EU report progress with eInvoicing
The European Union eBusiness Watch is an excellent source of free information and I have extracted here two graphs that show progress with eInvoicing in Europe.
The graph below shows as a % the number of firms from the survey sample that have adopted eInvoicing.
The graph below looks only at those businesses that use eInvoicing and charts the average share of eInvoices measured as a % of a company's total invoices sent or received.
Large business send more eInvoices than they receive.
Small business receive more eInvoices than they send.
Click here for the report (all 263 pages).
© European Communities, 2006. Reproduction is authorised provided the source is acknowledged. Click here for practical solutions to eInvoicing.
Apologies for layout of this blog the editing tools are not easy to use.
Labels: eBusiness Watch, einvoicing, electronic invoicing, european union
Bad invoices are bad for business
The debate over what the potential savings are with the introduction of electronic invoicing continue.
As we come to terms with electronic invoicing and I know that is a big assumption on my part we are starting to ask different questions.
For example:
How many invoices processed annually are in error and need special attention?Bad invoices are bad for businessIt is the invoices in error that create most work and drive up the cost.
I think everyone accepts that a computer can process invoices faster than any person but that assumes that the invoice is correct and the automated processing of an invoice by computer occurs without error. How much is saved per invoice? This is a measure of productivity and the savings only arise when for example 2 people can do what formerly 4 people were needed to do.
Interestingly, computers can't resolve issues arising from an invoice in error, let's call them exceptions.
Only people can do that so the full benefit and savings from electronic invoicing increase as you work towards zero exceptions. Is that practical and what is the implication?
If you ask any AP manager the bid deal for them is the workload associated with exceptions. Interesting many will reveal that it is often a core number of suppliers that they have quality problems with.
Three point checkSo, savings depend on three things:
1. automating the processing of invoices -
drive down routine processing costs2. reducing the number of exceptions -
delivers big savings as explained later3. resolving quality issues with suppliers -
change process and apply technology to automate
Putting some parameters around this:
Few exceptions
If you have few invoices in exception then implementing electronic invoicing offers you productivity and a moderate win in terms of savings since your costs associated with exceptions are low. Bigger AP departments have much more scope to deliver savings and they have been in the early wave of adoptors of electronic invoicing.
Many exceptions
If you have many invoices in exception then implementing electronic invoicing is harder as you have quality issues with suppliers to resolve yet also offers you a big win with a reduction in the number of exceptions.
Bad is expensiveI am not going to write the "how much does it cost to process an invoice" sums as these are misleading. What we do know is that exceptions cost considerably more to process than clean invoices. Research suggests exceptions can cost up to 10x more to process.
How many invoices do you have in exception as reducing these in number deliver the big savings?
Let's say you process 50,000 invoices p.a and 3% are in exception, that is 1500 invoices
If we estimate it takes 20 minutes on average to resolve the exception then that is 62.5 frustrating and non-productive days of work.
Now if we can reduce that to 1% then the impact is that you spend 20.8 days in this non-essential (as far as your business is concerned) activity.
That is a real saving of 42 days.
The point of this blog was to highlight an area that will assist your business case and justification for electronic invoicing based on looking at the problem area in AP - exceptions.
It is not the whole story just shining the torch on a problem area.
Click here for more insights
Labels: accounts payable, electronic invoicing, savings
Electronic Invoicing - crystal ball
What evidence is there that this electronic invoicing nonsense is going to make any difference to my business? Convince me.
I'm interested in what others are doing with electronic invoicing, it helps me to understand how this is developing and what the potential implications are for my business. I'm convinced.
So, which camp do you belong to?
Few want to be first to jump in on a new wave of innovation as it hits business and getting the timing right is always a tricky business. Now, where is that crystal ball?
CaveatNow, settle down, settle down. Hell, I'm an old man, it's early in the morning and I'm gathering my thoughts here." Donald Rumsfeld
.With that in mind here is something to digest.
Breaking NewsI received the following information in an e-mail newsletter from expp-summit who keep a close eye on the e-invoicing market. They report the market is growing fast, really fast.
- Mid-2006, around 360,000 European corporate and other organisations were using e-invoicing
- Outlook is this will increase to 630,000 in 2007
- The highest growth rates are expected in the Nordic countries, the UK and Benelux
- All industries are affected by this trend
- The public sector is prominent in delivering growth. Click here for UK news
- The processed B2B volume is expected to reach 420 million e-invoices this year (+75% year on year)
Check Crystal BallQuick look at the crystal ball: 420 million e-invoices and 630,000 users. Excel calculates that each e-invoicing user sends/receives 666 e-invoices annually.
It's a start but hardly a sea change in how invoices are processed across a substantial number of organisations.
Truth is that we know that some organisations have substantially eliminated paper invoices and some have achieved 100% paperless invoicing. Others are infant in their implementation of e-invoicing.
The startling thing is that 360,000 or so organisations and growing fast in number have the capability to expand their implementation of e-invoicing. Many of these will be big organisations with 1000s of suppliers. The company I work for is implementing e-invoicing for businesses that has 5,000 suppliers and another has 30,000+ suppliers.
Let's look at the numbers another way.
360,000 organisations are engaged in e-invoicing - buyer and supplier side.
Every organisation that is currently engaged in e-invoicing expands its use to another 10 counterparties.
The number is now 3,600,000 engaged in e-invoicing.
This is not a crazy number as we have projects engaging several thousand suppliers. It is also not that far short of the number of SME businesses in the UK so if this number were across Europe then this is highly believable.
Changed your mind?To sign up to receive the expp newsletter
click hereLabels: e-invoicing, electronic invoicing, expp, statistics
2007 - will it be you?
Reflecting on my earlier blog I started thinking: how many suppliers have lost customers because they had NOT implemented electronic invoicing when asked by a customer?
I don't expect anyone to reply this question. However, I have evidence that suppliers are losing customers and I wonder how many customers they have to lose before they choose to act?
Never mind with a new year in prospect we should look to the future.
Will it be you in 2007 that is asked to implement electronic invoicing?What clues do you have to know if it will be you?
1. Do you know what your customers' procurement policy is?
Click here to see an example
2. When you win a new contract or renew a contract check to see if your customer has introduced a clause concerning eCommerce. Many buyers are introducing eCommerce clauses as a condition of business even though they may not implement that immediately.
3. Do you have any UK public sector customers? The likelihood is that sooner than later you are going to be required to submit electronic invoices.
4. Have your suppliers implemented electronic invoicing? That is, they want to send electronic invoices to you.
5. When your are replying to an Invitation to Tender (ITT) or Request for Quotation (RFQ) did the customer require you to send your reply on paper or reply using an online service. If it was the latter then that is a clue they are moving their procurement away from paper to electronic delivery.
6. Has your customer contacted you to have a conversation about your early payment discount terms?
7. If you have had an approach from a customer about your submitting electronic invoices how did you respond? a. I didn't respond my preferred response was no but obviously I couldn't say that. b. I said I would think about it. c. I said I would if I knew how. d. I said Yes - how do I do that?
If the clues are there and you need some help then
click hereLabels: einvoicing, electronic invoicing, procurement
Electronic Invoicing - the future is coming - or is it?
How many times have you tried to predict the future and spent some time trying to understand those things that would influence your prediction? I picked up on an article published by gtnews.com on July 04 2005 that had a stab at the 'Future of Electronic Invoicing'. gtnews.com is read by those in finance and treasury.
The future was described like so:
The electronic invoicing industry is moving towards more inter-connected B2B solutions like federated networks.So, some 18+ months has passed is there any indication that this future is coming?
The article correctly highlighted the obstacles to buyers and suppliers from 'lock-in'. To strike an analogy; if you had to choose your telephone provider (telco) based on who you could reach by telephone using that telco then that presents you a problem if one telco can not povide you a service to reach everyone that you need to or might want to speak with. Of course this is not an issue because the telco industry understands their customers want a service that provides any to any connectivity.
The article also suggested that the service providers that deliver electronic invoicing will need to deliver the same any to any connectivity that your telco does. Is there progress towards any to any connectivity using federated networks?
To take an example:
Supplier A uses Vendor B to transact their eBusiness with Customer C
Supplier D uses Vendor E to transact their eBusiness with Customer F
Customer C invites Supplier D to transact their eBusiness through Vendor B whereas they would prefer to use their existing Vendor E and for Vendors E and B to provide a through connection to Customer C.
This idea of federated networks is highly appealing but is not a reality today and I know of no commercial discussions between vendors.
Let me know your views and I will compile your replies in a future blog.
Labels: accountants, electronic invoicing, federated networks, treasurers
