Friday Rant: E-Invoicing Claims vs. Supplier Reality (Part 2)

In the first installment of this rant, I tackled a number of claims and possible myths of E-Invoicing from a supplier perspective. In short, here at Spend Matters, we're not entirely sold on the supplier value proposition of mandated electronic invoicing programs (often called E-Invoicing, electronic invoice presentment payment -- EIPP -- or invoice automation) outside of the basic emailing of PDFs or through legacy EDI connections for larger companies. And we also believe that such programs may in fact create unnecessary workarounds and limited visibility for suppliers and procurement teams that have handshake deals that deviate from corporate policy. But more on that in a minute. Let's first wrap up our examination of a few additional claims that E-Invoicing providers often make to suppliers.

To begin, we largely agree with providers that E-Invoicing results in fewer billing errors (and subsequently fewer remediation steps and a longer-time to pay). Yet it's important to note that not all E-invoicing systems are tied properly, depending on vendor and deployment, into upstream eProcurement and direct materials (ERP) requisitioning tools that require certain matches and, when a deviation occurs, automatically kick-off an exception and remediation workflows to internal stakeholders and suppliers (e.g., rejection based on an incorrect amount that exceeds a PO threshold, wrong vendor name as a DBA, etc.). The bottom line: individual results may vary, and unless the E-Invoicing initiative includes close linkages with a broader P2P and/or direct materials transactional enablement program depending on supplier category, suppliers may see limited benefit.

And what of general productivity gains for suppliers? Again, we suggest that individual results will largely be dependent on the broader program E-invoicing is tied to. Next, let's turn to an additional myth -- that E-invoicing drives buyer compliance and additional spend to preferred suppliers. Our experience suggests this is most certainly a myth. Better eProcurement (and broader P2P enablement programs which include extensive support for guided buying, catalog management, etc.), strategic sourcing and contract management programs are what drive spend to approved suppliers, not E-invoicing alone.

Finally, you might ask, is E-invoicing, as vendors often claim, a one-time, painless enablement process? The answer is absolutely not. If you do business in the EU, you may have to connect with dozens of different invoicing platforms and networks, and in North America, the situation might not be any more simple depending on how large you are and what types of businesses you're working with. Moreover, the enablement process can vary from the very simple (e.g., Transcepta, OB10) to the more involved (e.g., Ariba, Hubwoo) to the potentially arduous (e.g., Oracle) depending on the buyer's requirements and the underlying network/E-invoicing platform. You're also probably not aware that a material portion of suppliers who start the on-boarding process for E-Invoicing with their customers often drop out of the process (but we won't go there today).

Now that we've analyzed and hopefully dispelled some E-invoicing supplier myths, we'd argue that there's an even more elegant litmus test for where the majority of benefit usually lies. Ultimately, all of you procurement and A/P types in the audience should ask yourselves how many times suppliers have come to you proactively asking if can submit invoices electronically via an electronic invoicing method besides email or EDI. For me, this is the fundamental question of where the value equation lies when it comes to E-invoicing. And for this reason, I believe that unless we see a greater number of buying organizations mandate such programs, that adoption will continue to be sporadic and encompassing of only a portion of a typical organization's spend/supplier profile.

Jason Busch

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