Are You Still Pushing Paper? Becoming Paperless – Tips & Tricks

We are pleased to feature this guest post from Dan Butts, Principal Consultant at Xoomworks, procurement consultants and business intelligence experts.

Embarking on a mission to remove (or at least reduce) paper invoicing should not be under estimated. It’s not easy but then nothing worth doing ever is.

E-invoicing isn’t the most exciting area of procurement – but it can deliver savings, improve relationships and open up new possibilities. This article explores some of the benefits and costs associated with setting up e-invoicing, how to measure them, common pitfalls (and how to avoid them) and also one of the most important parts: what to do next?

 

What is an e-invoice?

Our definition is an e-invoice that is transmitted electronically and that is intended to be processed automatically by the receiving system without manual intervention or printing.

 

Benefits of e-invoicing

  • Increased efficiency, reducing operating costs - entering data from a paper invoice into a payment system is time-consuming and is open to the risk of incorrect data entry.
  • Improved supplier relationships - there may be conscious decisions to manage supplier payments, but by receiving e-invoices, it is likely that the invoice processing time will be vastly reduced giving the buying organisation more control over payment. Payment on-time can lead to better supplier relations.
  • Better working capital management - early payment discounts can be obtained from the accelerated payment cycle provided by e-invoicing. With more control over the payment time, proactive decisions can be made over early payment discounts. With some of the best organisations in the world taking advantage of these where it suits the working capital strategy of the business, savings here can be significantly more than any other e-invoicing measure.
  • Reduced environmental impact - less paper means a lower carbon footprint which not only improves company image but provides a cost saving through reduced storage requirements.

 

Let’s talk about cost!

There are a number of potential areas for cost depending on the technology taken:

  • Higher volume suppliers are likely to want to automate invoice creation using EDI or XML. There will be a cost with this and some of this may be passed on to you (knowingly or otherwise).
  • Portals offer easy-to-use PO-flip and invoice-entry functionality for lower transaction volume suppliers. Transaction charges are levied by portals such as OB10 and the Ariba Network, costs vary significantly depending on the charging model. It is recommended that a thorough understanding of these is gained before selecting a vendor.  Other portals, such as the Coupa Supplier Network, are free of charge.
  • Internal or external resources to complete the supplier enablement activities. A clear strategy, tested communications and a plan are required to minimise resource costs and to prioritise suppliers for enablement.

Measuring Progress

As with all projects, a business case should be produced to ensure it works for your organisation at this time. In order to measure progress towards this business case, we recommend a number of basic KPIs that should be measured: percentage of invoices submitted using an e-invoicing method, percentage of invoices with exception, cost of processing an invoice, percentage of on-time supplier payments, days payable outstanding, percentage of early payment discounts taken.

And tomorrow – we’ll talk about successfully enabling your suppliers.

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