OB10 and why you should care about e-Invoicing

After Elcom yesterday, here is another of our "virgin" (to Spend Matters UK / Europe at least) solution providers...

We’ve promised (threatened?) to cover e-Invoicing a little more enthusiastically in 2012, so let’s start now, with a word about OB10 and the recent announcement of the formation of the European e-Invoicing Service Providers Association (EESPA). The link between the two incidentally is Charles Bryant, who works with OB10 and is also the newly elected Vice-Chair of EESPA – the Chair is Esa Tihilä from Basware.

But before we get into that, why, I hear you ask, should procurement people care about e-Invoicing at all? Well, invoicing is the culmination of the end to end procurement process. It is a major source of internal cost; a source of disagreement and relationship difficulties between buyer and seller when it doesn’t go well; and can provide procurement with a lot of significant data which helps to improve wider procurement performance. Information from the invoicing process informs issues ranging from basic spend analysis to contract management and implementation and budget-holder or supplier compliance.

Perhaps even more importantly, the invoicing process defines a major element of cash flow and working capital for both buying and selling organisations. And this is a theme that we’re going to come back to this year on many occasions I'm sure. If, as seems likely, many countries and organsiations are going to see tougher economic circumstances, then managing cash will be key.

But for procurement, that shouldn’t be simply about extending payment terms and letting the phone ring and ring when grumpy suppliers call to see what’s happened to their due payment. What happens if key suppliers get into trouble because you and other customers are delaying payment? That can rebound on the buyer, and is one reason why we’re seeing interesting options come into  play around supply chain finance, with an ever-expanding range of innovative options in that field.

For those to work, however, the invoicing process needs to be controlled and structured, which is where firms like OB10 come in. They were perhaps the first serious e-Invoicing provider, founded in 2000, offering a global service and enabling suppliers to send electronic invoices to customers without investment in specific equipment or systems. And they’ve built an impressive blue-chip client list, from Kellogg’s to BP, Unilever to GlaxoSmithKline. They’re headquartered in London, with offices also in the USA, Germany and Malaysia backing up their position as “the only truly global e-invoicing network”.

Automating and removing paper from the process brings straightforward savings in processing cost and resource – OB10 claim that savings of 60% are the norm. But it also opens up the options for controlling working capital better, looking for mutually beneficial opportunities with suppliers around payments, and actually developing more collaboration in the supply chain, with the invoice process at the heart of that.

It’s a market that is seeing some excitement at the moment with the entry of Tradeshift (who we covered briefly here), an ambitious and interesting “upstart start-up”! While I’m sure OB10 are watching them carefully, more focus and publicity for this whole area is probably good for everyone.

There's one further reason why Procurement functions and people should take an interest in invoicing - if you don't, Finance certainly will. We're not saying that's a bad thing, and clearly AP is part of the intenral financial management process as well as part of the procurement process. But I've seen accounts payable and invoicing being used as the Trojan Horse through which Finance get more and more influence and even control over the procurement process. Just be sensitive to that!

We seem to have drifted away somewhat from the subject of the new Association, so we’ll revert to EESPA in part 2 of this short series, when we'll look further at its aims and activities.

Voices (2)

  1. Christian Lanng (CEO Tradeshift):

    Hi Peter,

    Great article on the background of EESPA, OB10 involvement etc. for a little more perspective on the discussion I can recommend the interview Pete did over on PurchaseInsight, where I highlight some of the problems I have with OB10’s involvement in that forum

    http://purchasinginsight.com/why-i-dont-like-ob10-a-conversation-with-christian-lanng/

    I know it’s quite passionate, but I think it’s really important to talk about software patents together with EESPA or else it becomes a toothless tiger without real benefits.

    Br

    Christian

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