Your suppliers may not want to transition to e-invoicing, but they may not have a choice in the not-too-distant future.
This blog first appeared on the Corcentric website.
When we explore why companies are resistant to implementing an e-invoice initiative, we find that a lack of supplier compliance is a primary concern. Whether it’s resistance to new technology, an attachment to the traditional methods of billing, or simply good old-fashioned inertia, suppliers often set up barriers to climbing on board. No supplier compliance – no e-invoicing. That can be costly for companies, since those that have transitioned to receiving e-invoices have realized significant efficiencies, streamlined processes, and reduced costs. That doesn’t mean that every supplier has to comply. Certainly those that are “one-offs” can continue to send invoices in other formats; however, those that you do business with on an ongoing basis should be persuaded to adopt this technology.
That may all be changing over the next five to ten years due to the expansion of the e-invoicing mandates established by governments across the globe. A 2013 TAPN report on the global state of e-invoicing mandates noted that 56 countries had either adopted or were seriously considering e-invoicing mandates for all public sector business. And, as of this point in time, at least 35 countries have established these initiatives. The cost savings to these governments will be substantial. According to a May 2013 European Commission press release, the EU, which mandated e-invoicing for all governmental procurement by its member nations estimates a savings of over 2.3 billion Euros once all invoices have been converted to electronic form. And just recently, the E-invoicing Platform noted that France, which is mandating that all companies supplying the public sector switch to electronic invoicing by 2020, expects to save 710 million Euros per year.
However, the move that will have the biggest impact is right here at home, as the U.S. Federal Government has mandated all-electronic B2G invoicing by 2018. A September article in E-invoicing Platform notes that the Federal Government processes over 19 million invoices each year. About 40% are processed as electronic invoices, leaving 60% in a variety of other formats that provide little visibility and can result in late payments. A PYMNTS.com article earlier in this year cited a Treasury estimate, indicating that government-wide use of the e-invoicing platform could lead to cost savings of $450 million a year.
If any of your suppliers are doing business with the U.S. Federal Government, or any of the other countries across the globe that have e-invoicing mandates, they will have no choice but to comply. Even if they don’t do business in the private sector, suppliers need to be aware of the fact that many of the countries that either have mandated or are planning to mandate e-invoicing are using the B2G as a starting point, hoping that this will become the standard for B2B as well. And, at that point, resistance from suppliers will be a moot point.
But instead of thinking of this as a burden, suppliers should be shown how e-invoicing is a win-win for both customer and seller. We’ve already pointed out the benefits for buyers earlier in this blog, but suppliers benefit as well. Faster payment, visibility into invoice status, and less time spent on exceptions and disputes will save suppliers time and money. And when these same suppliers understand that instituting this practice is easy and affordable, it will take little convincing. That’s why it’s important that companies looking to demand e-invoicing make sure the solution they select is easy to set up, user-friendly, free to use, and offers a robust self-service supplier portal.
Here’s how you can make the case for e-invoicing to your suppliers.