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E-Invoicing Comes of Age

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Published:  May 18, 2012
Access Level:   Free
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Before exploring the concept of electronic invoicing and invoice automation, let's first ask ourselves: at the core, what is an invoice, really? To some, it's a piece of paper (or virtual piece of paper) sent by a supplier to a customer with varying amounts of detail about services performed or items purchased (or to be purchased) along with various other details – mailing addresses, the maturity date of the obligation, conditions if the maturity date is not met, etc. But in reality, an invoice is much more than this – or at least it should be. For more advanced companies, it's really a step in a much broader buying, accounting, treasury and supply chain process that links a number of functional groups together to drive visibility, compliance and even improvement strategies across a wide range of working capital management for a majority of organization purchases.

To fully appreciate what this means in practice, it's important to step back and frame the evolution of supplier connectivity and the accounts payable function over time. In the past, most procurement organizations would admit to doing a generally poor job in linking buying processes to the actual receipt of invoices, invoice approval process and subsequent payment to suppliers. There have been many reasons for this, not the least of which was limited coordination between "buying" systems, vendors, people and processes and the accounts payable (AP) function. But in more recent years, as finance and procurement have started to work more closely together to drive payment compliance initiatives (e.g., "no match, no pay") as well as programs designed to bridge the gap between purchase cost savings and working capital management strategies to reduce supply chain risk by providing greater visibility, functional and information coordination has had to improve.

This Spend Matters paper takes a detailed look at deployable capabilities in the electronic invoicing/invoice automation sectors and shares the types of cost reduction, working capital management improvements and related benefits that companies with the highest success in this area have realized. It provides a simplified capability/ maturity guide for electronic invoice presentment payment (EIPP), plus geographic adoption patterns and differences between regions, offering lessons that both US and European organizations can learn from. Finally, it also includes a detailed list of contributing factors for building financial business cases to justify the investment and ROI for electronic invoicing/invoice automation initiatives.

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