How can e-invoicing save the world?
We all have been witnesses to a new phenomenon in the modern world. Like a scenario from a fictional movie has become reality. The Covid-19 virus has caused the worst chaos in the world’s economy since the Second World War. Should we even think of E-Invoicing in times like this? Current circumstances demand radical action to keep the wheels of commerce turning and supply chains delivering. We understand that e-invoicing is only one solution to one of the issues and we hope no one is offended as we focus on this one issue where we feel we are able to contribute.
For me personally, Covid-19 has proved the urgency of adopting a paperless supply chain in order to accelerate your Order-to-Cash and Purchase-to-Pay processes. One could say even that it is not about acceleration but a survival question. The past 2 months have shown us that epidemic spreads rapidly and unpredictable changes happen almost daily. Different industries have been under great challenges. Next to the tourism and travel industry which have probably suffered the most, you can see that labor-intensive industries have been interrupted by major breakdowns.
Therefore also paper-based supply chain processes have been at great risk. We are not only talking about people in your mailrooms but as a whole, the worldwide postal business has been under strain, which then also impacts your accounts receivables and payables – possibly quite severely.
In my last month’s blog, I wrote about EESPA’s (European E-Invoicing Service Provider Association) activities. Just recently the association issued a market letter where they write about the urgency of transformation to electronic invoicing.
Electronic invoicing is an absolute must in your accounts receivables process in times like these – fast and accurate delivery of invoices and collection of payments is incredibly important as you manage the challenge. You increase the probability of getting paid on time if your invoices flow into your customer purchasing process seamlessly.
In the purchase-to-pay process, electronic invoicing guarantees you timely processing of the invoices and acceleration of payments. This gives you an opportunity to keep your supply process healthy and delivers certainty to the small suppliers who might be an important player in your supply chain but are very vulnerable to the hick-ups in an external economic environment.
Never have the arguments been so persuasive for removing paper and its replacement by safe and reliable digital processes for e-business and automated supply chains. There is current evidence of delays to invoice processing caused by remote working and the logistical handling of paper-based documents. Current dislocations act as a catalyst to digitize, as we will live with these new conditions for some time to come.
As you all know, I work for OpusCapita – an E-Invoicing Service Provider (among other things). I could maybe highlight here what we and all the other service providers are looking to be part of the solution which supports better results for our customers but also supports a healthier market overall.
What helps to drive the better result for the customer:
- First as said already – “Paper is out”. The electronic transition of all the messages to reduce costs, increase efficiency and improve data quality. There is no need to print and scan anything. Even virtual print and virtual scan (keeping in mind PDF) take too much time but at least it helps to mitigate physical production risk. Data that is electronic from beginning to end can radically improve KPIs like time to payment, DSO, and your cash conversion cycle.
- “From the beginning to the end”. It is clear that the best effects can be achieved when all the business messages are exchanged electronically. Starting from orders and why not catalogs. Again – data quality and efficiency are the keywords. Buyers and suppliers can reap the benefits of electronic procurement and invoicing efficient onboarding to access digital services and improvement in the certainty and timeliness of payments.
- “Be comprehensive and consistent”. Interoperability has come to stay. Through facilitating open data exchange, transactional data can be conveyed seamlessly between trading parties irrelevant in what continent your business partner is and what service provider it uses. Interoperability in E-Invoicing is nowadays as mainstream as it was in the GSM network some time ago. There are good standards available and though almost all service providers are ready for it, it hasn’t happened yet everywhere. Tough Peppol network and EESPA networks are very much working towards making interoperability globally reachable and fully transparent for the user.
- “Do more”. The real value proposition of the digital supply chain goes beyond message transport. It is about fiscal and contractual compliance, improved security and integrity, data validation and transformation, analytics and spend visibility, and potentially supply chain financing. E-Invoicing (and broader o2c/p2p messaging) is the basis for that.
- Now is the best time to switch over to a fully digital supply chain. The real benefits come with critical mass and the ability to quickly respond to changing circumstances. Please think about taking action today to protect trading integrity and create a valuable platform for the future – for your organization and your trading partners.
At the time of writing this blog, I have received a newsletter from PwC who are informing me about French government activities to “legalize paper-based electronic invoices”:
“In the context of the adoption several weeks ago of various emergency measures in the tax, VAT, social, legal and accounting matters related to the COVID-19 health crisis, the Public Finances Directorate General (DGFIP), in a memorandum from the Tax Audit Department dated 30 March 2020 and published on 2 April, proposes a tolerance measure for the exchange of invoices by electronic means. In practice, for the duration of the state of a health emergency, in the event of sending a digitized paper invoice by e-mail, it will be authorized for businesses that this type of invoice may – while retaining its nature as a ‘valid’ invoice with regard to VAT and without prejudice to the exercise of the recipient’s right to deduct purchase VAT – be addressed as such to the recipient (customer)”. (source: PWC newsletter)
I sincerely hope that you will not choose that path and you will use the momentum to switch to fully electronic invoicing. Hard times require bold decisions. Wise men have said: “Appreciate hard times. Someday they’ll just be another chapter of your success story.” So the only thing you need to do now is to just start executing your transition plans.