Maximizing E-Invoicing Adoption: On Basware and Having Suppliers “Opt Out” Rather Than “Opt In”
Categories: Industry News, Innovation, Invoicing, Supplier Management | Tags: Incendiary Tidbits, L2
EEI Platform recently ran a short post summarizing some news from Basware on a new process-focused approach to improving e-invoicing adoption with suppliers. In the authors’ words, “many companies would like to receive 100% e-invoices, as they see the efficiency, cost, visibility and cash flow benefits they can achieve. The key to achieving this lies on the side of the invoice sender.” Of course there are carrots and sticks for driving this behavior – as well as more neutral and process-driven means.
Basware’s process-driven approach is to shift the mindset away from having suppliers “opt in” instead of having them “opt out.” Under this model, “the use of e-invoicing is assumed and paper-based invoices are only implemented for those that specifically request them. This is radically different approach, challenging EU law on e-invoicing (adoption).”
These programs are most successful, however, when they have teeth. As far as tactics to encourage e-invoicing adoption, we’ve heard of a handful of organizations that have told their suppliers they will be charged a flat amount (say, $50) as a processing cost automatically subtracted from the invoice if they submit paper invoices. Such a model can be even more effective (and perceived by suppliers as fair) when it’s linked to an explanation of the accounts payable cost structure and the amount of the charge back is not invented, but rather represents the opportunity cost of not doing invoicing electronically.
More friendly adoption carrots can include providing enhanced payment terms for suppliers submitting only e-invoices (e.g., subtracting 5-10 days from standard terms). The alternative version of this model is extending payment terms for all suppliers that submit any invoices in a paper-based manner. Clearly, Basware is onto something with an “opt out” approach. But no doubt others, such as Taulia and Oxygen Finance in the receivables financing and discounting sector, understand these process-driven incentive (and disincentive) models as well.