e Invoicing - The facts & the costs and time saving benefits

Get Smart—The CFO’s Gateway to Supply Chain Efficiency

The concept of a smart economy doesn‟t sit comfortably with a business sector that is still heavily

reliant on paper. Take invoices: arguably the most important business document there is, since

without it, no-one gets paid. Maybe it‟s a holdover from the „cheque‟s in the post‟ culture, but

British businesses still overwhelmingly use paper and postage rather than an electronic

equivalent.

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Eliminate all costs associated with conventional, paper-based sys-tems

eInvoicing is a realistic business option for all companies

Businesses on average can save between 1-2% of turnover by switching to eInvoicing

Invoices are issued and sent immediately to customers resulting in a quicker payment cycle

Streamline the entire supply chain, both upstream and downstream and achieve efficiencies of scale

With the ongoing tribulations in the British economy,

this year has seen no shortage of calls for change, but

appealing to CFOs‟ patriotic nature with some big-

picture initiative will cut little ice with many firms

focused inwards, looking only at where they can cut

costs in their own business in order to survive.

The good news is, the two goals don‟t have to be

mutually exclusive. A recent report produced by the

Swiss group Billentis estimates that an average

business can save between 1 and 2 per cent of its

turnover by switching from paper to electronic invoicing

and by automating the related supply chain processes.

The „E-Invoicing / E-Billing in Europe and abroad‟ report

makes the case that replacing paper-based invoice

processing with electronic and automated methods

offers savings ranging from 60-80 per cent. What‟s

more, it says an e-invoicing project can begin returning

on its investment as rapidly as six months from the start

date. The report found that organisations moving to

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e-invoicing often find a ratio of 70 per cent to 30 per cent in favour of electronic documents over

paper, so the savings quickly become apparent.

This also addresses another hidden cost within business. According to estimates from the

research firm Gartner, managing a piece of paper costs nine times the price to print it in the first

place. Then there‟s the environmental advantage of removing large volumes of paper. Green

initiatives may have fallen off the business agenda lately but any EU or Government mandate on

carbon footprints would suddenly bring this issue sharply back into focus.

High tech, low price

Not so long ago, automating an accounts receivable system would once have been the exclusive

preserve of large corporations, with multi-million budgets to match. Technology, one of the

business world‟s great levelers, means the same facility is now available to small and medium

sized firms at a fraction of the cost.

To draw on another smart economy mainstay, we believe cloud computing has a huge role to play

in making this happen. Cutting through the hype, what this means in simple terms is that the

information can be stored in one central place and accessible over the internet from any location.

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Eliminating errors It also leaves the process open to mistyped information such as order numbers or delivery dates.

Any mistakes may not be picked up until much later, further slowing the payment process down

and potentially harming goodwill from suppliers at a time when good customer relationships have

never been more valuable.

Some CFOs may be reading this and think „I don‟t need this, I already send my invoices by email‟,

but that still puts the onus on the other party to read the invoice, and to input the details on their

own system.

We would argue that the incentives to deal with customers via e-invoicing are too big to ignore.

Firstly, the simpler and faster process of approving invoices means that suppliers can be paid

quicker and consequently their cashflow position improves. In turn, making it easier for customers

to process e-invoices means they will be more open to meeting a supplier‟s payment terms. It be-

comes, in other words, a virtuous circle.

Since 2004, the EU has recognised the status of e-invoices and they are legally accepted in mem-

ber states. The Billentis report refers to a sample survey by the author Bruno Koch which found

that in the past, smaller customers perceived moving from paper to e-invoicing as “nice to have”,

whereas larger organisations tended to use it as a mandatory requirement for doing business with

them. Koch argues that increased cost pressures and competition in the future will soon force the

optional to become obligatory.

High tech, low price (contd.)

In the context of this discussion, the concept is essentially a „clearing house‟ for electronic

invoices. By storing everything in one location, the scenario of lost, and therefore unpaid invoices,

disappears. E-invoices are routed directly to customers and the status of any transaction is

immediately transparent to buyer and seller.

Straight away, an accounts receivable system provided this way removes the need for individual

businesses to invest capital expenditure in their own systems for handing e-invoices, as well as

the op-ex required to manage those systems. All that‟s needed is a web browser to log in, view

invoices, approve them and submit proof of delivery. From the supplier‟s point of view, if the

customer has a query relating to the invoice that‟s instantly visible, eliminating any potential

backlogs and blockages in the approvals process.

Beyond cap-ex, further savings are made because the work involved in processing invoices

manually is removed – to say nothing of storing and tracking them should they be needed later.

The „hard‟ cost saving is a faster sending of invoices and eliminating postal charges. The soft

costs are that it speeds up the process, there are fewer queries in relation to invoices and

therefore administration staff become more productive because they can spend time on other

tasks.

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Eliminating errors (contd.) Moving a customer-supplier relationship onto an automated accounts receivable platform has

never made more sense. Large parts of the cost have been stripped out, clearing one of the

largest single obstacles from the process just when it is most needed. Doing so has the potential

to benefit both the wider economy and the individual business, without imposing a suffocating

straitjacket on either.

Ten years ago, the UK Government‟s ambition was not to build a smart economy but to make

Britain a hub for e-commerce. E-invoicing has the potential to turn both nebulous concepts into

something more tangible, because without the invoice there is no transaction. This is real e-

commerce. It is the smart move to make and the time to make it is now.

Celtrino Celtrino specialises in business process and supply chain document automation solutions. With over 20 years of successful trading under our belt, Celtrino has consistently delivered outstanding business value to a customer base of over 600 companies of all sizes, from sole traders to multinationals. As a pioneer in the provision of outsourced managed EDI services, Celtrino has long championed and delivered innovative reliable and feature rich on-demand supply chain solutions via the cloud.

Celtrino Platform The Celtrino supply chain automation platform is purposely designed to scale to meet the huge volumes of inter-company B2B com-mercial transactions whilst providing the highest level of performance, reliability and business continuity through a fully redundant and secure architecture. The Celtrino B2B platform enables a suite of touchless services to be delivered via Software-as-a-Service (SaaS) which offer a dramatically faster implementation process.

e Invoicing - The facts & the costs and time saving benefits

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