Alternatives for Electronic Invoicing in Accounts Payable
With the consolidation of work activities for Accounts Payable into a few centers globally, it is increasingly common for companies to have the scale required to justify the elimination of work through automation. Unfortunately, the path to replace paper with electronic invoices has seen a proliferation of approaches that show promise, with no one clear choice that is right for everyone.
A Peeriosity member from a large global company wanted to know where to focus limited company resources to achieve greater success from efforts to implement electronic invoicing. By creating an iPollingTM question, the member was able to quickly understand the range of methods used by peers, with many taking extra time to comment on their approach. Within a few days, the member had a more complete picture, with valuable insights into how they could best adjust their electronic invoicing strategy.
As documented in the iPollingTM results, 48% of member companies have 60% or more of their invoice volume received electronically, with 19% reporting penetrations of over 80%. Here are the details:
Clearly, there is significant room for improvement for most companies in this area, with over half with an electronic invoice submission rate of less than 60%.
When asked about the solutions that show the most promise in the future, the leading candidates are web-based e-invoicing selected by 32% of member companies, and email attachments using PDF or another format selected by 26%. EDI and ERS rounded out the field at 21% each, with no one selecting either 3rd party suppliers for managing incoming invoices or vendor catalog-based solutions.
Many of the responding peers added comments to supplement their iPollingTM responses. Here are some of them:
- We use a set of electronic methods to accept and process invoices (EDI, PDF, Elemica, Vinimaya, etc.) from vendors. The wide range of these channels keeps us from being efficient.
- We are pursuing all electronic options. Most of our current electronic invoicing is due to EDI, an SAP Supplier Network, and e-catalogs. We have just introduced Taulia as our iPortal for vendors which will give us an even broader suite of options for onboarding vendors to e-invoicing. Also introducing Dolphin, which we can use to automate the posting of invoices received in PDF file format. Our initiative is global in nature.
- Although 3rd Party or true e-invoice is preferred, we have decided to offer a menu of choices to suppliers including e-invoice, PDF, and self-billing.
- We find that web-based e-invoicing is the most cost-effective because it allows additional functions, such as a collection of vendor master data changes (i.e. bank account updates), dynamic discounting of invoices, and the ability to look up invoice status and payment remittance info, etc.
- For big volume suppliers, an EDI connection is to be developed, and for medium to small volume vendors, PDF is becoming the popular choice. We contracted with several 3rd party invoice processing suppliers, but because the vendors have to pay for the service, they prefer the free PDF.
- Approximately 76% of our invoices are electronic, with 51% on ERS/EDI/SUS/Ariba and 24% via e-mail. We still have 24% paper invoices. The ERS self-billing process has been an efficient method for us and is very cost-effective, but does have its hurdles. We are presently working on the design of a global standardized tool (like Ariba, etc) and will be willing to share ideas and findings with Peeriosity members as available.
- Our experience suggests that it is very difficult to have a single solution that works best for all your vendors.
- We have a large variety of vendors, and utilizing PDF files is highly efficient in our organization. They are easy to send, view, and store.
- We receive nearly 50% in PDF format via e-mail, but due to the complexity of the invoice content (multiple lines and multiple POs within a single invoice) and format, we are not yet able to directly import this into our ERP system, so must go through our scanning and OCR process. This makes this highly inefficient. EDI is more efficient, but requires a lot of IT involvement to set up, test, and maintain on the part of our suppliers and us. Self-billing or ERS would be most efficient as we would always pay our PO price, reducing purchase price variances or disputes on our side. However, this option puts more burden on our suppliers due to frequent price changes and updates in our business model, which drives more effort into reconciliation and dispute management. ERS is also not permitted in certain countries that require an official supplier invoice to pay. My second vote would go to web-based e-invoicing. We do not yet have this in place, but it appears to be a good blend that both allows the supplier to send the invoice data, but also requires a lower effort to bring the data into our ERP with less IT support after the initial setup.
What level of penetration does your company have for shifting invoice volume from paper to electronic? What approaches have been successful for you and what approaches are you planning to pursue to achieve greater penetration?
Who are your peers and how are you collaborating with them?
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