The two main barriers inhibiting growth of e-invoicing are systems issues and supplier reluctance. Overcoming these barriers requires e-invoicing providers and their clients to work as a united front.
Savvy companies are managing to successfully implement e-invoicing solutions by working as a team and using techniques that include early communication with stakeholders, taking advantage of providers’ on-boarding services, launching proactive campaigns, negotiating contracts, and even mandating e-invoicing.
Legacy Systems Create a Stumbling Block
As mentioned, one reason for the low adoption rate is that the business world is riddled with legacy systems. This is the biggest barrier on both the buyer and supplier side. Many companies have multiple systems for ordering, accounting, and paying. They are still struggling to get these internal systems to communicate with each other, let alone communicate with all their suppliers’ different systems!
AP and Vendors Dance ‘The Adoption Tango’
Another reason for the low adoption rate is that suppliers don’t want to be saddled with a cumbersome process. (But neither does AP, for that matter.)
On one hand, we in accounts payable are hoping to be a big enough gorilla to force our suppliers to use our e-invoicing method. On the other hand, we are madly hoping that each of our suppliers is not a big enough gorilla to force us to use their e-invoicing method. This is understandable, as AP departments simply do not have the time to go from Web site to Web site every day collecting invoices. Nor do suppliers have the time to go from Web site to Web site every day uploading invoices or retyping their invoices into Web forms. Electronic invoices need to flow between buyer and seller with minimal human intervention.
Solution providers are addressing these two major objections to e-invoicing, but their claims often don’t reflect the limitations of potential users. For example, vendors say it’s easy to upload invoice fls. However, there can be quite a bit of up-front work to make sure the file format is acceptable. Then someone has to do the uploading or automate the uploading. Plus, unfortunately, many buyers are unable to send all—or even most—of their POs electronically.
These solution providers compete on the size of their exchange or network. Often, however, these networks are confined to a particular industry, so many companies find few of their suppliers belong to the provider’s network. In addition, many companies have vendor fls containing thousands—or hundreds of thousands—of vendors, so they are likely to find even the largest exchange or network insufficient.
Providers point to their dedicated supplier on-boarding staffs who stand ready to do all the hard work. Yet, many companies are skeptical, because they believe that their suppliers will want to hear from them, not the solution provider. They are rightly concerned that persuading suppliers will be costly and time consuming.
An additional challenge is the sheer number of e-invoicing solutions available. As in many technology arenas, it is likely that some vendors will disappear entirely and others will consolidate. Companies hesitate to choose a vendor and dedicate resources to implementation only to discover their vendor has vanished.
Overcoming the Barriers
Companies that are successful at implementing e-invoicing projects have several things in common. Here is how they do it:
- As soon as they start focusing on an e-invoicing solution, they communicate with important stakeholders such as purchasing, IT, finance, and major suppliers.
- They take advantage of the supplier on-boarding function. Most providers begin by analyzing the buyer’s supplier file. Focusing on the suppliers with the highest invoice volume—or those that are very picky about discounts—can reap immediate benefits, even if it takes a long time to get a large number of suppliers signed up.
- The most successful e-invoicing implementations include a proactive campaign by the buyer to educate and bring suppliers onboard. Providers can help companies create a compelling message and customize it for different delivery methods for different suppliers. Letters are not enough. They need to be supplemented with e-mails, telephone calls, and sometimes even meetings.
- Over half the companies in a recent survey on e-invoicing say that to be successful, it is essential to require e-invoicing in contracts. Accounts payable will need to partner with purchasing to achieve this.
- In that same survey, 40 percent of participating companies indicate that it is critical to mandate e-invoicing and simply refuse to accept paper invoices. Unfortunately, most companies find that they are unable to make the mandate stick. They just do not have sufficient leverage with their suppliers.
- Some companies decide that they will require e-invoicing from new suppliers. This is an easier prospect than requiring it from existing suppliers.
- Some companies also find success with rewarding suppliers who sign on with more favorable payment terms. They change the start of the clock on due dates from the invoice date to the date the invoice is received in AP. This automatically offers e-invoicing suppliers quicker payment.
- Companies that start by providing an electronic PO are generally more successful in implementing e-invoicing than those who are unable to do so. This definitely puts the onus on the buyer to make whatever changes are necessary to their systems to accomplish this.
Ideally, you want your suppliers to be able to send invoices electronically from their existing systems with as little work as possible. Partner with a solutions provider that offers suppliers a wide variety of methods to get their invoices to you. These methods should include the ability to upload invoices to a supplier portal, send invoices via EDI or XML, upload flat fls, or, as a last resort, enter data into a Web form. The fewer keystrokes required for this Web entry, the better. You want your supplier to be able to use prior invoices as a template for new ones in order to make it as painless as possible. Not all suppliers are tech-savvy. They may want to participate but simply have no idea about how to do so. Your provider needs to be able to assist and educate these suppliers.
The Long Road to Success
Even the best buyer communication program (which includes heavy emphasis on educating the suppliers as to the positives e-invoicing will bring them) takes hard work and a great deal of patience.
It is important not to get discouraged about the low volume of electronic invoices received, or lose patience because of the long road to success.