There are several things to consider for a company looking to implement an e-invoicing system. Different departments will be affected as well as suppliers and customers. There are also the technical issues involved in integrating different business systems into the e-invoicing facility. This post will outline these areas of concern.
Making the Case
The person wanting to move the company from paper invoices to electronic invoices will need to persuade senior managers of the value of the change. A compelling business case would need to find a way of calculating the average cost of processing a paper invoice and then in comparing that cost to the projected average cost for an e-invoice. This will show the savings that can be expected from moving from paper invoices to e-invoices.
Build the Scope Overtime
It is not prudent to switch over from paper invoices to e-invoices over-night. It is best to look first at customers who are regular payers and have a record of few invoice queries. Build out from this core of trusted customers over time to bring in more customers into the e-invoicing orbit. It is best to delay e-invoicing foreign-based customers until the legal aspects pertaining to e-invoicing in that country are understood and complied with.
The Transition Period
Bringing all suppliers and customers into an integrated e-invoicing system takes time. The tax inspector will need to be kept up to speed with which companies have moved over to e-invoicing and which haven’t. When a company is running both a paper and electronic invoicing system the monetary savings inherent in e-invoicing will be less distinguishable.
Training and Technology
It is not only the accounts department that will need to understand and operate a new e-invoicing system. Business line managers, procurement, finance and other managers all need to upskill to make the move to paperless invoices smooth. An employee will also need to keep up to date with regulatory changes regarding e-invoices both at home and in foreign countries.
Moreover, to fully take advantage of the benefits of e-invoicing, a company will need to use EDI technology (electronic data interchange). This technology requires specific IT skills. Staff will need to be trained in these skills if they don’t have them already.
More on Technology
An efficient e-invoicing system will need to integrate with accounts payable and accounts receivable systems. Companies that use Enterprise Resource Planning (ERP) software will need to integrate that with the e-invoicing technology.
The final integrated system will need to meet several performance criteria that include:
- Storing of other related documents such as credit notes, purchase orders, debit notes and remittance advice for auditing purposes;
- Be able to operate with customers and suppliers who use different IT systems;
- Be capable of exchanging documents with other companies regardless of varying accounting systems; and
- Be capable of structured data exchanges with other business systems to allow accurate planning and forecasting.
Working With Suppliers and Customers
The success of an e-invoicing system is dependent on its adoption by suppliers and customers. The less they are required to do, the easier it is to get compliance. One of the best ways to secure the agreement of suppliers and customers to adopt e-invoicing is to offer a variety of options that suit companies with different levels of IT complexity. For small and medium-sized enterprises a simple web form can be offered that only requires a device connected to the internet. Other companies will use Microsoft Excel or accounting software such as Sage or QuickBooks. The e-invoicing system must be able to integrate with these programs to facilitate the move to paperless invoicing. And some suppliers will use an ERP system to automatically generate invoices that are sent to their customer’s accounts payable system. Data will need to be converted from the ERP format to one that is readable by the e-invoicing system.
Above all, communication with suppliers and customers is vital in successfully onboarding them into your e-invoicing system. For those with foreign trading partners, language skills become another imperative.
In Summary
There are legal, organisational and technical barriers to the successful implementation of an e-invoicing system. Staff in varying departments of a business have to be taught to use the new e-invoicing system. Help and guidance have to be provided to customers and suppliers to make sure they can integrate their IT systems with the e-invoicing system being used. If all these things are done in a timely and orderly fashion the cost savings of using e-invoicing will soon become apparent.
