E-Invoicing — Is the 80% Solution Enough?

There's another thought provoking post over on Purchasing Insight that suggests we may need to settle for the 80% electronic invoicing model rather than what many of us no doubt would aspire to. The piece argues that "Adopting a hybrid approach that allows you to interpret scanned images as well as 'pure' e-invoices as electronic invoices, allows the aspiration of 100% electronic invoicing to become attainable." The crux of the argument is that "getting dogmatic" is the wrong approach (i.e., not accepting scanning solutions to capture invoices from smaller suppliers and counting this as "e"). In other words, simply engaging in philosophical debate around "what is and is not an electronic invoice simply builds a reason not to do anything at all."

On Spend Matters, we've recently argued during one of our rant sessions (here) that for small businesses, the benefits of electronic invoicing are in general, greatly overstated for the little guy (i.e., the small supplier) in favor of the buyer. But the definition we adopted for e-invoicing in this regard was not the more flexible Purchasing Insight version. Rather, it was the version that requires an electronic submit that goes beyond e-mailing an invoice to a customer. By historic definition, Purchasing Insight suggests that "an email with a Word document or an excel file attached was not an electronic invoice and worse, a PDF image of a paper invoice was nowhere near an e-invoice. These were superficial attempts to tick the e-invoicing box."

But perhaps we should loosen our definition a bit. I'd argue that until more of the promised benefits of electronic invoicing become reality for smaller suppliers (e.g, prompt on-time payment, regular status updates available via portals, discount programs that don't make your supplier look like the mob in terms of the APR), there's no question the benefits of a partial solution involving both "virtual printer" and email approaches and scan/OCR models warrant revisiting our definition of what electronic. Still, I'd argue that rather than obsess over what is "e" -- perhaps the better question to ask ourselves is why we're obsessing over the second "P" in P2P these days. If our goal is to drive both internal and supplier compliance, reduce paper, build better working capital visibility (and ability to forecast) and drive the prospect of straight-through processing for a majority of invoices, then the partial solution may very well begin to look quite complete, given the pain and cost involved of truly going even 90% electronic.

Jason Busch

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