Bachelor Thesis within Business Administration

Authors: Gustav Dahllöf

Erik Matsson

Julius Nilsson

Tutor: Gershon Kumeto

Jönköping May 2015

Business to Business - Electronic Invoice

Processing

A report on the challenges, solutions and outcomes for

companies switching from manual to electronic invoice handling.

Acknowledgement

We would like to thank our tutor Gershon Kumeto for his guidance and support throughout the

process of writing this thesis. He has been of great value to us in regards to providing constructive

criticism which have enabled us to build a solid ground for this thesis. Furthermore, we would also

like to thank other students, family members and individuals for the input and criticism.

Moreover, we would like to send our special thanks and regards to the companies that have

participated in our case study, without their input and valuable insight, the thesis would have been

impossible for us to conduct. This also involves the input and information we received from

professionals within the field, Heinz Kopfinger and Jonas Edlund.

-------------------------- -------------------------- --------------------------

Gustav Dahllöf Erik Matsson Julius Nilsson

Bachelor Thesis in Business Administration

Title: Business to Business – Electronic Invoice Processing – A report on the challenges, solutions and outcomes for companies switching to electronic invoice handling.

Authors: Gustav Dahllöf, Erik Matsson and Julius Nilsson.

Tutor: Gershon Kumeto.

Date: Jönköping, May 2015.

Keywords: EDI, VAN, Electronic invoice handling, Electronic invoices, ERP, Formats, Electronic data transmission and Communication protocols.

Abstract

Electronic document handling was first used in the automotive industry in the early 1970’s, the way

of communicating electronic at the time was concerned with the communication way of EDI

(Hsieh, 2004). In the beginning of 2000 a new way of communicating electronic documents was

introduced with the emergence of VAN-operators (Hsieh, 2004). This technology of

communicating electronic invoices has shown to be less complex for the businesses than the

previous EDI connections. The VAN-operators enable companies regardless of size, ERP, also

known as Enterprise Resource Planning, system, formats or transaction volume to send and receive

electronic invoices.

The subject of electronic invoice handling have become increasingly debated, mainly because of

the legislations taking place all over Europe, and as well as the environmental impact by business

transactions being sent by paper. The objective of this thesis is to examine the challenges, solutions

and outcomes for companies switching to electronic invoice handling.

The data collected for the thesis is divided into two parts. The first part consist of information

retrieved by previous literature as well as internet sources. The second part concerns the case

studies conducted for the thesis in respect to our research questions. For this reason Scandinavian

companies have been interviewed, with different precondition as in size, industry, transaction

volume and IT structure.

The findings from the first and second part have been analyzed and conclusion have been made,

we suggest using a VAN-operators, which have shown to be the most appropriate alternative for

companies that are implementing electronic invoice handling. The result of this thesis can be used

as a guideline for companies when considering a switch from manual to electronic invoice handling.

1

Table of Content

1 Introduction .............................................................................. 4 1.1 Background ................................................................................................................................... 4

1.2 Problem discussion ...................................................................................................................... 5

1.3 Purpose.......................................................................................................................................... 7

1.4 Research questions ...................................................................................................................... 7

1.5 Interested parties .......................................................................................................................... 8

1.6 Definition of concepts ................................................................................................................ 8

1.6.1 EDI ........................................................................................................................................ 8

1.6.2 VAN ...................................................................................................................................... 8

1.6.3 ERP ....................................................................................................................................... 8

1.6.4 B2B ........................................................................................................................................ 9

1.6.5 Languages/Formats ............................................................................................................ 9

2 Theoretical framework ........................................................... 10 2.1 Solutions for electronic invoicing ............................................................................................ 10

2.1.1 Electronic Data Interchange ............................................................................................ 10

2.1.2 Value Added Network ...................................................................................................... 12

2.1.3 Electronic Invoicing .......................................................................................................... 14

2.2 Challenges of implementation ................................................................................................. 16

2.2.1 Complexity ......................................................................................................................... 16

2.2.2 Knowledge.......................................................................................................................... 16

2.2.3 Integration .......................................................................................................................... 17

2.3 Outcomes of implementation .................................................................................................. 17

2.3.1 Cost...................................................................................................................................... 17

2.3.2 Performance ....................................................................................................................... 18

2.3.3 Sustainable environment .................................................................................................. 18

2.4 Regulatory requirements ........................................................................................................... 19

3 Methodology ........................................................................... 21 3.1 Research approach ..................................................................................................................... 21

3.2 Research design .......................................................................................................................... 22

3.3 Literature and Theoretical frame ............................................................................................. 23

3.4 Data Collection .......................................................................................................................... 24

3.4.1 Case study approach ......................................................................................................... 24

3.4.2 Case study design ............................................................................................................... 24

3.4.3 Selection of companies ..................................................................................................... 25

3.4.4 Interviews with individuals .............................................................................................. 26

3.4.4.1 Jonas Edlund ............................................................................................................. 26

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3.4.4.2 Heinz Kopfinger ....................................................................................................... 27

3.5 Quality ......................................................................................................................................... 27

3.5.1 Validity ................................................................................................................................ 27

3.5.2 Reliability ............................................................................................................................ 27

3.5.3 Transferability .................................................................................................................... 28

3.5.4 Objectivity .......................................................................................................................... 28

3.6 Delimitations .............................................................................................................................. 28

3.7 Analysis of the data ................................................................................................................... 29

4 Empirical findings .................................................................. 30 4.1 Interviews .................................................................................................................................... 30

4.1.1 Explica entreprenad AB ................................................................................................... 30

4.1.1.1 Challenges .................................................................................................................. 30

4.1.1.2 Solutions ..................................................................................................................... 30

4.1.1.3 Outcomes ................................................................................................................... 31

4.1.2 Company X ........................................................................................................................ 31

4.1.2.1 Challenges .................................................................................................................. 32

4.1.2.2 Solutions ..................................................................................................................... 32

4.1.2.3 Outcomes ................................................................................................................... 32

4.1.3 Ides AB ............................................................................................................................... 33

4.1.3.1 Challenges .................................................................................................................. 33

4.1.3.2 Solutions ..................................................................................................................... 33

4.1.3.3 Outcomes ................................................................................................................... 33

4.1.4 Brck Dgtl Outdoor Media AB ......................................................................................... 34

4.1.4.1 Challenges .................................................................................................................. 34

4.1.4.2 Solutions ..................................................................................................................... 34

4.1.4.3 Outcomes ................................................................................................................... 34

5 Analysis .................................................................................. 36 5.1 Challenges ................................................................................................................................... 36

5.2 Solutions ...................................................................................................................................... 39

5.3 Outcomes .................................................................................................................................... 41

5.4 Summary ..................................................................................................................................... 43

5.5 Suggestions for improvements ................................................................................................ 43

6 Conclusion ............................................................................. 45

7 Discussion .............................................................................. 47 7.1 Future research ........................................................................................................................... 48

8 List of references ................................................................... 49

1 Appendices ............................................................................. 53 1.1 Interview template ..................................................................................................................... 53

3

2 Interviews ............................................................................... 55 2.1 Explica Entreprenad AB .......................................................................................................... 55

2.2 Company X ................................................................................................................................. 57

2.3 Ides AB ........................................................................................................................................ 59

2.4 Brck Dgtl Outdoor Media AB ................................................................................................. 61

Appendices

Appendix 1 Interview template.

Appendix 2 Interviews.

Appendix 2.2 Explica Entreprenad AB.

Appendix 2.3 Company X.

Appendix 2.3 Ides AB.

Appendix 2.4 Brck Dgtl Outdoor Media AB.

Figures

Figure 2.1 – The process of EDI, authors own illustration............................................................8

Figure 2.2 – The process of VAN, authors own illustration........................................................10

Figure 2.3 – The process of VAN interoperability, authors own illustration............................10

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1 Introduction

The introduction chapter aims to provide the reader with a general insight of the chosen topic. The background will

cover different aspects, which in turn will be conduce to the problem discussion for the purpose of narrow it down to

the research question guiding this thesis. It will also cover definitions of a number of key concepts that will be frequently

used throughout the thesis. The chapter also covers the interest parties that we believe would benefit the most by

reading the findings of our study.

1.1 Background

The subject of electronic document handling has been a debated topic over the last decades. The

use of electronic data interchange of financial documents, in the context of business to business

transactions, started in the automotive industry in the 1970’s, in order to increase the efficiency in

the supply chain management processes (Hsieh, 2004). Over the past decades, there have been a

rapidly increasing amount of organizations that use the internet as a tool in their day to day business

(Raphael & Zott, 2001). During that time, the way of communicating electronically was focused

on EDI, also known as Electronic Data Interchange, technology. The usage of EDI has since then

increased and larger organizations have become specialized in setting up EDI-connections (Hsieh,

2004). EDI-professionals create a structure to increase the efficiency and decrease the cost of each

connection as a result of specialization. As technological abilities boosted new ways of connecting

organizations, in year 2000, VAN-, also known as Value Added Network, operators started to

emerge (Hsieh, 2004). The VAN-operators primary objective is to minimize the boundaries and

increase the enablement for companies to start transmitting data electronically with their trading

partners regardless of the organizations internal abilities.

In 2008 the European Commission together with a consortium of 17 members from 11 countries:

Austria, Denmark, Finland, France, Germany, Greece, Italy, Norway, Portugal, Sweden, and

United Kingdom, created the Pan-European Public Procurement Online also known as PEPPOL

(Peppol, 2015). The goal of the project was to simplify electronic transactions across borders in

Europe and to create a technological standard that would increase efficiency in matters of

connections as well as reducing costs, compared to previous methods of exchanging data between

businesses in different countries. Since the introduction, an increasing number of countries have

adopted the standard of PEPPOL as the country specific gateway and several countries have

legislated electronic invoicing to governmental entities (Peppol, 2015). In the last years, the

Scandinavian governments have started to require that their incoming invoices should be

communicated electronically, according to the different national standards. All Scandinavian

countries have been early adopters of electronic invoices handling and are all connected to the

PEPPOL agreement (Peppol, 2015).

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Previous research, within the field of electronic invoice handling, argue that companies can benefit

by switching to electronic document handling due to the reduction of labor, since electronic

handling require less manual intervention as well as lower material costs (Soliman & Janz, 2003).

Another beneficial aspect is the improvement of supply chain management between the two

trading partners exchanging document electronically, with increased accuracy and speed (Hill &

Scudder, 2010). However, it is widely debated in literature what the actual outcomes of electronic

data interchange are, stating that: different studies show significant difference in benefits for

organizations that adopt EDI (Narayanan, Marucheck & Handfield, 2009). Key factors that has

increased the usage of electronic invoice handling in the European market can be divided into two

parts, one consisting of internal pressure, improvement of cash management and environmental

sustainability. The second part concerns external factors, legislations and directives for

communicating with trading partners electronically (Billentis, 2014).

Zhu, Kraemer, Gurbaxani & Sean (2005) argues that companies needs to be up-to-date with the

new technologies arising, hence the usage of electronic invoice handling, as a part of the EDI

processes, can be beneficial and result in advantages for companies compared to competitors that

are not. The fact that the concept of electronic invoice handling within business to business

transaction are up-to-date can be supported by the citation made by Gartner in 2014, an American

consultant company widely recognized within the field of electronic document handling:

“Start evaluating e-invoicing project opportunities now, regardless of your company’s vertical industry

or financial shape. The pressure to do some form of e-invoicing will increase, no matter where you

are, or the size of your business. Sooner or later, you will face the hard deadline of a government

mandate.” – (Gartner, 2014, p.13)

In order to get a cohesive and trustworthy contribution, the thesis will cover current literature

within the field as well as qualitative data in the form of case studies with organization that have

implemented or are in the process of implementing a system for electronic invoice handling.

Argued is that the subject of electronic invoice handling have become increasingly more important

in the global and complex environment that businesses are operating in (Zhu et al., 2006). Zhu et

al., (2006) further argues that in order to stay competitive, one aspect is the importance of

implementing a suitable form for electronic invoice handling for organizations today.

1.2 Problem discussion

Businesses and organizations are using different ERP-, also known as Enterprise Resource

Planning, system to keep track on business processes such as procurement, accounting, production,

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distribution and more (Hsieh, 2004). These systems speak different “languages” i.e. require data

in different format structures in order to communicate digitally (Kaliontzoglou, Boutsi, & Polem,

2006). If companies want to achieve a touchless process for incoming electronic invoices, the

invoices need to be received in the same format which can be interpreted by the recipients ERP

system (Hsieh, 2004). The managerial and IT complexity within organizations can be a part of the

barriers that organizations face when considering a switch to electronic invoice handling (Zhu et

al., 2006). Since we believe that there can be a complexity in terms of formats and ways to

communicate electronically, we will investigate and outline the obstacle that may occur when an

organization want to implement or have implemented a system for electronic invoice handling.

This leads up to our first research question:

What challenges, if any, are involved when switching to electronic invoice handling?

The first EDI connection was introduced in the automotive industry in the 1970’s (Hsieh, 2004).

In the last 25 years EDI have become more adopted in various industries by large organizations

and companies (Hazen & Byrd, 2012). The authors further argue that the globalization and spread

of internet enabled small and medium enterprises to start benefit from EDI connections. In the

last decade, service providers, also known as VAN-operators, have become an option for

companies to enable electronic invoice handling (Hazen & Byrd, 2012). Since there seem to be a

variety of possible solutions for organizations to communicate electronically, we will map the

different solution on the market. Hence, the second research question:

What solutions are available to choose from when switching to electronic invoice handling?

The benefits with electronic invoice handling vary significantly in previous research and literature.

Organizational improvements, such as less error management, time reduction and efficiency

outcomes are some of the benefits when implementing a solution for electronic invoice handling

(Sanders, 2007). Currently, literature also argue differently; even if the usage of EDI connections

by organization have been operational for over 25 years, the gains for using this technology is

inconclusive in literature (Ahmad & Schroeder, 2001). Some argue that the outcome, when

switching to electronic document handling, is dependent on the company size and transaction

volume (Narayanan, Marucheck & Handfield, 2009). Large organizations have greater possibilities

to be more beneficial compared to smaller organizations, in terms of electronic communication.

Smaller organizations usually have fewer transactions to process as well as less cash flow (Veselá &

Radimersky 2014). Hazen & Byrd (2012) however argues that smaller organizations and

corporations have become more able today, due to globalization with stakeholders all around the

world, to gain the same benefits as large actors in the market. Since there are inconclusive outcomes

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when implementing a system for electronic invoice handling, we will investigate how one can

measure the gains, if any. Hence our third research question:

What outcomes are there when switching to electronic invoice handling?

The research questions have been chosen with caution to cover the different aspects, which

companies can be interested in when switching to electronic invoice handling. The research

questions will contribute to a clear and concise report and can be analyzed with the data received

from the qualitative research, in forms of interviews with organizations that will be presented.

1.3 Purpose

The purpose of the thesis is to investigate the challenges, solutions and outcomes in respect to

electronic invoice handling for businesses, and to provide the reader with a cohesive and revised

report of aspects to consider when implementing a solution for electronic invoice handling. There

are numerous solutions and options for organizations and corporations to choose from and

different aspects to take into account, when switching to an electronic invoicing system in today’s

market. We believe that this thesis is of interest for our audience, which are further described below

in the section regarding interest parties. We argue that the topic is up-to-date, with the current

legislations for electronic invoices throughout Scandinavia and Europe (Peppol, 2015). The aspect

of the environmental impact of traditional paper invoices are furthermore a key driver for

electronic invoices. We argue that there is a considerable interest by companies, regardless of size,

transaction volume or industry for a study like ours, the result of the study will present different

aspects organization needs to evaluate when implementing a solution for electronic invoice

handling. As the previous literature is partly inconclusive in the results of having an electronic

invoicing system within organizations, we argue that the purpose of the thesis is valuable today.

1.4 Research questions

The following research questions will be used for our thesis:

Research question 1: What challenges, if any, are involved when switching to electronic invoice

handling?

Research question 2: What solutions are available to choose from when switching to electronic invoice

handling?

Research question 3: What outcomes are there when switching to electronic invoice handling?

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1.5 Interested parties

This thesis turns to all types of organizations, regardless of size, transaction volume or ERP system.

It is designed to provide a guideline for companies that are considering or are in the process of or

already have implemented a solution to communicate invoices digitally. We believe that the

following groups within an organization can find this information useful; IT or supply chain

consultants, supply chain managers, system developers, project managers, procurement managers

and e-business managers who already have some previous knowledge within the field of electronic

invoicing. As we further argue, knowledge is an important aspect of electronic invoicing and it is

our aim to provide our interested parties with the knowledge needed.

1.6 Definition of concepts

1.6.1 EDI

EDI, an abbreviation of Electronic Data Interchange, is a solution for communicating

electronically between two server environments in or between organizations (Hoogeweegena,

Streng & Wegenaar, 1998). It is used to increase the efficiency, traceability and speed when

communicating information. It enables swift access to data, which moreover can be done in

between different environments, both internally and externally with or within organizations and

corporations (Clemons, Reddi & Row, 1993). Henceforward, the concept Electronic Data

Interchange will be referred to as EDI.

1.6.2 VAN

VAN, an abbreviation of Value-Added-Network, is cloud based service that enables different

methods of connecting possibilities to the platform, where the translation in-between the different

formats can be performed. The VAN acts as an intermediary between different trading partners to

ease the ability to interact with different business partners globally. This provides the ability for

organizations to use one standardized business process for all trading partners that are connected

to the platform. This way of communicating electronic data is used by organizations, regardless of

size or transaction volumes, to minimize the need for internal IT competence and resources for

enablement of electronic data transfer (Bailey & Bakos, 1997). Henceforward Value Added

Network will be referred to as VAN.

1.6.3 ERP

ERP, an abbreviation of Enterprise Resource Planning, is a software used by organizations to

manage various types of data such as inventory, shipments, manufacturing, sales, marketing,

production capacity and costs. An ERP system combines different types of data into one viewable

9

business process (Klaus, Rosemann & Gable, 2000). ERP systems are commonly used among

businesses globally since it is seen as a vital tool for keeping track of various functions within

organizations business processes, as the ERP system stores all data centrally (Hendricks, Singhal &

Stratman, 2007). An ERP has the ability to combine data from several different departments and

systems within an organization, which gives the user an ability to monitor the business as a whole.

(Klaus, Rosemann & Gable, 2000). Henceforward, Enterprise Resource Planning will be referred

to as ERP.

1.6.4 B2B

B2B, an abbreviation of Business to Business, is referred to a trade transaction in between to

organizations e.g. when a buyer organization buys products from a supplier, then a B2B transaction

is accruing. Henceforward, Business to Business will be referred to as B2B (Hawkins, Pohlen &

Prybutok, 2013).

1.6.5 Languages/Formats

Sending/receiving electronic data in B2B transactions requires that an organization has the ability

to handle different formats (Kaliontzoglou et al., 2006). This is due to the fact that suppliers and

buyers are using different ERP systems that are based on different types of programming languages

such as JAVA, C++, JAKO, PHP (Kopfinger, H personal communication, 2015-04-01). The

diversity of minds behind the ERP systems as well as the different programming languages has

resulted in that the languages/formats from ERP system that can extract/import differs from ERP

to ERP. The format structure might also differ depending on which version of an ERP system the

company are using. When EDI was introduced, the communication format EDIFACT, an

abbreviation of Electronic Data Interchange for Administration, Commerce and Transport, was

created (Hoogeweegena, Streng & Wegenaar, 1998). In order for companies to use the EDIFACT

format, their ERP system needed to build support for extracting/importing the files into their

system, if not, the companies had to do the conversion of the formats by themselves outside their

ERP system. As the technology has developed over time, a new format, more commonly used for

importing/exporting data from/to have introduced. This format is known as XML, also known as

Extensible Markup Language (Kopfinger, H personal communication, 2015-04-01). EDIFACT

and XML are different formats structures that can be used to transmit data in-between business,

the difference is the format syntax (Bussler, 2001). Henceforward, the structure of the information

transmitted between businesses will be referred to as formats.

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2 Theoretical framework

The chapter of theoretical framework will include theoretical discussions and a presentation of previous literature in

a conceptual framework. It will cover the parts that are of interest for our research questions and analysis: EDI,

VAN-networks and electronic invoice handling. Thereafter the chapter will cover aspects in regards to consideration

of implementation, including drivers of implementation such as cost, performance and regulatory requirements,

concerning corporations based on previous literature and interviews.

2.1 Solutions for electronic invoicing

2.1.1 Electronic Data Interchange

In the past four decades, EDI, as a way of communicate electronically have become an increasing

part of the supply chain and procurement departments within large organizations (Narayanan,

Marucheck & Handfield, 2009). EDI as a point to point or computer to computer way of

communicating B2B transactions electronically is one of the most used tools for electronic data

exchange. EDI has become an increasingly crucial part within some organizations, as it is used as

a platform to communicate and exchange data with suppliers, distributors, manufacturers and other

trading partners (Ahmad & Shroeder, 2001).

Global corporations with trading partners around the world could, with the help of EDI, exchange

business documents in a faster and more secure manner. EDI enabled companies to have a unique

traceability by sending the documents electronically, which enabled safer business relations. With

the development of internet and computer usage the numbers of corporations using EDI increased

and the knowledge of EDI was spread so that organizations had the possibility to be more

beneficial in establishing these connections (Zhu et al., 2006).

Issues with EDI connections later occurred regarding the formats and protocols which

complicated the setup and administration for companies and organizations. EDI connections are

a point to point solution, where the two trading partners need to agree on certain formats and

protocols in order to communicate. (Ratnasingam, Gefen & Pavlou, 2005). Ratnasingam et al.,

(2005) further argues that once a new setup is occurring, the same procedure has to be made once

again, with the agreement and development of certain formats and adjustments in order to have a

functioning EDI connection.

EDI has the possibility to reduce manual handling as well as limit inventory levels, turnaround level

and increase productivity within organizations. Argued is that the benefits of EDI can be overseen

by the actual cost of implementing the system. The aspects one needs to consider are if the

company has appropriate hardware or software and knowledge within the organization. It is further

argued that the decision to implement EDI needs to be made mutually by the two trading partners,

11

since both trading partners need to agree on several parameters for it to work (Saunders & Clark,

1992).

Companies adopting EDI as their way of communicating electronically needs to take into account

that their existing system can be modified in order to support the EDI setup. The internal system

of each company should have an accessible interface that supports different program languages, in

order to make it easier for the user. Secondly, the trading partners need to agree on format standard

and how they should translate data between each other. Since, organizations must translate and

convert documents to different formats in order to use them properly in the organization (Massetti

& Zmud, 1996). The communication protocol also needs to take into account the possibility for

the users to maintain the daily work, such as tracing and providing the audit log and provide secure

access (Janssen & Cuyvers, 1991).

The technology of EDI requires a project based setup and is suitable for trading partners with high

transaction volumes. In order to have an efficient setup of EDI connections, the companies should

have their own IT department that has previous knowledge within the field. The setup of a new

EDI connection can, if new formats and communication protocols are complex, be time

consuming and costly. Frequently used communication protocols for EDI connections include

AS2, SFTP and FTP which is used to transport data securely. (Kopfinger, H personal

communication, 2015-04-01). Kopfinger further argues that the possibilities of EDI connections

are not limited to invoices, but the trading partners need to agree on the format structure on all

document types. The formats on the document types can vary and can result in a greater workload

(Kopfinger, H personal communication, 2015-04-01). Further on, Massetti and Zmud (1996) argue

that there is a large variety of documents types that can be sent through an EDI connection, and

is seen as complex and important aspect in the organization.

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Figure 2.1 – The process of EDI, authors own illustration

Explanation of figure 2.1: Company A creates an invoice in their ERP system, the invoice format

is then sent to the “EDI Translator” in order to convert the format into the agreed format between

the two business partners “Company A” and “Company B”. The invoice, the EDI data, is then

sent via the communication software to “Company B”. The communication setup is called EDI

and is a way of transmitting electronic documents, usually an AS2 or any other secure internet

protocols. Same process goes for “Company B”; once the data is received, an “EDI Translator” is

needed to convert the “EDI Data” to the recipients own format in order for “Company B” to read

the invoice in their system (Kopfinger, H personal communication, 2015-04-01).

2.1.2 Value Added Network

VANs are provided by third party partners that take on the responsibility of delivering electronic

documents between organizations. When corporations and organization invest in a solution to

communicate digitally via a VAN-operator, the technical knowledge and skills of transferring

electronic documents does not have to be developed in-house. Therefore, VAN-operators used to

be described as an alternative when an organization was not able to cope with the complexity of

sending electronic documents (Massetti & Zmud, 1996). The VANs acts as an intermediary,

between different trading partners to ease the ability to interact with one another. This provides

the ability for organizations to use one standardized business process for all trading partners that

are connected to the platform. VAN-operators generally promote interoperability agreements, in

order for companies to use one service provider instead of several, when exchanging electronic

documents. This enables companies to no longer have to be concerned about the different formats

Communication software Communication software

EDI Data

Internal format

EDI Data

Internal format

Point to Point Communication (EDI)

Company A Company B

EDI Translator

EDI Translator

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and communication protocols when sending electronic messages (Ratnasingam, Gefen & Pavlou,

2005), which is further argued to improve the benefits of using a VAN-network. Moreover,

Massetti and Zmud (1996) argue that VAN-operators were established in order to help

organizations cope with the challenges of sending electronic documents.

Ratnasingam et al (2005) argue that the use of VAN-networks are likely to improve the institutional

trust, which is described as the relationship between companies, viewed as a central part of an

organization when managing a business successfully. The authors further argue that the trust and

security for corporations and organizations are improved when using VAN-networks in

comparison of communicating through traditional paper usage.

VAN-operators are providing a scalable solution, with a vast amount of different ways to connect

to the network. The structures of VAN-operators are to offer companies a many to many solution,

which results in that trading partners, regardless of size and volume, have the possibility to send

and receive electronic invoices. The formats are managed by the VAN-operator and are instantly

available and beneficial for all trading partners in the network. A lot of the VAN-operators also

have interoperability agreements which enable companies to send and receive electronic invoices

from other VAN-networks using their chosen VAN-operator (Edlund, J, personal communication,

2015-03-16).

Figure 2.2 – The process of VAN, authors own illustration

Explanation of figure 2.2: Company A creates an invoice in their internal format. The invoice is

then distributed to the VAN-operator, using a communication way, such as a virtual printer, SFTP,

FTP or AS2. The invoice is then converted to Company A’s trading partners “Company B/C/D”

formats. Company A make one connection to the VAN-operator and has, thereafter, the possibility

Company A

Company B

Internal format

Internal format

VAN

Company C

Company D

Internal format

Internal format

14

to reach all trading partners connected to the network structure (Edlund, J, personal

communication, 2015-03-16).

Figure 2.3 – The process of VAN interoperability, authors own illustration

Explanation of figure 2.3: Company A creates an invoice in their internal format. The invoice is

then distributed to the VAN, using a communication way such as virtual printer, SFTP, FTP or

AS2. The invoice is then distributed from the VAN-operator to the trading partners, as “Company

B/D” is using another VAN-operator, an interoperability agreement between the VAN-operators

enabling them to exchange invoices. This enables Company A to use one channel regardless of

whether their trading partners are connected to other VAN-operators or not (Edlund, J, personal

communication, 2015-03-16).

The VAN-operator’s architecture is often built on the concept of SOA, also known as Service

Orientated Architecture, which implies that their platform is viable for others to use via the

internet. The VAN-operators’ architecture is usually not limited to any business message. The

structure consists of an open network approach, with public recipient and sender registers

accessible through web services (Brun & Lanng, 2006). The communication setup take

approximately five days and do not require any standard format because it is based on a new

technology, compared to the traditional EDI setups. The VAN-operator works as a “translator

hub” for the trading partners and the companies using this way of communicating only have one

connection to maintain (Pramatari, 2007).

2.1.3 Electronic Invoicing

There are numerous ways of distributing/receiving electronic invoices also how corporation and

organizations choose to exchange these documents. It has been widely debated among organization

Company A

Company B

Internal format

VAN

Company C

Company D

Internal format

Internal format

VAN 2

Internal format

15

and institutes what should be regarded as a true electronic invoice (Edlund, J, personal

communication, 2015-03-16). Distributing an invoice via e-mail, with an attached PDF-file

representing the invoice is not regarded as a true electronic invoice. Nevertheless, to do so is

common among organizations today. However this is not preferable since it requires a manual

handling of the invoice due to it cannot be automatically processed for importation to the ERP

system (Veselá & Radimersky, 2014). Both the distributer and the receiver of the invoices will need

to use manual interventions to fulfil the transactions. The distributing party will have to export the

content from the ERP system and attach it to an e-mail prior to distribution. The receiving party

needs to either manually enter the content of the invoice into the ERP system, or alternatively use

the process of printing the PDF-file and then scan the content in order to receive a file that can be

imported into the organizations ERP system (Edlund, J, personal communication, 2015-03-16).

Today, many corporations and organizations handle all, or parts of, their inbounding or out

bounding invoices manually in their supply chain and procurement processes. This is considered

to be a loss of efficiency and moreover, a more costly process compared to having a system that

allow invoices to be digital throughout the entire process, from the step of distributing to receiving

the invoice (Zhu et al., 2006). As long as there needs to be manual interventions, such in the event

of a PDF distributed invoice via email, it is not regarded as a true electronic invoice (Edlund, J,

personal communication, 2015-03-16).

A true electronic invoice needs to be electronic from wall to wall. The exported file from the sender

party needs to be imported by the recipient, this can be achieved through the usage of EDI or

VAN solutions. By using EDI or VANs, no manual intervention needs to be added in-between

and it is therefore regarded as the full electronic way to distribution information and therefore also

electronic invoices. However, although there is an increasing amount of corporations and

organizations that handle their invoices electronically through EDI and VAN connections, it

remains a problem that all cannot be handled electronically since all organizations are connected

to though EDI or VAN-operations, therefore invoices need to be handled manually as well

(Edlund, J, personal communication, 2015-03-16).

The most common issue is that companies are not sending fully automated electronic invoices.

Instead, as mentioned earlier, they send a PDF as an attachment in an e-mail (Edlund, J, personal

communication, 2015-03-16). Furthermore, this is an inefficient and unsustainable way of handling

invoices since there are solutions that easily allow invoices to be efficient to organizations. It is

argued that using EDI to distribute electronic invoices between corporations and organizations is

one way of increasing the economic value and a vital decision to prepare for the future of invoicing

16

within and in between organizations (Narayanan, Marucheck & Handfield, 2009). When sending

an invoice electronically via EDI or a VAN-network, the invoice can contain a digital signature

which increases the credibility and integrity of the invoice. It can also be richer in content compared

to paper invoices that the software can read and log for the future (Kaliontzoglou et al., 2006).

The system creates the invoice digitally, sends it in required format via EDI or a VAN-network

and the invoice is thereafter received by the recipients system and handled automatically and fully

digitally. This is mainly done and used by large corporations today with more than 250 employees

(Veselá & Radimersky, 2014), it is argued that these companies have the ability to benefit the most

by having an automated electronic invoice handling, since companies with high transaction volume

can save significant amount of money and resources by handling their invoices electronically.

Smaller organization, with less transaction volumes, generally feel that they lack administrative

resources and knowledge (Karjalainen & Kemppainen, 2008).

Widely argued is the fact that an electronic invoice can be distributed in an efficient and secure

way, which can minimize manual handling and provide traceability. It is further stated that

electronic invoice handling can be more beneficial for large corporations, as previously stated, since

it can improve control of the economic situation it is easy to track with the receipt handling,

providing a unique traceability, something that is more difficult when sending paper invoices

(Sammon & Hanley, 2007).

2.2 Challenges of implementation

2.2.1 Complexity

The technical complexity can be a barrier for companies when they consider implementing a

solution for electronic document handling. EDI standards and setups are often complex and time

consuming for companies which have no prior knowledge about EDI setups in their organization

and it is argued that maintenance of EDI connections requires certain technical skills (Zhu et al.,

2006). Edlund argues that that the technical complexity that organizations face with EDI is not

present when connecting to a VAN-network. Further, VAN-operators have scalable solutions

which can be customized according to the technical needs of the organizations. VAN-networks

share the same benefits as EDI in respect to electronic document handling but offer an easier

solution for companies (Edlund, J, personal communication, 2015-03-16).

2.2.2 Knowledge

Knowledge of electronic invoicing is one important aspect to consider when implementing a

solution that enables electronic invoicing (Hong & Kim, 2002). The knowledge need to cover

17

technical and basic aspects on how to cooperate with systems which enable electronic invoice

handling in an organization in order to benefit from. The knowledge inside organizations needs to

cover aspects such as organizational and IT structure (Hazen & Byrd, 2012). Having an IT-

infrastructure that is well functioning and connected with partners is an important aspect for

organizations to be beneficial from e-procurements. This includes having a system that handles

electronic invoices with the knowledge in-house or in the case of a VAN-operator where the

knowledge can be outsourced (Ratnasingam et al., 2005). Ratnasingam, et al., (2005) further argue

that institutional trust is an essential aspect of being successful and without knowledge within the

organization, the institutional trust is affected negatively. This aspect is necessary in order to

maintain good relationships within the organization and also with stakeholders such as partners,

customers and clients. Hazen & Byrd (2012), stresses that the understanding of the issue is crucial

to be successful with the adoption of e-procurements in the long run.

2.2.3 Integration

The integration can be achieved through regular EDI or by connecting to a VAN-network, which

enables companies to send and receive electronic invoices. It is crucial for corporations when

implementing an electronic invoicing system, to do it successfully and lean. Firms that are stuck in

an old system and refuse to update due to any reason, runs the risk of losing their possible

competitive advantage towards others (Zhu et al., 2006). The integration part is more described in

the section of 2.1.1 EDI and 2.1.2 VAN.

2.3 Outcomes of implementation

The usage of electronic invoicing is becoming a more common occurrence in all types of

businesses, and there are several strong forces that drive corporations and organizations to

implement a system that can enable electronic invoicing. Current literature lists several crucial

forces to why corporations implement a system, but the literature is inconclusive regarding why

some corporations and organizations benefit more than others in regard to switching to electronic

invoice handling (Ahmad & Schroeder, 2001).

2.3.1 Cost

The cost aspect is an important part for organizations when considering switching to electronic

document handling and it is argued that organizations can reduce the cost per invoice with as much

as 60-80%, compared to if organizations would send/receive paper invoices (Veselá &

Radimersky, 2014). It is further argued that the ROI, also known as Return of Investment, period

for switching to electronic invoice handling is 0,5-1,5 years (Billentis, 2009).

18

Implementing cost is a significant barrier to cross for companies when considering implementing

a system for electronic invoice handling. Further argued is that companies need to consider the

implementation costs in relation to the current cost with higher manual handling and material cost.

In the long run, the investment in a system, which enables electronic invoice handling is likely to

pay off, as there are significant savings to be made: time as in labor cost as well as material cost

such as the cost of paper, ink, envelops and stamps (Zhu et al., 2006).

Electronic invoice handling can also generate cost savings with respect to improved business

processes: minimization in error and labor time spent on invoice handling. This generates a more

efficient use of human resources; time previously spent on invoice handling can now be used for

more value-generating activities (Veselá & Radimersky, 2014).

2.3.2 Performance

The aspects of performance related to switching to electronic document handling are widely

debated in existing literature. One aspect is that electronic invoice handling improves performance

in terms of faster processing, less error management and faster approval cycles (Veselá &

Radimersky, 2014). Electronic invoice handling also provides a financial security for organizations,

because of the traceability an electronic invoice provide compared to the postal delays and

disappearance of paper invoices. (Haq, 2007, Berez & Sheth, 2007).

Electronic invoices also offers e-procurement the opportunity to decentralize some parts of the

operational management processes within an organization. This provides the opportunity to focus

on the central parts of the strategic and management procedures. As a result it provides a better

control of the administrative routines, electronic invoices provides better traceability and storage

in a digital system that does not demand daily and manual control by organizations (Puschmann &

Alt, 2005). Implications of electronic market places suggest that organizations change their strategy,

leading to that organizations are able to increase the efficiency of the business (Yannis, 1991). The

complexity of documents exchange in-house is high and can be seen as risk factor. Organizations

that establish a system need to plan the management and strategy well in order for the organization

to cope successfully (Truman, 2000).

2.3.3 Sustainable environment

Traditional paper invoices require material and transportation in order to be delivered to the

recipient, this handling can be argued to be unsustainable in terms of the environment. The benefits

for the environment are directly connected to the decrease in paper and printing from the previous

manual invoicing handling (Moberg, Borggren, Finnveden, Tyskeng, 2010). Every invoice causes

19

approximately 0.029 kg Co2 pollution (SEB, 2015). The stated number of pollution is just for the

creation of the paper, the printing and an envelope and does not contain the pollution statistic for

the transportation which contributes to the largest part of pollution in terms of manual invoice

handling. However, the electronic invoice has no Co2 pollution and only requires electricity which

is more sustainable in the long run for the global environment (Kloch, Petersen & Madsen, 2011).

2.4 Regulatory requirements

In a global perspective, there is much to be gained when businesses are switching to electronic

invoice system, since it provides a more sustainable society and is environmental friendly. As a

result, governments have introduced legislations and requirements for organizations and

corporations on how to send electronic invoices (Riksdagen, 2015). The directive for PEPPOL

from the European Commission is to mandate electronic invoicing and forbid paper invoices by

law in 2018 (Peppol, 2015). In this thesis, we have focused on the Scandinavian market and their

status and standardization for electronic invoicing.

In Scandinavia, invoice handling has during the latest years been regulated in the sense that all

invoices that are received by the government need to be electronic. Sweden proposed the standard

in 2003 by a law and legislated it in 2012 and have been under progress since, this is now the

standard in Sweden (Riksdagen, 2015). However, the Scandinavian countries all have their own

standardization system on electronic invoices but have all agreed to follow standards as for the

European Commission (Peppol, 2015).

PEPPOL is an initiative by the European Commission to reach standards for e-procurements. This

origins from the European Union’s directive in the early 2000’s which desired a more homogenous

market for invoices throughout the member states (Kaliontzoglou et al., 2006). It is designed to be

a standard to transmit business information where the system is connected to all local systems and

function no matter the local legislation and standardization in each country within European Union

(Kloch et al., 2011). The members of PEPPOL are growing annually, even with countries outside

the boarders of the European commission (Peppol, 2015).

The local standards in Scandinavia vary; in Denmark the standard is called Nemhandel, in Norway

it is called PEPPOL and in Sweden the standardization is called STFI. Nemhandel works in similar

way as PEPPOL and is designed to connect business partners through a system and is demanded

by law in both countries for VAN-operators to be connected and working with when conducting

business with the public sector in Denmark (Nemhandel, 2015). The experiences and outcomes of

20

Nemhandel have laid ground to much of the content in PEPPOL protocols, since Denmark was

one of the pioneers within legislated e-invoicing (Kloch et al., 2011).

Norway got assigned the task from the European Commission to design and create PEPPOL and

has the PEPPOL agreement as a standard with Difi, an agency for eGovernment in Norway. The

e-procurement infrastructure has PEPPOL as a standard and Norway has a high degree of

compatibility regarding e-invoicing, with national and international business partners. The

government have started introduced demands for their partners that they need to send invoices

electronically in a specific format. It has been a national implementation with more than 30 000

companies that are using the same standard and connected to PEPPOL (Peppol, 2015).

In Sweden, the standard is called SFTI, an abbreviation to Single Face To Industry, and is closely

connected to PEPPOL. SFTI is a government owned agency for the public sector that handles the

standardization and verification of electronic invoicing (STFI, 2015). The format “Svefaktura” was

established in the early 2000 and SFTI demanded that public institutions were to be able to receive

electronic invoices by the year 2005. It was designed to work with standardized systems used in the

Scandinavian countries (STFI, 2015). SFTI recommends Swedish service providers to use

PEPPOL as a standard for electronic invoices and other electronic documents. The goals for SFTI

is to set PEPPOL as a standard to facilitate the documents of e-procurements in one system,

increase the involvement of e-invoicing within both public and private sectors and to help

organizations and corporations to overcome barriers of electronic invoicing which, according to

the European commission, is an issue today (Peppol, 2015).

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3 Methodology

The chapter includes descriptions of how the research have been conducted. The chapter starts with the research

approach and design, concerning how the thesis has been constructed throughout the process. Thereafter, the data

collection process is described. The section covers the theoretical frame and literature review, the case study approach

and design including information and descriptions of the personal interviews with professionals within the subject of

electronic invoicing. The chapter ends with the quality section, delimitations of the research and descriptions of how

the data conducted has been analyzed.

3.1 Research approach

A method is the design and approach used as a tool to attain the research results and goals. The

method is chosen in respect to the problem addressed and challenges of the academic work,

research questions or desired result. The content within the research is crucial to be able to create

a solid ground in order to analyze it and choose the most suitable and preferable research approach

(Hsieh & Shannon, 2005). To fulfill the research, a philosophy approach needs to be chosen. The

philosophy is the underlying assumption of the general view from the researcher’s point of view,

which furthermore inspire and affect the research and the result (Saunders et al., 2009).

There are three approaches when conducting research: inductive, deductive and abductive

(Saunders et al., 2012). The deductive approach is commonly when doing research on existing

theory and on different hypothesis testing, which is often used in scientific researches. The

inductive approach is more flexible and suitable for smaller samples where one can make theory

out of the result from the analysis based on the research question (Saunders et al., 2007). The

abductive approach starts with a theory and from that, conclusions that follows the theory are

made from an observation. Alternatively, an observation is achieved and from that, develops a

theory. The research form in this thesis is an inductive approach; we argue that this is most suitable

since no hypothesis testing will be made. This method is beneficial when making conclusions from

statements in a qualitative study, (Saunders et al., 2012) and therefore the preferable alternative for

this study.

Within social research there are two main large philosophies, interpretivism and positivism (Ritchie

& Lewis, 2003). Interpretivism is the more recent of the two major philosophies (Saunders et al.,

2009). It deals with differences among people in the social society and integrates the human interest

and understanding of the society. Positivism regards facts and information from individuals in

order to pursue a quantitative research with statistical analysis that answers research questions and

is considered to be a more complex procedure in many research situations compared to

interpretivism (Saunders et al., 2007).

22

We argue that the preferred philosophy for this thesis is interpretivism. Hence, the interpretivist

research philosophy has been chosen for this study. Because, in a qualitative research approach, it

is crucial to discover, understand and analyze patterns of the result (Hsieh & Shannon, 2005) and

concerns the soft data, which is gathered from the case study. The research questions of our study

are not regulated by different hypothesis testing; instead they are focused and designed to discover

patterns of challenges and possibilities in order to come to a conclusion of what aspects companies

should take into account when implementing a system that enables electronic invoice handling.

The interpretivism approach suggests understanding of details compared to positivism that is

strongly focused on hypothesis testing and forecasting (Ritchie & Lewis, 2003), which further

argues for an interpretivist approach to be applied to this study.

Therefore, we argue that the philosophy of interpretivism is the best choice for us since we have

based our theory and come to conclusions from the case study result and analysis. As we have

applied the interpretivism as a philosophy on this qualitative study, theory has constantly been

developed throughout the research process, which we argue is important for us in order to

contribute from this study and give directions for future research.

In this process, it is crucial to formulate the research questions that are to be answered. This is

done by selecting a sample of the research to be analyzed, outline the process, implement and fulfill

the approach and analyze the data and literature in respect to their trustworthiness (Hsieh &

Shannon, 2005).

3.2 Research design

The method chosen is to combine an inductive analysis of existing literature and a qualitative

research method achieved by case studies in the forms of interviews. The concept behind an

inductive approach is that theory is a result of different observations (Saunders et al., 2007), which

is suitable for a qualitative research design. The background to this thesis is to map the possible

challenges, benefits and outcomes for companies implementing a solution for electronic invoice

handling. We therefore see that the inductive research method as the best and most rational choice

for this thesis combined with qualitative research. According to Saunders et al (2007), as a result of

our case studies we obtain primary data, which will be analyzed to form conclusions.

With the qualitative research design and methods, we intend to achieve a greater and deeper

understanding for the issue addressed, which gives the opportunity to expand and improve the

topic. In general, qualitative research design consists of words and images, compared to quantitative

research design that consists of numbers and hypothesis testing (Denscombe, 2007). One crucial

23

aspect of qualitative research and main purpose is to use examples that can contribute to

conclusions for the research (Hsieh & Shannon, 2005). It is important to compare and analyze the

trustworthiness of the qualitative data that is gathered and to compare results with respect to the

individual. Since the data is possibly affected by the personal beliefs and ideas of the individuals a

part of the case study, we will do our outmost to neglect and set aside our personal beliefs and

ideas to ensure the quality and accuracy of the paper. However, as we see it, the inductive approach

and a qualitative case study is the superior method for us to use throughout the thesis. The

qualitative method regards emotions and impressions of individuals of how individuals interpret

the subject (Denscompe, 2007). Therefore it was preferable for us to use this approach when we

gathered the data as we have had interviews at different times and at different places.

Four corporations of different size and in different stages of the implementation process have been

the interviewed, in order to answer our interview questions based on different experience, this is

the foundation of qualitative data collection. The qualitative method with an inductive approach

has therefore been a good tool when analyzing and presenting the data in this study. Analyzing the

data from the case study with the qualitative research method with the inductive approach has been

suitable when building theory and conclusions as according to Saunders et al. (2012), Saunders et

al., (2012) further argues that the authors needs to understand the values and emotions of the

participants of the study. The empirical data is the center of the research process, and furthermore,

it contributes to the development of a theory that is trustworthy and testable. Moreover, the

inductive approach on the study is useful when studying the “how”, which has been beneficial for

us to investigate when answering our research questions in this study (Saunders et al., 2009).

3.3 Literature and Theoretical frame

In order to get a good overview of the subject we will use different databases to obtain information,

such as: Scopus, Wiley, Jönköping University Library Database and Google Scholar. These

databases will be used in order to find literature with many citations, peer reviewed and from

trustworthy publishers, which can be a suggestion that the information found is accurate.

Credibility and trustworthiness can be argued by reliability of the author(s), peer debriefing,

engagement, persistent observations and analysis (Hsieh & Shannon, 2007).

In order to find suitable literature and research data, the following keywords will be used when

searching for information: “EDI”, “VAN”, “Electronic invoice handling, “Electronic invoice, “ERP,

“Formats”, “Electronic data transmission” and “Communication protocol”

24

In order to get a good overview that cover all aspects that want to investigate, we will cover the

following areas in our interviews; background, implementation process and the outcome when

implementing an electronic invoicing system. The questions that will be asked concerned our

research questions, identifying the challenges, options and possible benefits or negative aspects

regarding the implementation and the outcome of electronic invoice handling within the

corporations. We will divide companies in two segments; the first segment consist of companies

that have implemented an electronic invoice handling prior to our thesis. The second segment

consist of companies that are in the process of switching to electronic invoice handling.

3.4 Data Collection

3.4.1 Case study approach

When conducting a case study, the first approach is to choose the topic of research and form

questions for the sample to answer, by the involved companies or individuals that have been chosen

by different characteristics or randomly. The data collection is done by doing interviews and/or

observations and/or surveys. A case study approach in a study can highlight smaller events

(Denscombe, 2012), which is preferable in this study compared to a wider scope. We will choose

a selection process that involves a clear set of companies that are in the process or have a solution

that enable electronic invoice handling. We received the data from the case study by interviewing

the companies that we have chosen. The interviews will be held by at least two persons: it is argued

that this approach enables the interview to be viewed from different perspectives and provides

richness to the data (Eisenhardt, 1989). The author further states that the interview group can

consist of one person handling the interview questions and the other person will be observing and

taking notes during the interview (Eisenhardt, 1989). The outcome of the interviews will be

summarized when presented in this thesis, not be presented as an unedited version, as the

summarized method is argued to be more efficient (Dahlqvist, 2003).

When considering a case study, the focus is an important aspect, what focus one has in respect to

the questions asked (Baxter & Jack, 2008). In our case we will focus on the processes and people

involved in the electronic invoice handling at the companies.

3.4.2 Case study design

The design of the case study will be a multiple, exploratory case study. The results from the case

studies differ as the companies are in different phases regarding electronic invoicing. However, to

do a single case study is likely to question the trustworthiness of the study (Yin, 2009). Therefore,

25

this study benefits more from a multiple case study including four different companies, as this

increases quality.

The interviews for the case study that will be conducted for our thesis will be limited to companies

that are in the process or already have implemented a solution that enables electronic invoice

handling. When these requirements are met, the following interview guide (appendix 1.1) will be

used. It is important to treat the companies as one connected group and not to sample completely

randomly (Kumar, 2011). We argue that this case study will fulfill these requirements.

In the beginning of the interview, the following information will be noted:

Name of the person being interviewed

Organization/Company name

Position within the organization

Place

Date

The interview guide, which will be used during the interviews, will be focused on answering the

research questions stated in the section 1.4, “Research questions”. The outline of the interview

guide can be found in Appendix 1. All companies and individual from the company that have been

interviewed, has been informed about anonymity and confidentiality. They have been informed in

advance about the different aspects of the case study in order to give trustworthy and correct

information (Saunders et al., 2012). One company and an individual chose to be anonymous, hence

that company is called “Company X” and the individual from Company X that has been

interviewed has the fictitious name “Jan Svensson”. The interviews have been conducted in the

native language of the person interviewed and have been translated with caution in order to not

miss any important part of information from the case studies. After the interview, the answers,

given by the respondent, were compiled and then sent via email to the person being interviewed

for approval. We offered them the possibility to correct any misconceptions.

3.4.3 Selection of companies

Since we wanted to cover companies in different industries that had different pre-conditions the

following process was applied when choosing companies that were to be interviewed. A list of 100

companies within the Scandinavian market, consisting of companies we previously worked with or

heard about, was created. The companies were then divided into ten different categories depending

on which industry vertical they operated in. The ten categories consisted of: Construction,

26

Technology, Retail, Media, Automotive, Energy, Food and Beverage, Healthcare, Banking,

Transportation and Engineering. We then contacted two companies within each industry we

identified and asked for the possibility to make an interview. As a result, four companies agreed on

being interviewed for this thesis. The companies that were interviewed were all operating in

different industries which enabled us to provide with a more general, and not industry specific,

insight in respect to electronic invoice handling.

3.4.4 Interviews with individuals

The interviews with Heinz Kopfinger and Jonas Edlund that have been conducted are used to get

an enhanced perspective with respect to our research area. The persons interviewed were chosen

to provide a second alternative to literature. The interviewed persons have several years of

experience within information technology and electronic document handling. They have different

experience as regards the solutions enabling electronic invoice handling; Kopfinger as a previous

specialist in EDI connections and Edlund working at a VAN company. Each interview was based

on a structure concerning only their background of electronic invoicing, leaving more personal

questions aside. From this, we reached a higher level of understanding of the technical aspects of

electronic invoicing today and how it affects companies working with it. It gave us the opportunity

to get a wider scope and a deeper knowledge which we agree, enhances the quality of this study. It

is crucial to minimize possible harm and misunderstandings when conducting primary data

(Saunders et al., 2012). Therefore, the interviewees were informed about the topic in advance in

order to be able to prepare accurate answers. They were informed about the usage of the data and

that their names had been used, which none of the interviewees considered an issue. In order to

secure the individuals in regard to the information they gave us the interviewees were given

anonymity by the ethical codes of informed consent. (Saunders et al., 2012).The interviews of

individuals were conducted in Swedish and the information has, with caution, been translated into

English.

3.4.4.1 Jonas Edlund

Jonas Edlund has been interviewed, mainly to provide us with a better understanding of the VAN-

operators currently present on the market. Jonas Edlund currently holds the position of Chief

Marketing Officer at Pagero AB. Pagero is a service provider that has been operating within the

field of electronic invoice handling since 2006. Jonas Edlund previous engagement includes CEO

of two IT companies; Vendimo AB and Diamo AB during 1990-2004.

Jonas also holds a master degree from Chalmers University of Technology, Gothenburg, Sweden

within the field of Computer Science & Engineering.

27

3.4.4.2 Heinz Kopfinger

Heinz Kopfinger has been interviewed, in order for us to understand the usage of ERP and EDI

connections. Heinz is the co-founder and previous Chief Technology Officer at IFS. IFS was

founded in 1983 and is one of the largest ERP systems in the world. Heinz has a broad and

extensive knowledge within the field of ERP as well as EDI connections.

Heinz also holds a master degree from The Institute of Technology at Linköping University,

Linköping, Sweden within the field of Economic Engineering, with a major in Data Information.

3.5 Quality

For this research to be trustworthy, the quality of the analyzed existing literature and the case study

must be high. Reducing the number of possibilities to be wrong or uncertain is crucial and it is

therefore of great interest that all research is credible and valid and in that sense, of high quality

(Saunders et al., 2007). It is important that the questions of the case study are correct and leave no

room for misunderstandings or interpretations. Furthermore, to be certain of the quality, all

corporations that are being involved in the case study, a mail will be sent of similar question,

meaning that they are aware of the topic and have thought about it. All the case studies and

interviews will also be recorded to enhance the trustworthiness of our analysis of the answers given.

3.5.1 Validity

The validity of data that is obtained by the case study interview is affected by the personal opinion

of the respondent. One must take into account that the respondent can choose to respond to the

questions in a specific way. There is also the possibility of there being internal conflicts regarding

sensitive information, which can determine the responses (Saunders et al., 2007). We therefore

borne this in mind when conducting the interviews in order to keep a high quality and validity for

the data collected with the interviews.

3.5.2 Reliability

According to Saunders et al. (2007) there are complications with reliability that one should be aware

of when handling research. The context in which a study is done have great impact on the result

and awareness of that is needed in order to be able to analyze the results/outcomes of the research

made in a professional way (Hsieh & Shannon, 2005). Moreover, there are a few steps and

checkpoints one can use to measure the reliability of the research and the analysis;

Another research of the same subject should be able to reach the same results

The results should be realistic

28

The room for errors should be minimized

(Hsieh & Shannon, 2005)

3.5.3 Transferability

When investigating the degree of transferability it is necessary to decide whether or not the study

could be made somewhere else and in another case (Denscombe, 2008). We see that legislation of

electronic invoicing is being developed all throughout Europe but with different paragraphs and

descriptions. Therefore, we argue that this study could be achieved in another country in Europe

with a low psychic distance and still reach similar results. We argue that the findings are likely have

taken effect all through Europe, however as different countries has reached different stages of

development, we believe that it is likely to take place during a time interval of several years. Further

on, we argue that we have given the interested parties more insights on the status of electronic

invoicing today, which is positive regarding the transferability of this study (Denscombe, 2008).

3.5.4 Objectivity

In order to get trustworthy data, in the study, the three authors of this thesis have tried to be as

objective as possible. We have tried to not take into account our own values and beliefs when

achieving the case studies. The objectivity is crucial for the study in order to reach conclusions

(Denscombe, 2008), Which is something we have borne in mind from the beginning of the study

in order to not be affected by information that may make us believe that one kind of solution is

better than another when handling electronic invoices.

3.6 Delimitations

The thesis will cover both the theoretical parts within the theoretical framework as well as feelings

and thoughts from the case studies regarding the thesis questions. Because of this, we will focus

on challenges and outcomes that can be specific to different organizations and may therefore vary

in the specific nature, but also what alternatives there is on the market and how organizations can

be most beneficial when implementing an electronic invoicing system (Narayanan, Marucheck &

Handfield, 2009). We are aware that the solutions that enable electronic invoices can also be used

for other documents, this fact will be taken into account when writing the thesis.

The case studies will be made with organizations that are in the process of implementing or have

implemented a system that enables electronic invoice handling. We have delimitated the study to

the Scandinavian market to have a smaller scope in order to, as we argue, perform a better analysis

with stronger conclusions.

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3.7 Analysis of the data

This study is made with an inductive analysis of the data that will be conducted through a qualitative

research via case studies. This is done in order to describe the nature and theory of the topic and

study, and use that as a platform as we analyze the results from the qualitative study in an inductive

method in order to build our own conclusions and theory. The research questions are developed

to clarify and describe the purpose of the thesis and the empirical findings are linked to the three

research questions.

The first step when analyzing our data, was to map the findings which is time consuming but

important when dealing with qualitative data (Saunders et al., 2007). After conducting the case

studies, we summarized the data, we then took time to grasp and understand the information. In

this way, we could more easily see the main points and all authors could get a better and wider

scope of the topic. This also benefited our study in terms of comparing the data which was crucial

when analyzing the data and come to good conclusion.

The empirical findings have been in three main categories for us to analyze. The challenges, the

solutions and the outcomes have been the main points as the research questions are concerning

these three topics within electronic invoicing. The challenges have concerned mainly processes, IT,

managerial concerns and other possible factors contributing to the challenges present in the

implementation process. The solutions have mainly concerned what types of solutions that was

available as an option for the specific organization, and why they in the end chose to implement

that specific solution. The outcomes have focus on the economic perspective, time aspects and

efficiency (appendix 1).

Since the case studies were conducted during a short period of time, we have been able to analyze

the data from all companies at the same time. This has made it beneficial for the study in terms

that all authors have had the time and possibility to analyze the result both by their own and also

in group. We argue that this was beneficial for the outcome of our study as our knowledge of the

complex topic was constantly enhancing during the time interval.

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4 Empirical findings

The chapter of empirical findings will cover and present the relevant parts of the qualitative case study that has been

conducted with four corporations. The interviews will follow the interview guide (appendix 1), these questions have

been asked the individuals from the different corporations in order to cover the research questions that have been

constructed for this thesis.

4.1 Interviews

The following information is a summary of the full interview that was conducted and printed word

by word before it was summarized. According to Saunders et al., (2007) this is beneficial for a

concise and trustworthy result of the empirical findings.

4.1.1 Explica entreprenad AB

These findings are based on a personal interview with Niclas Eriksson at Explica Entreprenad AB,

12 April 2015. Explica Entreprenad AB is a roofing and sheet punching company based in

Gothenburg, Sweden, established in 1992. The person who was interviewed is one of the co-

founders of the company. Explica have been working with electronic invoice handling via a VAN-

operator for two years.

4.1.1.1 Challenges

The demand for electronic invoices came from their clients. Explica’s previous invoice handling

involved paper invoices by mail and scanned PDF-invoices via email to their customers. The clients

demanded that the invoices should be sent in the invoice format Svefaktura, which is an XML

format. Explica did not have the capability through their ERP system to generate a Svefaktura and

had limited knowledge in the area. Therefore, solving this issue became a challenge.

4.1.1.2 Solutions

Explica was contacted by a VAN-operator that informed them more about their clients demand,

as well as informed them about different solutions to fulfil this demand. Their previous knowledge

within the field was limited, and they got the information from the VAN-operator who was

contracted to onboard the suppliers of their client. Explica looked into the possibility of producing

a Svefaktura themselves but realized that the cost would exceed the profit of doing so. The chosen

solution became a virtual printer that enabled them to send their PDF-invoices to the VAN-

operator which then converted the format to Svefaktura.

The solutions that Explica was able to identify, that enabled electronic invoice handling, were

traditional EDI and VAN-operators. There was a wide range of ways to connect to the network

using a VAN-operator, such as Web portals, Virtual printers and communication protocols such

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as FTP, SFTP and HTTPS. He stresses that there is a big difference between connecting via EDI

with a point to point connection and a VAN-operator which only requires one connection to reach

the entire network. Furthermore, Explica had too limited knowledge in-house to be confident

enough to connect and solve the challenge themselves, and the best solution for them at that point,

according to Eriksson, was a VAN-operator.

4.1.1.3 Outcomes

Further Eriksson explains that the outcome when switching to electronic invoice handling has been

positive compared to their old ways of handling their invoices. The solution, provided by the VAN-

operator, has enabled them to spend less time managing the invoices as well as they have seen a

decreased material cost per invoice sent. Previous handling included printing, putting the invoices

in an envelope and then posting it. The only process now involved is to choose the virtual printer

instead of their standard office printer and the invoice will be electronically sent to the recipient.

The time previous spent on handling invoices can now be used for more value-generating activities.

Another important aspect today with electronic invoice handling, is that it helps them achieve their

environmental goals.

Erikson also points out a different dimension of electronic invoice handling; the automatic

validation that their clients use. The validation provides them with information directly if there is

something wrong with the invoice, such as reference code. This has, according to Eriksson, helped

Explica improve their cash liquidity, since they have the possibility to directly correct the reference

code and get paid faster.

4.1.2 Company X

These findings are based on a phone interview with Jan Svensson at Company X, 2 April 2015.

The person and company that was interviewed chose not to share their name, the person that was

interviewed has been working for the company for six years as the IT manager and Jan Svensson

is therefore a fictitious name. The company is active within the retail sector and is located in Sweden

with customers all over Scandinavia.

The company is currently in the processes of updating their electronic invoice handling system.

Previously, the company was working with point to point setups, also known as EDI connections.

They are now implementing a VAN-operator which they argue will provide them with a wider

reach to their trading partner.

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4.1.2.1 Challenges

The challenges for the company were to find the suitable partner. The process of choosing the

partner covered a tender which was sent out to six different service providers. For this process

they hired a consultant to help them with the tender specification as well as with identifying

different service providers. Svensson argues that if he would go through the process again he would

choose the consultant more carefully, since his knowledge within the field was mainly in EDI

connection and not the VAN architecture.

4.1.2.2 Solutions

The solution that Svensson had knowledge about was EDI, the communication way that they are

currently working with. However, the EDI solution only enabled a small amount of their trading

partners to send and receive electronic invoices to their company. The VAN-operator’s solution,

that they are currently in the process of implementing, offered them a wider reach since all their

trading partners have the possibility to implement, because they offer scalable solutions. The

company will connect to the VAN-operator via SFTP, since it will provide them with an automated

handling of their invoices. They did not want to implement an improved solution in-house because

they thought it would be too costly and in-efficient since they have limited knowledge and skills

with electronic invoicing. As their partners require different types of formats, the old EDI

connection was not good enough and they did not have the skills in-house to improve it, in order

to be able to take benefit from it once again.

4.1.2.3 Outcomes

Svensson further explains that the estimated outcome with the new VAN-operator will generate a

reduction in cost by 15 SEK per invoice. Today they estimate that each invoice cost 17, 50 SEK

and the transaction cost by sending through the VAN is 2, 50 SEK per invoice. For the incoming

invoice they will save even more, estimated to 30 SEK per incoming invoice. The reason for this

is that they will use automated validation as well as the invoices will come directly into their ERP

system which will cut costs for managing all invoices in-house. It will be more efficient and the

company will be able reduce previous costs.

Lastly Svensson explains that the EDI setups that are currently in place will still be used until both

trading partners are connected to a VAN-operator. In the EDI connection, more than just invoices

are exchanged. Document types such as orders, order confirmations, dispatch advices, advance

shipping notes and other financial documents are exchanged. These wide possibilities to exchange

documents are not currently present in the VAN structure, still for the invoice part, Svensson sees

it as a huge advantage to implement for the future of the organization.

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4.1.3 Ides AB

These findings are based on a phone interview with Sverker Lundberg at Ides AB, 29 Mars 2015.

Ides AB is a software company, established in 2003, that provides systems for technical and

administrative activities for industries, Ides AB is based in Linköping, Sweden. Lundberg is a

general advisor at the company.

Ides are currently in the process of switching to electronic invoice handling. They had previous

knowledge about EDI and were shocked when a client wanted to receive electronic invoices from

them, since Lundberg were aware of the expensive setup cost for EDI. In order to sort it out they

arranged a meeting with the client to ask how the client would compensate them for setting up an

EDI connection. During the meeting they were informed about the option to use a VAN-operator

and chose to implement the VAN-operators solution.

4.1.3.1 Challenges

The challenges that Ides faced were that of having limited knowledge in the field as well as in the

format that their ERP system was able to produce invoices. It was an XML format that the

contacted VAN-operator did not have support for. Therefore they are currently in the process of

building support so that they can start to send and receive electronic invoices. That is regarded as

a challenge itself, as partners who wish to conduct business are not currently able to send or receive

electronic invoices by Ides.

4.1.3.2 Solutions

The different solutions that would enable Ides to send electronically were a connection to a VAN-

operator using a Web portal, AS2, SFTP or FTP connection. Lundberg were not able to tell which

connection that was more appropriate for companies in general, since it depends on their internal

processes as well as their IT structure in-house the organization. Lundberg argued that they had

knowledge within the organization but as this challenge increased, the solution was either to invest

a great amount of money in order to develop a system in-house, or to sign a contract with a VAN-

operator that would handle the issue.

4.1.3.3 Outcomes

Furthermore, Lundberg argues that it is hard for Ides to estimate the actual outcome of

implementing a solution for electronic invoice handling, since they are currently not sending any

electronic invoices. They received ROI calculations from the VAN-operator; which stated that Ides

would reduce their total cost per invoice by 70 %.

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4.1.4 Brck Dgtl Outdoor Media AB

These findings are based on a personal interview with Alexander Jansson, at Brck Dgtl Outdoor

Media AB, 15 April 2015.

Brck Dgtl Outdoor Media AB is a media company based in Stockholm, Sweden, established in

2011. The person who was interviewed is one of the co-founders of the company and previous

CEO. Jansson currently holds the position of Chief Finance Officer at the company.

Brck Dgtl have been working with electronic invoice handling for one year. They implemented the

solution as a result of a demand from one of their clients. Their previous handling was mostly

concerned with emailing the invoices to their customers. The client demanded that they would

send their invoices in an EDIFACT format D96A.

4.1.4.1 Challenges

The challenges for Brck Dgtl concerned finding a solution, in-house or a VAN-operator that

supported this format and to find a solution that was cost effective. Three different VAN-operators

were contacted of which only one was able to convert it to the D96A format. Furthermore, Brck

Dgtl wanted the solution not to result in additional administrative work for the employees of the

economy department, as Brck Dgtl is a small business and did not feel that they had the capability

to handle such an organizational change that would effect on the entire organization.

4.1.4.2 Solutions

The solution they are using now is a web portal. It is a cloud based solution and not integrated with

the ERP system. This solution can be used for any company, regardless of their situation, if they

have an ERP or not. The reason for choosing this solution was that they only sent approximately

20 invoices to the client per year, and wanted the cheapest solution on the market that would enable

them to fulfil their and their clients’ demand.

Important parameters for them, when choosing a solution for electronic invoice handling, was for

it to be cost efficient as well as support many formats. Brck Dgtl wanted to be able to fulfil other

clients’ demands as they appeared in the future.

4.1.4.3 Outcomes

The outcome for Brck Dgtl was that the client offered them a payment period reduced by ten days

as well as reduced costs per invoice, which contributed to a better cash flow for Brck Dgtl. The

web portal required manual handling, so they had to create their invoices in their ERP system, and

then fill in the information again in the portals invoice template. Jansson argues that the actual

outcome was neutral in their case; it was not an increase in efficiency neither a decrease. However,

35

they could continue to stay in business with their partner, and therefore remained their place among

their competitors.

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5 Analysis

In the chapter the authors critically analyze their findings based on the theoretical framework and empirical results.

The analysis will aim to problematize, discuss and theorize the findings from the theoretical as well as the qualitative

data, which will result in guidance for corporations and finally a summery and suggestions for improvements.

The data that has been obtained has given us a profound understanding of different ways of

communicating financial document in-between different trading partners. It has come to our

knowledge during the research process, that during the last decades the technological development

within the field has been extensive. This has been favorable for companies since they, according to

our interviews, have been able to calculate a positive ROI when investing in digital communication

with trading partners. Nevertheless, the development of VAN-operators has been a necessity for

companies, in order to fulfill the legislations and recommendations that have been introduced by

countries, institutions and corporate organizations. From what we can understand these influences

have increased the awareness about the ability of communicating data electronically between ERP

systems, by that also pointing out the benefits of doing so in an environmental, traceability, time

of delivery standpoint. The early adopters of communicating data electronically were concerned

with EDI connections. Today, organizations have initiated the project to convert over to a VAN

structure since the ability to connect and cost of doing so decreased dramatically. As the demand

in several markets, industries and verticals is increasing (Gartner, 2014), we agree with the statement

of Gartner:

“Start evaluating e-invoicing project opportunities now, regardless of your company’s vertical

industry or financial shape. The pressure to do some form of e-invoicing will increase, no matter

where you are, or the size of your business. Sooner or later, you will face the hard deadline of a

government mandate.” - (Gartner, 2014, p.13)

5.1 Challenges

Our findings revealed that organizations use different formats when dealing with electronic

invoicing and that this often becomes a challenge for them. The structure of the different ERP

systems does not enable a user friendly and lean process of dealing with electronic invoicing. It

becomes a challenge for organizations regardless of sizes, number of employees, turnover, trading

partners or transaction volume. In order to avoid and minimize challenges of implementation and

maintenance, organizations needs to get a better and broader understanding, to able to make

rational choices regarding electronic invoice handling. We saw the same pattern from the case

studies we conducted with the companies. They had in general, little or a mediocre knowledge,

about their invoicing and as clients demanded technological services that required improved

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technology and/or skills and knowledge, the organizations where in need of support. The primary

data obtained showed patterns that companies tend to have knowledge about EDI, but as

legislations and requirements from clients and authorities increase; the knowledge about electronic

invoice handling within organizations were inadequately.

From the literature review we saw the same patterns of understanding as from the case studies,

namely that knowledge is a key factor for avoiding challenges with electronic invoicing in

organizations. Understanding the different functions is often described to be a key driver to success

of the different solutions of electronic invoicing that we have presented in the theoretical

framework, which was confirmed by our empirical findings. Hazen and Byrd (2012) argues that

knowledge is a key factor of the business and it needs to cover all organizational and IT structure.

Ratnasingam, Gefen and Pavlou, (2005) supports this by saying that an IT-infrastructure that is

well functioning and connected with partners is a strong aspect for organizations to benefit from

e-procurements. Therefore, we argue that knowledge needs to be constantly improved with the

technology and that it is necessary to have in an organization that strives towards improving their

supply chain. This challenge is supported throughout our findings and with an increasingly complex

environment with a large number of possible partners for clients, meaning a large and an increasing

number of formats for organizations. Therefore, we argue that companies need to obtain the

appropriate knowledge within the field, to overcome the challenges in order to stay successful in

the fierce marketplace among competitors.

As having the appropriate in an organization is a key factor one must also take into account the

constantly changing business environment. In a global context both technology, customer and

business partners constantly changes. EDI was first developed for the automotive industry in the

1970’s (Hsieh, 2004), since the beginning of the 2000 there has been a rapid development of means

of communicating electronically. Technology has made it possible for organizations to have an

increased speed in throughout their supply chain e.g. documents can be sent instantly through

digital systems. As a result, efficiency has become increasingly important within organization, which

we can confirm from our empirical findings. The companies interviewed in our case study pointed

out that they did not want introduce a handling which resulted in extra work for their employees,

since they wanted the organization to focus on their core business. The thesis have shown that it

is important to overcome the challenges one can face with electronic invoice handling, since it will

be a reality sooner or later. Organizations need to cope with the development of electronic invoice

handling if they want to stay in business because of the legislations and directives demanding this

way of communicating (Gartner, 2014).

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The organizational and IT structure need to be able to cope with the new technology, where

understanding and knowledge within the field are considered necessary in order to have a well-

functioning supply chain. Zhu et al., (2006) describes firms that are stuck in and an old system and

refuse to update due to any reason, runs the risk of losing their possible competitive advantage

towards other. The empirical findings in this thesis clearly provide evidence that being stuck in an

old system, as in using EDI communication, is not an option. Hence we see it as a critical factor

for companies to be up-to-date with technology.

A well-planned organizational and IT structure is of importance, combined with a well-functioning

electronic invoice system. With this in mind, the challenges of planning for the future and fulfil the

legislations, are easier to manage. The supply chain need to handle well at the same as new

technology is well planned and implemented within the organizations supply chain as a tool for

enhanced quality.

Cost can also be seen as a challenge when implementing a system. When implement an electronic

invoice system in-house, there are several aspects that needs to be covered. These aspects consist

of, experience and knowledge of the technical aspect with communication protocol setup, format

conversion via EDI translators and last but not least: the service and setup are usually not universal

and new adjustments are needed for each setup to reach new trading partners. Explica realized that

a development of electronic invoice handling in-house would be too costly for them; the challenge

then became to find a VAN-operator or another tool that would help the organization to fulfil the

demand of their clients. The pattern we have been able to identify, both from the theoretical

framework and from the case studies is that smaller organizations face a larger challenge in finding

an economically sustainable solution for sending electronic invoices. Larger organization tend to

have larger transaction volumes, therefore, have a larger cost on manual invoicing which, when

implementing a solution for electronic invoice handling, is not considered as expensive as for

smaller organizations. The larger transaction volumes results in larger cost savings as the electronic

invoice handling results in less labor and material costs. Smaller organization face a large fixed cost

when implementing a system, since it becomes a bigger share of their budget, and it takes a longer

time to break even as the cost for manual invoicing is not as high as for large organizations. For

smaller organization, the challenge is concerned with finding a cost beneficial and effective solution

for electronic invoice handling.

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As presented in the empirical findings, Brck Dgtl send very invoices per year and it would not be

cost beneficial for them to use a another solution than the web portal which was provided by the

chosen VAN-operator. According to Jansson, their implementation of a system that enabled

electronic invoice handling was status quo since they choose the light version where they had to

manually type in the invoice details using a web portal. Jansson stated that they were not better off

with electronic invoice handling, as they are sending very few invoice per years but still not worse

off since they found a suitable solution. Further argued is that even if the solution did not bring

any cost savings, they managed to fulfil their clients demand and keep them as a customer.

5.2 Solutions

The second part of the analysis leads us to evaluate what types of solutions that are currently

available for organizations to implement in the Scandinavian market. We argue, as is frequently

argued in literature, that knowledge has an important part to play for the purpose of minimizing

challenges. An important aspect of this knowledge regards knowing what kind of solution that is

the best fit for a specific organization. From the empirical findings it is evident that Company X

had difficulties in finding the suitable solution for the organization, and therefore hired a consultant

to find the best alternative possible. As previously stated, many organizations do have some kind

of experience of EDI, however, as noticed from our empirical findings, the previous experience

does not seem to be enough in order to easily find a solution for electronic invoicing today. For a

solution to be beneficial to the organization in-house, regardless of previous knowledge of EDI,

we see that organizations need to develop a large technical system in order to just have the

possibility to send electronic invoices through a system in-house. When deciding to implement an

electronic invoicing system in-house, it requires time and money to set up the system and

knowledge of how to deal with the set-up is crucial to overcome the challenge.

However, Ides states that there is no clear answer to what is the right solution, as the structure of

the organization and IT possibilities needs to be aligned with the implemented solution. As stated

in the chapter Challenges, the pattern we see is that companies have some previous knowledge of

electronic invoicing but experiences that it is not enough in a larger perspective today. Therefore,

the solution of implementation needs to be chosen carefully.

As we have been able to identify, the solutions offered to day are somehow restricted to the

legislations and directives from authorities. Organizations need to follow the legislations

introduced by PEPPOL (Peppol, 2015) and in Sweden the guides of the format Svefaktura (SFTI,

2015). As it is required by organizations in order to conduct business with them. As for today, we

see that there is two polarized sides on systems that enables electronic invoice handling, consisting

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of EDI and VAN-operators. First we have the solution that have been used since the beginning of

electronic invoice handling, EDI connection, where the knowledge and workload is done in-house.

Secondly, we have the structure of VAN-operators that enables companies to outsource the

responsibility of communicating electronically with their trading partners.

When companies develop the solution in-house, the implementation and maintenance comes with

increased organizational complexity. Our empirical findings show that none of the organizations

believe that they would have the capability to handle the complexity without outsourcing the service

or invest in knowledge if they would send and receive invoices according to their trading partners’

format standards. An implementation in-house could be done by increasing the knowledge of some

of the staff for the system or to hire one or several experts within EDI and electronic invoicing.

The workload for companies, that have a system in-house, would not be sustainable since it requires

unique setups for each trading partners with different formats, translators and protocols. In today’s

market with the legislations and directives the EDI connections is not a possible solution. The

complexity would therefore increase with an increasing number of partners within the network of

electronic invoicing.

The solution which concerns VAN operators, where the knowledge and workload is outsources

would therefore be a more suitable option. The largest advantages for VAN-operators compared

to in-house is, as stated before, that challenges of doing business with electronic invoices are easier

to overcome. The pattern that our study demonstrate, clearly show that the knowledge required by

companies is less crucial for being successful when implementing for electronic invoice handling

with a VAN-operator. Organizations can decide how to work with the invoices and do not have

to consider the issues with different formats. As in theory, dealing with several formats can be an

issue when different partners have different routines and requirements. Literature as well as our

empirical findings indicates that there is a positive trend of being part of a large network of both

existing and potential future partners (Zhu et al., 2006). When dealing with a VAN-operator,

organizations can take advantage of that possibility. The operator takes care of handling and

converting the data to match the specific requirements of partners. Because of this, organizations

can take advantage of the large amount of contacts without having to deal with the complexity of

fulfilling the needs regarding electronic invoicing handling for every partner and client.

In our empirical findings, we found that Explica, Company X and Ides thought that the enlarged

network was a huge benefit. Considering this, the pattern shown in our empirical findings indicate

that once the once the organization determined to implement a VAN-operator partnership, the

largest challenge was to find the right one for the organization. Some could not cope with a specific

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format and the operators differed in the sense of how much work the organization had to put in.

Finding the right partner gave organizations the opportunity to pursue other value-added activities

and for Explica to reach their environmental goals by implementing an electronic invoicing system.

The literature does not suggest any specific type of solution, however, based on our empirical data

it is our opinion, that a VAN-operator is likely to generate a result for organizations, where the

benefits of implementation a solution is likely to exceed the cost in regards to the manual handling.

The reduction of time and increase in efficiency aspects from start is an argument that is of

importance in today’s complex market. From our empirical findings and previous literature we see

that this is importance for organizations and the right solution for electronic invoicing is one aspect

that can benefit this. The solution should be chosen after what fits the specific organizations and

its needs, with respect to what kind of solution that would be the most beneficial and can overcome

the challenges of implementing an electronic invoicing system. However, findings from the

empirical data clearly indicate a trend of choosing VAN-operators over the process of developing

a system in-house.

We believe that the benefits of having a VAN-operator as a partner is greater in smaller to medium

sized organizations compared to larger ones, since the price is an important aspect as discussed in

“Challenges” (found in section 5.1). Explica, Company X and Ides could all see an organizational

pattern of invoice cost being dramatically cut when implementing the VAN-operators services.

The cost for both ingoing and outgoing invoices were expected to be cut to more than half the

historical price in handling the invoices. This is because the fixed cost is not as high as developing

in-house, and smaller organizations were also able to find a solution that were cost efficient for

them and that enabled electronic invoices handling. Brck Dgtl experienced this, which is why they

choose a solution with a VAN-operator.

5.3 Outcomes

Previous research shows that the outcomes of implementing an electronic invoice system include

improvement in supply chain management. With the right solution, organization can overcome

challenges, and have a more efficient organization that is able to cope and respond faster to

stakeholders request and changes in the business environment. As legislations is on schedule for

governments throughout Scandinavia and Europe, the outcome for organizations that choose to

implement an electronic invoicing system is that they are up-to-date, because in the future, it will

be required by law (Gartner, 2014). In the empirical findings, we saw that the organizations needed

to implement an electronic invoicing system in order to do business, and the crucial outcome of

that is that the organizations in our case study where able to stay in business with respect to present

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and future legislations. According to us, this is one of the main reasons to implement an electronic

invoicing system for organizations in Scandinavia today, as it is said to be crucial for the future

development of the business. Being on top of the competition and updated with present and future

regulations and legislations are important aspects for organizations, which we argue, is likely to

have a positive outcome.

In order to stay competitive in the global business environment, theory stresses the importance of

having the correct technology and being up-to-date. Our empirical findings confirm this: the

organizations that have chosen to be a part of our case study believe that the technology needed is

crucial for their business. Partners and customers require a system of electronic invoicing and

organizations need to cope with that. The desired outcome is to either remain their place in the

market or become even more attractive for future partners and customers. For Brck Dgtl, the

implementation was important, but did not change the output significantly. They stated that there

have been a decreased material cost, but an increased handling of their invoices. However, with the

electronic invoicing system implemented, their client offered a 10 day decrease of the payment

period which in the long run will increase their cash liquidity. Explica, Company X and Ides all see

a decrease of material costs and also other benefits with the system.

Explica’s outcome, when switching to electronic invoice handling, meant both less material cost

and managerial assistant of handling invoices. The handling of electronic invoicing became more

precise and they received fewer errors in managing their outgoing invoices. The control of the

invoices was improved and as a result of this they could see better cash liquidity. Explica’s output,

as they implemented a system with a VAN-operator, follows a pattern that VAN-operators often

see according to Jonas Edlund and previous literature on the topic. The managerial aspect in one

part of the organizations supply chain is less complex as it is outsourced and organizations can be

beneficial with that desired output when choosing a solution.

All the business and individuals interviewed as well as much literature state that the extended

network is one aspect that is of great importance. The network growth that occurs when an

increasing amount of organizations join a certain network is positive for every organization in it,

in terms of easier connections with present and future trading partners. We see an opening for

businesses who are expanding or have the desire to expand to join a VAN-network in order to

reach new partners and customers. The output in a broad perspective is desired to reach an

improved financial result. Individuals working with electronic invoicing of any kind claim that this

is a way for organization to cut cost, faster response time and get better cash liquidity, which in the

long-run all are positive aspects for an improved financial result. We see from previous literature

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and the empirical findings that larger corporations are likely to have a more enhanced financial

result because of this compared to smaller as the quantity of invoices is a large aspect of this. In

example, for Brck Dgtl, who sent 20 invoices per year, the financial result was unaffected. However,

they could keep the partner with their invoicing system.

5.4 Summary

Because of the changing environment and preconditions for organizations today, we suggest that

skills and knowledge within organizations are needed if the preferred solution for electronic

invoicing is done in-house. However, from our empirical findings it is made clear that a VAN-

operator is most probably a better alternative for most Scandinavian organizations today.

Developing an electronic invoicing system in-house of organizations is costly and is likely to have

several challenges when implementing a solution. When analyzing literature on the area, much of

the aspects of electronic invoicing deal with EDI, which is more complex when the market for

electronic invoicing is expanding, since EDI requires a specific connection to every partner.

Organizations can benefit from having a larger network as we see in our empirical findings and

having a solution with EDI is very complex and need knowledge to maintain the system in order

to cope with the market and the legislations in the different countries. It is our opinion that the

most important issue is that there must be an organizational fit of the implemented solution. Every

organization is unique and has certain preferences which contributes to a larger variety of solutions

for electronic invoicing. Still, we see it most likely that a VAN-operator can fulfill the need of every

organization as there are several actors on the market that works with the solution. However, as

stated in the empirical findings, it is necessary for every organization to find out which operator

that is the best fit as the formats and complexity within the field of electronic invoicing is

significant. Certain organizations requires certain formats and certain countries have different

legislations which requires certain preferences for the operators. Even with the PEPPOL

agreement, there will be differences that are crucial for organizations to take into consideration.

If the previous sections are done correctly, we argue that the outcome can be beneficial for all types

of organizations. The challenges described in this thesis can with, consideration to the specific

organization, be minimized with the right solution and therefore, organizations can have a desired

positive output of the implementation of electronic invoicing.

5.5 Suggestions for improvements

In this process, there has been one large challenge for organizations that have been made clear to

us. It concerns the issue with different formats for electronic invoicing as a challenge for companies

44

and it has been displayed through the literature and from our empirical findings. Companies that

conduct business with more than one partner via electronic invoicing often see formats as a

challenge as organizations demand different formats. The formats differ in complexity and the

knowledge about the different formats is inconclusive. As we see from the literature review and

empirical findings, VAN-operators is key to many organizations today. However, the empirical

findings made clear that there is an issue with different formats, also with VAN-operators. As Brck

Dgtl tried to find a solution for their specific demand of format, there was only one VAN-operator

who was able to solve the situation.

Therefore we see a suggestion for improvements in the solution part for organizations and

operators dealing with electronic invoicing today. A large improvement for organizations would be

one specific format that every organization can work with, which is on the agenda for the European

Commission currently with the PEPPOL agreement. As we see in the regulatory requirements,

nations have legislations and guidelines on how their electronic invoices should be designed.

Consequently, we see a suggestion for improvement also for VAN-operators to create a suitable

solution that would fit all organizations demands and formats. In that way, VAN-operators can

build a stronger brand and integrate more organizations to their network. We believe that this will

benefit all organizations in the future, regardless size, being part of a network will substantial reach

is positive. Different ways of doing business is beneficial for all organizations in the network, and

we see that achieving a safe and easy way of handling electronic invoices is one of them.

45

6 Conclusion

In this chapter conclusions are drawn by the analysis of the theoretical and empirical data. The conclusion is related

to the research question guiding this thesis. Based on our research questions, a conclusion has been presented regarding

the challenges, solutions and possible outcomes for companies that implements a solution for electronic invoice handling.

What challenges, if any, are involved when switching to electronic invoice handling?

The main challenges, that we have been able to identify, in previous literature as well as the outcome

of our case studies, are that companies tend to lack the knowledge of electronic invoice handling

to create their own and informed understanding. These challenges seem to be fewer when it comes

to communicate invoices digitally via a VAN-operator, since it does not require same technical

knowledge in-house. VAN-operators also take on the responsibility to convert the invoice formats,

something that is need to be done with EDI connections.

What solutions are available to choose from when switching to electronic invoice handling?

Findings from this thesis show that there are two solutions enabling electronic invoice handling

consisting of EDI and VAN solution. Within these solutions there are different communicate

protocols that enable the actual transmission of invoice data. VAN-operator offer companies to

communicate electronic invoices by connecting to their network, the connections can consist of

web portals, virtual printers, FTP, SFTP, AS2 and HTTPS. The VAN-operator provides a many

to many architecture with one connection and the possibility to reach the entire network, regardless

of communication protocol or formats.

EDI connections are point to point setups between two trading partners. In order to set up this

connection, both trading partners need to agree on communication protocol and format structure.

Therefore, the EDI solutions require more technical knowledge in-house and are often project

based and costly to set up. In the EDI setup companies usually use the system to send more

document types than invoices.

What outcomes are there when switching to electronic invoice handling?

The outcomes, that we have been able to identify, connected to electronic invoice handling, include

less manual handling, error management, environmental impact and cost reduction. EDI is usually

concerned with high implementation costs, which can make the implementation of this electronic

invoice handling system not feasible for companies unless the trading partner has high transaction

volume or the knowledge of how to setup and maintain EDI exist within the company. The actual

outcome of switching to electronic invoice handling for companies depends on their previous

46

invoice handling. This implies that some companies tend to see higher benefits and better

outcomes of their electronic invoicing system investments than other.

In conclusion, we hope and believe that the findings of this study can help companies when

considering a switch to electronic invoice handling.

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7 Discussion

In this chapter, the method, outcome and process of this thesis is discussed. It also includes the reflection upon this

study as well as suggestion for further research within the field of electronic invoice handling.

This thesis has been an interesting journey for all authors involved. The topic was particularly

interesting for us since we see the increasing importance of technology as a part of organizations

today. The subject of electronic invoice handling is exciting since there are both technical aspects

as well as organizational processes that needs to be taken into account. Prior to choosing the topic,

we read articles and talked to professional within the field, in order to grasp the crucial parts of the

topic, which we all found to be of personal interest. We early realized that EDI, as a way of

communicating electronic invoices, has been an important aspect in the development within this

field. As new legislations and directives was introduced the emergence of VAN operators became

a fact. Since we realized that the development of electronic invoice handling has been rapidly

changing we found the topic interesting and clearly saw a need for a report as ours.

We saw that important aspect of the study was to provide the reader with a general insight of the

challenges, different solutions and the possible outcomes in regard to electronic invoice handling.

We were eager to start the research within the theory and the opinions of the professionals that

helped us in participating in the case study. The technical details of EDI and VAN structures have

been hard to present in a perfect academic structure, since we noticed that there was a vast amount

of different protocols, coding and customizations. We also came across the fact that there was little

academic literature regarding the new way of communicating electronically, which is concerned

with VAN operators. Therefore, we decided to focus on the soft aspects that directly affect the

end user, between the two ways of communicating. We believed that this approach would address

a larger audience, working in different departments of an organization, to benefit from our thesis.

The outcome when implementing a solution for electronic invoice handling is also closely linked

to companies’ old way of handling invoices. The ROI calculations may not be applicable for all

types of companies, nevertheless we argue that they can be used a guidance for companies.

Different outcome aspects have been brought up in this thesis and can be used as a template for

consideration.

The challenges are also closely linked to the structure of the company, we have been able to identify

that consistently for all companies is that lack of knowledge within the field was or is a challenge.

Different invoice formats have also been addressed as a challenge for companies, the two different

ways of communicating; EDI and VAN have diverse way of handling this challenge. EDI is a point

to point solution that requires both trading partners to agree on certain protocols and format

48

structure on the other hand VAN-operators take on the responsibility to convert the invoice the

chosen format by the trading partner.

We believe that the usage of VAN-operators will increase, in terms of electronic invoice handling.

The EDI connections may be used for other document types but in regard to invoices we can

clearly see a trend of more companies implementing these services to communicate electronically.

We find this study and the topic of great interest and as the authors, we will follow the progress of

electronic invoicing and the legislation, nationally and globally, closely out of personal interest.

7.1 Future research

We believe that further research within the field of electronic invoice handling is needed, mainly

because the market is constantly changing and more companies adopt and demand electronic

invoice handling. We argue that the research on specifically electronic invoicing is relatively thin,

even though there have been several studies made on EDI during the last decades. However, as

we see new regulations and legislations nationally and with the European Commission, we argue

that old research done on the topic is losing quality with time as legislations is heavily influencing

the organizations way of handling their electronic invoices.

Research questions, which would be of interest within the field, could be; technical aspects of

VAN-operators solutions, efficiency outcome in the supply chain and procurement processes. We

argue that a report on the different VAN-operators, currently in the market would be of great

interest. This study would preferably be done for different regions, in order to find the specific

legislation in place for electronic invoices.

As the topic of electronic invoicing is under development with both the technical aspects and

legislations, the subject will most probably change with time. Therefore, we believe that a future

study most probably not find the exact same result as presented in this study, even though we

believe that VAN-operators is the future for electronic invoicing.

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1 Appendices

1.1 Interview template

Research questions Interviewer questions

What challenges, if any, are involved when switching

to electronic invoice handling?

In what stage are your company currently in the

process of switching to electronic invoice handling?

Describe the process that was involved for your

company when switching to electronic invoice

handling?

What challenges, if any, were involved when your

company decided to switch to electronic invoice

handling?

If yes, how did you overcome these challenges?

If no, describe what factors that made the transaction

smooth

What would be different if you would implement a

system for electronic invoice handling today?

What solutions are available to choose from when

switching to electronic invoice handling?

What different solutions have you been able to

identify, that enable electronic invoice handling?

How did you receive this information?

What solution do your company use, or intend to use,

in order to enable electronic invoice handling?

What parameters was important in the selection of the

solution to communicate electronic?

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What different aspects did you take into account when

choosing solution?

Why, if any aspects, were they of importance?

Were all solutions possible for you to implement, or

did you experience any limitations?

What outcomes are there when switching to electronic

invoice handling?

What outcome, estimated or actual, have there been

for your company when switching to electronic

invoice handling?

What were the positive effects?

What were the negative effects?

Have there been a time reduction, in respect to the

invoice handling?

Have you been able to reduce the payments days?

What economical outcomes can you relate to

electronic invoice handling?

What efficiency outcomes can you relate to electronic

invoice handling?

Other

Would you like to add something, which you find

important, in the areas that we have discussed?

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2 Interviews

2.1 Explica Entreprenad AB

Company name: Explica Entreprenad AB

Webpage: www.explica.se

Interviewed: Niclas Eriksson

Date: 2015-04-12

Place: Stålverksgatan 3, 417 07, Gothenburg, Sweden

Business area: Roofing, sheet punching,

Turnover: 37 MSEK

Number of employees: 26

The interview:

We have been working with electronic invoice handling for approximately two years. We have

implemented a solution to send and receive electronic invoices via a VAN-operator.

The process involved when switching to electronic invoice handling was initiated by a demand

from one of our clients. We got contacted by a VAN-operator which informed us that our client

had chosen them and that we were supposed to connect to a VAN-network that could reach our

client. We had never worked with electronic invoice handling previous, so we got the necessary

information from the VAN-operator which then offered us a solution that would enable us to

fulfill our client demand.

The challenges for us was that we did not have any previous experience with electronic invoice

handling. We have been e-mailing or sending paper to our clients for decades and our ERP system

could not produce an XML file called Svefaktura, which our client demanded. If we would buy a

client or upgrade our ERP system the cost would exceed the profit for that customer, so that was

not an option.

By using a VAN-operator we were told that they could convert our PDF file to the XML file that

our client demanded. The investment in that solution was minor and we were able to fulfill our

client demand.

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If we would implement a system today we would do an inquiry into which VAN-operators that are

on the market so that we could haggle on the prices. Nevertheless, our overall handling cost for

invoices has decreased

The different solution I have been informed about regarding electronic invoice handling is EDI

connections, Web portals, Virtual printers and communication protocols such as FTP, SFTP,

HTTPS. There is a big difference between a point to point setup, such as traditional EDI and

VAN-operators. With a VAN-operator, one only needs to connect once and then can reach all

recipients and suppliers in the network.

I got this information from the service provider that contacted us when we got the information

that our client demanded electronic invoice handling. After the call I also search around on the

internet and were able to read about the different solutions.

The solution that we currently are using is virtual printer with a client from one service provider.

This solution enables us to send PDF-invoices which the service provider then converts to the

format that our recipients want.

There were two important aspects for us when choosing a solution, it should be user friendly as

well as cost efficient. The reason for these two aspects is because we did not want a system that

would cost more than the traditional handling of invoices.

The limitation for us is that we are not a large company, with our own IT department. So an EDI

setup would not be a possible solution for us, I do not believe that this is a limitation, since the

technique of EDI in regards to electronic invoice handling is ancient if one compare with the VAN-

operators.

The outcome for us, when switching to electronic invoice handling, have been that we spend less

time managing the invoices. Previous we had to print all invoices, put them in an envelope and

then post them. The process now is that we use another printer, so called virtual printer, which

sends it electronically to the recipient. This have enabled us to lower the cost of sending invoices.

The recipient also use validation in the system, so we get an instant error message if for example a

reference code is incorrect. This have improved our cash liquidity since we now can correct the

invoice directly and get paid faster. I do not have any exact figures how much we saved but I believe

that the ROI, if a company uses a VAN-operator, is very short. An additional benefit is that sending

electronic invoices is also environmental friendly, something that helps us meet our environmental

goals.

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Another positive effect with electronic invoice handling is that we can now spend the time,

previous used to handle invoices, for more value-generating activities for the company.

The negative, but also can be seen as a positive, effect is that the invoice gets validated immediately.

Sometimes our clients actually forgets to give us a reference code, in that case we have to call the

client and ask for the correct reference code so that our invoices goes through the validation.

As I mentioned before, there have been a significant decrease in the time spent on invoice handling.

2.2 Company X

Company name: X

Webpage: X

Interviewed: Jan Svensson

Date: 2015-04-02

Place: Phone

Business area: Retail

Turnover: 400MSEK

Number of employees: 98

Note: The company interviewed choose to not share their name, the interviewed employee have

been working for the company for 6 years as IT Manager. We use a fictitious name on the person

being interviewed; Jan Svensson.

The interview:

Our company is currently in the process of updating our electronic invoice handling system.

Previous we worked with point to point setup, also known as EDI connections. We are now

adapting a VAN structure which enable us to have one connection and have a wider reach.

The process that was involved included a tender request that we sent out to 6 service providers,

which 5 out of 6 came with an offer. Three of the offers included VAN-operators, the other two

was working with EDI setups. We decided to go with the new architecture for the new setups for

our customers and suppliers.

The challenge for us was to find a VAN-operator that had global reach, since many of our suppliers

and customers are located around the world. So it was crucial for us to have a VAN-operator that

58

advocated interoperability agreement which would enable us to reach our trading partners

regardless of their VAN-operator.

In order to overcome these challenges, we hired a consultant which helped us to write the tender

specification as well as finding suitable companies.

If we would go through the same process again we would have picked the consultant more

carefully, since the consultant used was a previous EDI integrator and not that familiar with the

new technology of VAN-operators.

The different solutions that we have been able to identify on the market are; traditional EDI, EDI

VAN-operators and VAN-operators. The different between EDI VAN and VAN-operator is that

EDI VAN-operators are building their network on a technology that require manual handling with

setting up new trading partner.

We received this information by attending to fairs, search the internet as well from the consultant

we hired for the project.

The solution that we will use is a SFTP connection for communication to the VAN-operator, the

link that connects us with the network.

The parameters that was important, that also was in the tender as requirements was that the solution

had to be cost efficient, in regards to setup cost and transactions fee. We also felt that it was

important that the VAN-operator had a global presence and that they had intention to expand.

Finally we also looked at the accessibility, if the VAN-operator had scalable solutions that they

could offer to our suppliers and buyers that was cost efficient for our smallest supplier, e.g. 1MSEK

turnover and for the largest supplier, e.g. 2BSEK.

All solutions was technically possible for us, we decided the SFTP setup since it enabled us to have

an automated handling. Some of our suppliers will eventually use the portal that our VAN-operator

supplies, that would also work for us but since we have internal processes that needs automation

this solution was not suitable for us.

The estimated outcome when we switch to electronic invoice handling via a VAN-operator is a

reduction in price per invoice by 15 SEK, we estimate that each invoice cost 17,50 SEK and by

using electronic invoice handling via our VAN-operator we will pay a transaction cost by 2,50 SEK

per invoice. For the incoming documents we estimate that we will save 30 SEK per invoice, since

we will use automated validation of the incoming invoices as well as they will come directly into

59

our ERP system and there are no transaction costs. The current handling of incoming invoices

require manual validation handling as well as stamping the information into our ERP system.

In conclusion, I argue that VAN-operator can offer us a wider reach. The EDI setups currently in

place will still be up and running but will eventually be removed when the trading partner starts to

use a VAN-operator. Prior to our investment in the VAN-operator, we had a connection cost for

each new EDI connection for about 60-100KSEK. Now with one connection to the network we

do not have to pay for any additional trading partner we set up. Once you are connected to the

network, adding a new trading partner is just click away, almost like using Linkedin or Facebook

when adding a new friend. Once the new trading partner accepts you the setup is done and we do

not need to worry about the formats.

Important to note is that the EDI connections we currently have setup are used for more document

types than just invoices, for the EDI setups we exchange documents such as invoices, order, order

response, dispatch advice – advance shipping notes and other financial documents.

2.3 Ides AB

Company name: Ides AB

Webpage: www.idesglobal.com

Interviewed: Sverker Lundberg

Date: 2015-03-29

Place: Phone

Business area: Software Company, solutions for technical and administrative activities

Turnover: 6MSEK

Number of employees: 2

The interview:

We are currently in the process of switching to electronic invoice handling. As we speak we are

implementing the solution that will enable us to send and receive electronic invoices in the XML

format that our ERP system require.

The first step in the process was the letter sent to us by one of our clients which informed us that

they would like to receive electronic invoices. We had the option go integrate by using an EDI

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connection or by using a VAN-operator. Prior to the letter, we had knowledge of EDI and was

shocked that that client asked us to set up this connection. We arranged a meeting to ask the client

how they would compensate us for setting up an EDI connection. During the meeting we got

informed that we could use a VAN-operator, they provided us with the contact details and we gave

them a call.

The challenges for us during the implementation was a technical aspect, the format that our ERP

system were able to produce were not a standard format. The operator had to build support for

this so we are currently waiting on the work to be done.

It is currently hard to point out any things that could be done different, since we are currently in

the process of implementing the system. One thing that is to ensure that the VAN-operator have

support for your format, they told us that the format was ok but we found out that it was not

according to the standard scheme for that format.

The different solutions for electronic invoice handling we know of is; EDI with several different

protocols, VAN-operator with solutions such as Web Portal, AS2, SFTP, FTP etc. I cannot deem

which solution is more appropriate since it all depends on the companies processes as well as IT

structure. I would say that there are two solutions, EDI and VAN, but there are different ways of

communicating with these two solutions.

We are a software company we hear about this things through word of mouth as well as newsletters

coming out for people within the sector. We also heard that legislations have been introduced in

Scandinavia, when we got that information we took some time to look at the different solutions

on the market.

The solution that we are using consist of a communication way enabled by a FTP connection in

order to send and receive documents to the VAN-operator and their network.

We wanted to find a reliable, cost efficient and user friendly solution. It was important for us that

it would be easy to add new trading partners, since we get more and more requests for electronic

invoice handling.

The limitation we felt was that it would not be cost efficient for us to set up an EDI connection.

Since our client only wanted to receive invoices, the VAN-operator’s technology was efficient

enough. We also liked the aspect that they convert the format to the format our trading partners

prefer.

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It is hard for us to talk about the outcome since we are currently in the process of setting up the

solution. We got some information from the VAN-operator we choose, with some ROI

calculations. They stated that we would reduce the total cost per invoice by 70%, by taking away

the manual handling as well as the material costs. I guess time will tell.

2.4 Brck Dgtl Outdoor Media AB

Company name: Brck Dgtl Outdoor Media AB

Webpage: www.brickdigital.se

Interviewed: Alexander Jansson

Date: 2015-04-15

Place: Concord Tower, 26th floor, Dubai, United Arab Emirates

Business area: Media Company

Turnover: 11MSEK

Number of employees: 6

The interview:

We have been working with electronic invoice handling for 1 year. It all started with a request from

one of our customers which demanded electronic invoices. Previously we have been emailing the

invoices to our customers but the client demanded an invoice handling via a VAN-operator and

wanted to receive the invoice in the EDIFACT format D96A.

The challenge for us was to find a suitable VAN-operator that was affordable and that could help

us deliver our invoices in the D96A format. We also wanted a solution that was easy to use and did

not result in additional work for our people working in the economy department.

We contacted three different VAN-operators that we were able to identify via the internet. One of

them were able to convert our internal format to the format that our client demanded. So the

choice of VAN-operator was pretty simple for us.

I think we are pretty happy with the solution we have, I cannot think of anything that we would

have done differently if we would implement a solution today. We do not have many invoices and

they are not complex in any way.

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We told the VAN-operator that we had approximately 20 invoices per year that we wanted to send

electronically. They offered us a web portal to fulfil our client demand. They told us that this was

the smallest solution and required some manual handling. This was ok for us, since the price wasn’t

high.

This information was received by talking to a sales person at the VAN-operator that we choose.

The parameters that was important for us was that it was going to be cost efficient. The other

aspects we took into account was that the service provider supported more formats than just the

D96A, since we believe that it is going to be more request in the future.

We only focused on the web portal, I do not know if all solutions available on the market would

be possible for us. The web portal can be used by any company regardless if they have an ERP

system or not since it is cloud based and you fill in the invoice information in a templet.

The positive effect was that we were able to fulfill the demand of our client and we are still doing

business with them. The negative effect is that by using the portal, we have to do the invoice twice,

first in our ERP system then in the portal.

There haven’t been time reduction in our case, but I believe that it is only concerned with the fact

that we choose the smallest solution, since we do not have many invoices.

The payments days have been reduced, the client offered 10 less payment days if we were to fulfill

their demand on electronic invoices.

The economical outcome is that we got less payment days as well as that the cost per invoice, in

material cost have been reduced. We do not pay anything to send an electronic invoice, in

transaction, usually we pay approximately 8 SEK per invoice in material cost if we sent it by paper.

The efficiency outcome can be seen in two different angles, the first is that we have to do the

invoice twice which have made our invoice handling less effective. The second is that we do not

have to manually handle the invoice by printing and posting and ask if the invoice have been

received. I think that it was even out in our case, the efficiency outcome is neutral.