Tieto The Future Of E-invoicing

The future of e-invoicing

A Tieto publication featuring research from Gartner

Contents

Towards Pan-European E-invoicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

E-invoicing one stop shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Paper invoicing has NO future – The Tieto way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Swedbank, in the frontline of e-invoicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Cost Savings Finally Make the (European) E-Invoicing
Steamroller Pick Up Speed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Volume 3 Issue2

Towards Pan-European E-invoicing

For many years, the European Commission and the European Central
Bank, working in conjunction with the Single European Payment area,
have stressed the importance of migration to electronic invoicing. A
mass-market move away from manual paper invoicing is seen as a
major improvement in productivity. To help pave the way for such a
development, the focus has been on making it easy for EU’s 23 million
small enterprises to join digital financial value chains. Besides saving
time and money, while improving the service they provide to larger
counterparts, this transition enables them to automate their transactions
with other SMEs.
Bo Harald In 2006, the EU commission established an informal task force . This was followed by a formal Expert
Group on e-invoicing . This group of thirty-one members, which started its work in February 2008, has
Chairman
a clear mandate . It aims to identify shortcomings in the regulatory framework concerning e-invoicing
EU Expert Group for
as welI as identify and validate e-invoicing business requirements . It also hopes to identify and
E-invoicing
validate relevant e-invoicing data elements and linkages . Another key part of its remit is to propose
responsibilities assigned to standardization bodies and a time schedule for the development of common
standard(s) . Finally, it wants to propose a European e-invoicing framework to establish a common
conceptual structure, including business requirements, standards and solutions . This group, which I
have the honor of chairing, has a strong mandate and a formidable task ahead of it .
The groups mandate runs until the end of 2009 and a comprehensive mid-term report was approved in February . One of
the Expert Group’s most important additional tasks is to raise awareness of the benefits of e-invoicing thus speeding up
its adoption, both nationally and at a cross-border level . Thanks to the group’s active and inclusive way of working, we are
already seeing clear advances in this area .
In regards to its formal task, the identification of shortcomings in the existing regulatory framework, the group’s progress has
been better than expected . The EU Commission responded to the group’s request to treat paper and electronic invoices
equally by issuing a VAT directive proposal in January 2009 . If adopted, this will remove all technology specific demands
placed on e-invoices . What’s more, it would make e-invoicing significantly easier and cost effective for all and help remove
any mental barriers, which SMEs may still have . It was gratifying to note that the tax administration in the Netherlands took
immediate practical actions in this direction and that the majority of EU member states already support this logical approach .
In support of the EU Commission’s approach of equal treatment The Expert Group has unanimously approved a Code of
Practice . This has been recommended for implementation when, and if, the amended VAT directive proposed by the European
Commission comes into effect . The Code of Practice describes how businesses can provide the required reliability of their
e-invoicing process through technology neutral business controls and procedures embedded in their operations . Although not
mandatory, additional supplementary controls, such as managed networks and electronic signatures can also be used .
The business requirements work has focused on crafting recommendations, which make e-invoicing easy, uniform and
economical . Removing the mandatory technology specific requirements has been a central demand of small and large
enterprises and their associations throughout the EU . The Expert Group recommends that all member states support the
equal treatment principle embedded in the new VAT directive proposal and implement it in their national legislation as swiftly
as the Netherlands has done .
Next the Group aims to focus next on the issue of standards . We are currently evaluating how Cross Industry Invoice 2 .0,
developed within UN/CEFACT, can satisfy the reasonable demands of invoice receivers yet still be easy to implement . It is
particularly important to avoid ERP system investments that deliver too little data . Large invoice receivers, enterprises and
the public sector will clearly not drive e-invoicing if it fails to fulfill their requirements .
Service providers will have to support many existing standards during a lengthy transition period, but exchanges inside the
network should move to CII2 .0 as soon as possible . Once it is accepted, it should be offered by service and ERP providers
to enterprises .
The Framework to be proposed also includes a Framework for Interoperability . This will help realize the vision of an EU,
where invoices can be sent and received just as easily as payments . To further develop the European e-invoicing framework,
we are also working on a proposal for a collaborative governance model . This is another key deliverable that will help ensure
the Frameworks success .

Source: Tieto
2 The future of e-invoicing

E-invoicing one stop shopping

As a result of its strong position within the progressive Nordic
market, Tieto has gained extensive experience working with some
of the world’s most advanced users of e-invoicing. Through strong
partnerships with banks and corporate customers, Tieto has become
one of Europe’s leading e-invoicing vendors.
Now, within the rest of Europe we are seeing the use of e-invoicing accelerating too . The increased
numbers of exchanged documents and of invoice issuers and receivers participating in the
exchange are evidence of this . In order to fulfill the complex demands created by this diversified
European market Tieto offers a managed one stop shopping service . This gives customer the
chance to have one vendor look after all aspects of e-invoicing, including the legal and tax related
requirements .

Mats Wikström Tieto e-invoicing services are organized according to the requirements of different customer
Vice President groups . The backbone of the Tieto market model relies on partnerships, primarily with banks .
Value Networks Tieto offers banks a white labeled service where Tieto acts as a technical partner, while the bank
Tieto handles customer relations . The service package includes both Business Value Services and
Business Integration Services .
Tieto bank labeled e-invoicing enables banks to offer invoicing services to large corporate
customers, SME’s and consumers . Having such a wide ranging scope is essential for telecoms,
utilities and insurance companies, which cater to a variety of customer groups and require a unified
way of handling them . Tieto also provides e-invoicing directly to large corporate customers, which
require demanding solutions for long term projects that include customization and integration with
core systems .
As a full service ICT vendor with industrial expertise, Tieto is well placed to provide corporations
with an end-to-end e-invoicing solution that integrates seamlessly with their back office systems .

Small and Medium
Large Enterprise Consumer
Enterprise (SME)

Automated eBanking /
Message Exchange Self Service Portal

Business Value Low Volume End
High Volume End
Services Self service functions
Automated message exchange
Integrated with eBanking
Online conversions, AFI - AFO
Manual capability
(any format in - any format out) Document Storage File transfer capability
Adapters for ERPs and Presentment Value added applications
Data validation
Semi-automated integration
Roaming with other networks
(Print file upload, PO flip)

Source: Tieto

The future of e-invoicing 3

E-invoicing one stop shopping

To increase customer value, Tieto also has roaming partnerships with other leading European vendors .
By co-operating like this, it is possible to dramatically increase the size of the virtual networks and the
amount of potential business partners within the e-invoice exchange . The customer benefits, as only one
service provider is required to reach all business partners, even if those partners are connected to other
vendors’ networks .
The migration from paper to e-invoicing won’t take place overnight . Connecting and automating the
e-invoice exchange, within a large supplier Network, is a challenging process that takes time . To support
the dematerialization of paper invoicing Tieto and its partners offer complementary scanning and printing
services for the electronic exchange . Tieto also has a long history working on traditional EDI based
message exchanges . Consequently, our services cover the exchange of other Financial Value Chain
related documents too, thus enabling full coverage of supply chain message exchanges .

Source: Tieto


Paper invoicing has NO future –
The Tieto way

The public sector and Whether the market will tip for certain technology
corporations within depends on two things . Firstly economies of scale
and secondly, demand for variety . Clearly a market
Europe have now is more likely to tip if there are important scale
begun to realize the economies, both on demand side economies of
benefits of moving scale, such as network externalities and supply
away from manual side economies of scale, such as lower marginal
production costs .
paper invoicing to
e-invoicing. This is E-invoicing, it seems, provides a perfect example
hardly surprising when of a technology which provides important scale
economies in both the demand and supply side .
you consider that Network externalities are typically divided into direct
numerous studies have and indirect network externalities . E-invoicing is
Markus Hautala
Development Director
proven E-invoicing a classic example of a direct network externality,
brings significant where the utility of the network to the user
Value Networks
increases with the number of other users that can
Tieto cost savings, frees up be reached . An indirect network externality arises
increasingly scarce when the utility of a product increases with the
workforce and helps reduce CO2 number of users because, for instance, there are
emissions. Yet despite these more complementary products available (Katz and
impressive benefits, the use of Shapiro 1986, 19941,2; Farrell and Saloner, 19873) .
In regards to e-invoicing, there exist a wealth of
e-invoicing still remains fairly low at complementary products including electronic
around 3% in Europe. For some this archiving, e-invoice financing, and cash flow
poses valid questions such as “is forecasting .
e-invoicing really going to take off?” Secondly, a market is more likely to tip if there
and “will the market really tip for is low demand for variety . Demand for variety in
this technology?” this context describes the preference for special
features . Therefore, a market can be served by
Andy Grove’s 10X rule of thumb suggests that a single technology if that technology is suitable
the performance of a new technology must be for all users . Moving from paper invoicing to
ten times the performance of an established e-invoicing is a technology shift where one mode,
technology in order to start a revolution . Various the exchange of invoice data electronically, can
studies in this area suggest that from this point serve the whole market .
of view e-invoicing more
than meets this criterion . It
delivers a tenfold increase in Low scale High scale
cost savings and a clearer
economies economies
conscience due to lower
CO2 emissions . Add to that Low demand for variety Unlikely YES
the absolute necessity for
increased efficiency due to High demand for variety NO Depends
a diminishing labor force
during the next decade and Shapiro & Varian (1999)4
you have a very compelling
case for change . Some could justifiably argue that e-invoicing, as
it is carried out today, is not a single technology,
Will the market tip to e-invoicing? but a collection of various (often incompatible)
Tipping, in this context, refers to a market making technologies referred to using one term . This
the transition to a specific technology or standard . seems a valid argument, as there are many

1Katz, M . L ., and Shapiro, C . 1986 . Technology adoption in the presence of network externalities . Journal of Political Economy 94: 822-841 .
2Katz, M . L . and Shapiro, C . 1994 . Systems competition and network effects . Journal of Economic Perspectives 8: 93-115 .
3FARRELL, J ., AND SALONER, G . 1987 . Competition, compatibility, and standards: The economics for horses, penguins, and lemmings . In
Product Standardization and Competitive Strategy . H . Landis Gabel, Ed . Elsevier North Holland, Amsterdam, 1-21 .
4Shapiro, C . and Varian, H . R ., Information Rules: A Strategic Guide to the Network Economy, Boston: Harvard Business School Press, 1999 .


Paper invoicing has NO future –
The Tieto way

different formats to choose from, reachability that this technology will win . The transition to
issues to think about as well as various industry e-invoicing will happen fast once the mass market
sectors and country specificities to address . This realizes the benefits and inevitable migration to this
fragmentation does not, however, extend to end vastly superior technology .
users as the service providers operating in this field
mask these underlying incompatibilities and actively Tieto’s general strategy in e-invoicing
collaborate to solve interoperability issues across Our approach to integrating e-invoicing in Europe is
different domains . based on open standards, industry best practices
and collaboration . We view e-invoicing as the first
As an example, we acknowledge the major benefits,
step towards ubiquitous mass market infrastructure
which can be gained from the emergence of a
for the exchange of commercial documents of
global cross-industry standard and actively support
all types . To further this, our general strategy in
such activities . But whether the market will shift
e-invoicing is focused on open and compatible
towards a single standard or not is not an issue
instead of performance and proprietary . We
for the end customers . B2B integration and format
embrace standardization and harmonization as
conversion services offered by service providers
is evident from our active participation in various
allow corporations to use their existing capabilities .
international standard and interoperability forums,
They also ensure a smooth and controlled migration
such as ISO20022, UN/CFEACT, EU Expert
to new standards once they are available .
Group on e-invoicing and EBA e-invoicing Proof of
The same principle applies to meeting differing Concept Group .
national legal requirements related to e-invoicing .
Tieto’s view on partnering is that no service provider
The market would benefit hugely if legislation
alone has the existing market position, technical
related to e-invoicing was harmonized across
capabilities, patents sales force or geographical
different countries . There is, however, no need
footprint required to dominate the market and make
for anyone to wait for this to happen as service
it take off . In addition to domestic connections,
providers already enable the exchange and
organizations need to reach their business partners
archiving of e-invoices in a tax and legal compliant
located outside their national borders . Suppliers
manner across various jurisdictions .
and buyers still face challenges with harmonized,
In addition to high scale economies and low trusted and tax & legal compliant business partner
demand for variety, a market will tip to one integration in cross-border connections . Tieto’s
technology if multihoming costs are high . Homing interchange agreements provide extended access
costs are costs and investments incurred to and reach to business partners across a number of
the user due to technology affiliation, such as different geographies .
maintenance costs . In the case of invoice handling,
Tieto’s view is that the banking sector’s participation
multihoming costs are high . The parallel handling
is critical to the success of rapid mass-market
of both paper and electronic invoices generates
migration to e-invoicing . Banks can ensure quicker
a considerable amount of additional costs for
migration by building on the established practice
example the scanning of paper invoices into
of e-banking and by making use of the trust
electronic format .
established through re-use of e-banking interfaces
In summary, e-invoicing is an excellent example and payment tools . What’s more, banks have the
of a technology providing significant economies required mass-market sales power to convince
of scale with relatively low demand for variety customers to migrate to e-invoicing and support
from end users . Where those demands for variety them through the transition .
have to be met, in industry specific variations,
national legal requirements and standards, service Tieto delivers results as a service
providers can mask incompatibilities with their
offerings and active collaboration . Invoicing is From e-invoicing to Financial Value Chain
also a task where multihoming costs are typically Based on Tieto’s experience, the cost savings from
considerable . Consequently, it seems highly likely B2B e-invoicing within services and manufacturing
that in the future the market will at some point industries typically amount to 1% of a company’s
tip to e-invoicing . Precisely when the tipping to revenue . At a time when many economists predict
e-invoicing will take place depends on critical challenging times ahead, such savings are very
mass . Rather than a majority of users migrating, welcome .
what is required to create critical mass is a Cost savings gained from electronic transactions
sufficient number of potential users believing are, however, only one side of the story . Electronic


Compatibility Control Open
• Controlled Migration • Open Migration
• Compatible technology but • Friendly to users (usually no
exclusive rights owned by the switching costs)
producer
• Several suppliers
• E.g. upgrades and updates of
• Compatible technology
Windows
• E.g. multiple generations of fax
machines

Performance • Performance Play • Discontinuity
• A new non-compatible tech. • Several suppliers
• Most risks • New technology
• Attractive to outsiders with no • E.g. CD audio technology
installed base
• Requires “way cool” tech.

Technology strategies, Shapiro & Varian (1999)5

transactions can be further utilized as a source for For large corporates, we offer automated
new business services and for revenue creation . messaging services, which can be connected to
Tieto’s Financial Value Chain takes the traditional their corporate integration infrastructure . In order to
financial supply chain transaction management provide a complete business driven packaging of
to another level by adding value through end-to-end services, Financial Value Chain services
sophisticated solutions, such as supplier financing, can be complemented with local integration and
working capital and trade risk management . application development services from Tieto .
Electronic business transactions, including
Services for banks are based on a white labeled
e-invoices, can additionally be used for improved
provisioning model, where the bank defines and
CRM through targeted one-to-one customer
delivers the commercial packaging while Tieto
communications .
produces the technical service:
Providing the Full Range • Business Value Services includes supplier
Tieto’s Financial Value Chain services improve financing, trading risk management and working
working capital and financial risk management capital management .
based on digitized business transactions in the • Business Integration Services includes the
network between buyers, suppliers and banks . multichannel digitalization of trading and
The service is designed to reach all types of corporate to bank relations, procurement to
stakeholders, including self-service solutions for pay / order to cash processes (e-payments,
consumers and small business organizations, e-invoices, SEPA direct debit, e-orders), trading
as well as automated messaging for large partner onboarding services and tax compliant
organizations . Functionality covers the digitizing of archiving of business documents .
the full financial supply chain, from order to cash
and procurement to payment, ensuring that all of Building bridges
the transaction parties needs are met . Tieto’s interchange agreements allow for extended
Results as a Service access and reach to business partners across
Tieto’s Financial Value Chain solutions are available a number of different geographies . Our service
as on-demand services . This service oriented enables the exchange and archiving of e-invoices
delivery model enables the customer to start using in a tax and legal compliant manner in Europe, the
the service with a minimal investment, minimal risk USA and Canada .
and minimal use of their own resources .
Source: Tieto
5Shapiro, C . and Varian, H . R ., Information Rules: A Strategic Guide to the Network Economy, Boston: Harvard Business School Press, 1999 .


Swedbank, in the frontline
of e-invoicing

As one of the Nordic region’s and integration models, therefore making it easy
leading banks, Swedbank’s (www. for customers to use . Like all the banks at that
swedbank.com) vision is to be time, Swedbank was facing a several development
the leading financial institution requirements due to regulatory demands from
in every market in which it authorities . These slowed down the realization of
operates. It also aims to be a business-driven development initiatives .
service leader in the banking Tieto, a long-term partner of Swedbank’s in B2C
industry, and make its customers’ e-invoicing, offered its services to cover B2B
lives and business run smoother e-invoicing as well . Instead of selecting a traditional
through a wide range of easy- IT system implementation model, Swedbank
to-use and competitively priced decided to use Tieto’s white labeled on-demand
financial services. Swedbank’s services . This allowed Swedbank to focus on
goal is to have the most satisfied customer interface, commercial branding, service
customers in the banking industry. packaging, marketing, sales and first line support .
To achieve this, the company is Tieto provided the required business process
Sarah Hysén at the cutting edge of product competences and delivered the technical services .
Product Manager and service development, easily By embedding white labeled services into the
Swedbank AB accessible to all customers and solution, Swedbank was able to scale down the
Corporate Banking provides excellent service. size and resources needed for the project and
launch new products faster .
Swedbank Group has 9,4 million retail
Swedbank’s B2B e-invoicing service is based on
customers and 540,000 corporate
end-user centric design and it covers both sales
customers, with 419 branches in
and purchase invoicing between organizations
Sweden, 272 branches in the Baltic of all sizes . The service enables Swedbank to
countries and 216 branches in create solutions, which support its customers’
the Ukraine. It is also present in financial value chain processes beyond payments .
Copenhagen, Helsinki, Kaliningrad, The service includes a fully automated off-the-
Luxembourg, Marbella, Moscow, New shelf selling process of B2B e-invoicing products,
York, Oslo, Shanghai, St. Petersburg integrated into Swedbank’s existing sales support
and Tokyo. As of March 2009 Swedbank and ERP systems . It is based on core functionalities
had total assets of SEK 1,831 billion and of Tieto’s service and also includes customized
approximately 21,000 employees. packages, which are used by Swedbank’s sales
In the mid-nineties Swedbank was one of the first force to address individual customer’s needs .
Nordic banks to launch a B2C electronic invoice The technical solution consists of the following
presentment and payment service . As a major integrated main components:
Swedish bank Swedbank used its established
1 . Self-Service Portal
e-banking relation with private customers to
complement the existing payment products with • Web application for small corporate
e-invoicing . During that time, the B2B e-invoicing customers acting as e-invoice issuers,
market was complex and fragmented and mainly mainly designed for customers with no
an arena for large corporates active in specific need to integrate e-invoices with their ERP
industry sectors . A few years later the B2B market system
had changed, mainly due to the EU VAT directive,
• Integrated with Swedbank’s external
national legislation and the birth of more widely
e-banking web site
accepted e-invoice formats . As a consequence
Swedbank became interested in offering electronic 2 . Ready-made adapters for the most common
invoice exchange services for corporates of all ERP and financial systems
sizes .
• Plug-in adapters for common ERP systems
Swedbank needed to establish B2B invoicing as in important customer segments
a service, which customers would perceive as a
• Plug-in adapters for widespread invoice
natural part of the cash management offering . The
formats
service was expected to handle different formats


• Applicable for both sales and purchase automated message handling to connect with their
invoicing business partners . To close the gap, the solution
includes self service applications for e-invoicing,
3 . Message handling
integrated with Swedbank’s existing IT systems .
• Automated information exchange to/from
The solution provides Swedbank with a new
enterprises
source of revenue and a more intimate relationship
• Interconnections/roaming with other with the customer . It also improves customer
e-invoicing networks retention and enables the further development
of other financial services integrated with the
• Handling of both bulk and individual
trading processes . These include cash forecasting,
e-invoices
working capital financing and trade risk mitigation .
• Traffic monitoring and an extensive set From Swedbank customers’ perspective the
of value added services for transmitted service has made their life a lot easier . Prior to
information packages, including the solution’s introduction they had to send paper
addressing, splitting, routing, validation and invoices, which involved a significant amount
conversion functions of manual work . Now, invoices can be sent
electronically, either by using a web application
The service introduced a seamless integration of
or directly from their ERP systems . For Invoice
services for both large corporates and SMEs, often
receivers the benefits are just as impressive . Today,
sharing the same financial value chains, but having
they can integrate invoices directly to their workflow
very different business needs . In order to replace
and ERP systems and improve the automation
labor intensive manual handling, large organizations
levels of invoice handling . Alternatively, they can
aim to fully automate and digitize business
use self-service applications to approve and pay
documents with all their suppliers and buyers .
received invoices .
However, some SMEs may not have the technical
skills or investment capability to implement an Source: Tieto


Cost Savings Finally Make the
(European) E-Invoicing Steamroller
Pick Up Speed
E-invoicing is finally growing, make 50% of your invoicing traffic electronic in
especially in Europe. The two years, then you’re doing great .
savings have been proved, but STRATEGIC PLANNING ASSUMPTION(S)
the complexity of multinational By 2012, at least 20% of all invoices exchanged
e-invoicing projects is deceptively in Europe will be electronic, up from about 3% in
2009 .
challenging. Application managers,
CIOs and business managers should
use this research to plan e-invoicing ANALYSIS
projects and to achieve the best 1.0 E-Invoicing: A Definition
cost-savings and benefits. E-invoicing cuts through many disciplines, requires
a lot of knowledge (spanning business, regulations
Key Findings and IT), and involves a lot of complexity . A good
• E-invoicing is a complex solution that must definition of e-invoicing is:
bridge heterogeneous internal business
processes of business partners . A substantial • E-invoicing is the interchange and storage of
amount of IT infrastructure is needed to legally valid invoices in electronic format only
support these processes, and to address tax between trading partners .
and business regulations compliance . The interchange does not use or require paper-
• Because of all the moving targets involved, based invoices . E-invoices have legal validity,
the vast majority of e-invoicing projects will be and can be used to prove compliance or as tax
implemented by B2B or e-commerce service originals . This research is about e-invoicing in
providers . On-premises software will be an general, and most considerations apply whether
option only for very large corporations, which you are sending e-invoices or receiving them,
are in the best position to provide a high level unless otherwise stated . Operationally:
of control of the solution, and can afford the • The seller must ensure that the invoice contains
strong commitment of a handful of technology the correct data and that it is authentic .
and business specialists .
• The buyer must verify the authenticity of the
• The first case studies of e-invoicing indicate invoice, match it to goods or services received,
that these projects typically break even (that is, and execute payment .
they pay back their own costs) within a year or
less . • The seller and the buyer (or a third party on
their behalf) must both store the readable
• Several governments in Europe (and others and authentic (this comes with a lot of added
around the world) mandate the use of strong security) invoice for a period of time
e-invoicing for government agencies; more are (see Section 4 .0 European Union Directive
likely to follow in the next year or two . 2001/115, and Its Revision 2006/112’ below),
• It’s only a matter of time before e-invoicing and make it available to a tax authority on
becomes mandatory, wherever you are, request .
whether you are a supplier or a seller .
2.0 Basic Facts on E-Invoicing
Payments for goods and services account for
Recommendations about 30% of the gross domestic product of most
• Start evaluating e-invoicing project countries; several countries implement value-added
opportunities now, regardless of your tax (VAT) over those payments (for goods and
company’s vertical industry or financial shape . services): so we are talking about a lot of money,
• Never underestimate the consequences of made up of a lot of invoices . With good reason,
regulation diversity across countries; potential tax authorities in government have a strong interest
problems are in the details . in ensuring that companies exchange and store
invoices in a secure and reliable way to prevent
• Don’t sell the benefits of e-invoicing internally
taxation errors, and to minimize fraud . Thus, tax
in your company too quickly; multicountry
authorities typically rely heavily on the invoice to
e-invoicing projects last years . Proceed with a
establish the commercial and tax implications of a
succession of projects and demonstrate their
specific transaction .
value one by one . In a large project, if you


E-invoicing takes for granted that a company has to be around €30 . It also determined that by
a clear, structured process, which, on receipt of using e-invoicing, an 80% cost saving is possible .
an invoice, reconciles it with goods and services Confirming this data, initial case studies also
delivered, accepts it automatically if an agreed- indicate that e-invoicing has proved to reduce the
on set of criteria is met, and starts payment . cost of processing one invoice to less than €7 .
Implementing buyer e-invoicing is more challenging E-invoicing also offers a range of other potential
in organizations with fragmented accounts payable benefits, including improvements in AP processes
(AP) systems and processes . Organizations that by reducing invoice processing time and minimizing
have already implemented shared services for AP manual intervention, thus leading to a reduction
will realize the greatest benefits, because they in operating expenses . This fact alone makes
already have only a small number of locations some companies start e-invoicing projects; it
where invoices are received . makes many more look deeper into the e-invoicing
conundrum .
Where multiple AP systems are in place,
implementing an AP invoice automation system Several studies and surveys are available on the
can link multiple AP systems to provide one point current e-invoicing uptake and on the projected
of interface for e-invoices . However, this will growth in the next years . The results are somewhat
add complexity to the project . Some companies different, because several vested interests are in
piggyback on the necessity of an e-invoicing play, but a conservative estimate indicates that in
project (for example, to comply with a government 2008, tens of thousands of European corporations
regulation) to force an internal rationalization and several million consumers exchanged tens of
effort, and to put some order into their existing millions of e-invoices . So, e-invoicing is possible,
processes, in preparation for an electronic solution, viable and beneficial – today . The e-invoicing
because the processes are not that difficult to market (made up of several markets; see Section
change (they are just clerical AP processes) . But 3 .0 Current Vendor Landscape) started from very
e-invoicing is not only about this; it is also about little, and is processing tens of millions of e-invoices
compliance with local tax laws and integration with just four years later . Still, many voices in this area
the security infrastructure that is used to exchange express disappointment at the slow progress and
invoicing information and to keep the records . uptake of e-invoicing; we can only observe that
they must have had unrealistic expectations from
E-invoicing affects internal business processes,
the beginning . Yes, the adoption of e-invoicing
mutual agreements among business partners,
remains very modest for now (approximately only
financial transactions, taxes, and legal compliance,
3% of European invoices are electronic), but it is
and a lot of the IT infrastructure that supports
easy to explain why, considering the difficulties and
all this . The business processes to get invoices
complexities associated with this approach (see
paid change slightly company by company (and
Section 7 .0 E-invoicing Challenges) .
sometimes within a specific company, depending
on trading partner agreements, or on different One immediate observation is that how you do
business practices in different geographies, or e-invoicing does not depend only on where your
on the type of invoice); (tax) laws and security company has its headquarters, or on the country
norms (for example, e-signatures and how where it is listed on the stock exchange . There are
advanced/qualified they are, or the rules for also strong dependencies on the countries from
issuing them or building certificates) . On the other which you receive e-invoices and to which you
hand, for many buyer-supplier communities, the send e-invoices, because you will have to conform
continued prevalence of paper-based or fax- to the norms and business practices of those
based invoices and the inertia it has produced countries for the e-invoices to be valid there . This
have severely limited the ability to leverage research is mainly about e-invoicing in Europe, but
e-invoices to automate the purchase-order-to- it also affects every company that does business
invoice reconciliation processes and the rest of the with European partners . So, if you are outside
payment process . the European Union (EU; for example, in the U .S .)
but your company does business internationally
All the above is enough for some companies
or plans to do so, this research is highly relevant .
to decide, “E-invoicing is not for me, at least
Don’t forget that your business partner might
for today.” But one fact introduces doubt into
even be your own company; because of the
this perspective: The European Associations
VAT implications of e-invoicing, and because
of Corporate Treasurers identified the average
intercompany transactions are subject to VAT in
processing cost of a paper invoice across Europe


Pick Up Speed
countries with VAT statutes, you may find that strong industry focus, whereas supplier e-invoicing
the simplest place to start an e-invoicing rollout is solutions are generic, because AP processes are
between you and (one of) your foreign subsidiaries . the same across industries) .
No company that is conducting transactions Recently, some larger integration service providers
electronically today will stop doing so . Current in B2B have been combining supplier/customer
projects will only expand, because the more e-invoicing with archiving for tax purposes, offering
invoices you process electronically, the more services for the whole e-invoicing space across
money you save . An accounting department several countries . By looking at the bullet list of
that processes twice as many invoices in the vendors at the beginning of this section, these new
same unit of time delivers immediate benefits offerings by larger integration service providers
in savings on resources and in customer today address a much wider set of requirements .
satisfaction (users of e-invoicing are starting to It must be noted though that the vast majority of
see more than 10 invoices processed per hour these offerings is incomplete: however, leveraging
per full-time equivalent [FTE]; see Section 9 .0 ongoing harmonization efforts, they already deliver
Reasons for Doing E-Invoicing) . Proof-of-concept significant benefits, so they are starting to sell well .
implementations that began during the past year
E-invoicing solutions have a wide range of users:
on a small percentage of invoices will be extended .
Gartner expects hundreds of new projects to start • IT staff to install and operate the solution
in Europe just in the next year . Larger integration (possibly outsourced)
service providers offering e-invoicing services
• Administrative payments/accounting staff
expect to at least double their e-invoice traffic in
(could be outsourced, too, but it’s less
2009 . Again, even from a conservative perspective,
frequent)
it’s clear that the number of e-invoices exchanged
in Europe will grow steadily in double digits for • Tax auditors from tax and revenue agencies
the next few years (see Section 10 .0 The Main outside the company who want to see
Reasons Why E-Invoicing Use Will Grow) . evidence of real, paid, unchanged invoices (and
all of them) kept for a number of years
3.0 Current Vendor Landscape The complexity of catering to such diverse
Many competing and varied vendors are trying to constituencies of users adds to all the other
solve various aspects of e-invoicing, including: difficulties of putting an e-invoicing solution
• Banks together (see Section 7 .0 E-invoicing Challenges) .
Also, e-invoicing solutions need to closely follow
• Credit card companies several moving targets, and must immediately
• ERP-related purchasing applications vendors demonstrate tangible benefits; for these reasons,
e-invoicing solutions delivered as a service in
• Pure-play e-invoicing providers Europe tend to be much more popular and easy to
• Marketplaces consume than software-based solutions .

• Integration service providers
4.0 EU Directive 2001/115, and Its
• Electronic data interchange (EDI) technology Revision 2006/112
providers As this directive’s ID number indicates, the original
• B2B software companies directive was issued in 2001, and was revised in
2006 (see http://ec .europa .eu/taxation_customs/
• Supply chain finance specialists taxation/vat/traders/invoicing_rules/index_en .htm),
Historically, each vendor has addressed only with a view to “simplifying, modernizing and
one specific side of the e-invoicing puzzle: harmonizing the conditions laid down for invoicing
Today, supplier (or buyer) e-invoicing frequently in respect of VAT in the EU,” for all member states.
is addressed by a different set of vendors from A core theme of the directive was to promote
customer (seller) e-invoicing, which frequently is the efficient cross-border creation, transmission,
addressed by a different set of vendors set general acceptance, storage and retrieval of invoices .
e-archiving – and the list can go on . Today, Since it went into effect on 1 January 2004, all EU
these are different markets, just as the issues member states must accept e-invoices for VAT
the vendors address are somewhat different (for purposes – if two conditions are fulfilled:
example, customer e-invoicing solutions have a


• The other party agrees to exchange invoices in operate or be trusted in the sender’s or receiver’s
electronic format. Article 232 states, “Invoices home country . Some countries require time stamps
issued pursuant to Section 2 may be sent at specific points in the e-invoice life cycle . All this
on paper or, subject to acceptance by the information must be linked together for proper
recipient, they may be sent or made available accounting and tax processing . In addition, these
by electronic means.” stipulations overlap with the regulatory framework
governing e-record every EU member state already
• The integrity (nonchangeability) and authenticity
has in place .
(the declared source being the actual source)
of the e-invoices are guaranteed in transport The e-invoicing directive explicitly states that third
and storage . parties may issue the invoice in the name and
on behalf of the supplier . It is generally assumed
To allow for technological differences between
– although usually not explicitly regulated – that
each member EU state, and to remain technology-
the buyer can also outsource some or all tax-
neutral, the directive allowed for several ways of
relevant processes to a third party . This opens
meeting the two conditions . For example, the
up a variety of new lines of business for B2B
requirements to ensure authenticity and integrity
infrastructure vendors to extend existing B2B
can be met either through advanced or qualified
projects to e-invoicing, and to maximize the value
e-signatures or through EDI with contractual
of investments that IT end users have made in B2B
security measures (see Section 8 .0 E-Signatures,
projects .
EDI or the “Third Option”? for a brief discussion on
the alternatives) . In an announcement issued at the end of
January 2009, the commissioner for taxation and
Unfortunately, this technological flexibility has
customs of the European Commission unveiled
led member states to adopt state-specific
proposals to make e-invoicing subject to the
versions of the directive, which have disparate
same rules as paper-based invoicing – without
requirements for meeting the functional objectives .
mandatory controls such as EDI or e-signatures
These requirements, in turn, have led to more-
as a precondition . This deregulation, if approved,
stringent or less-stringent controls in different
would give businesses freedom as to how to prove
states (for example, in the U .K ., no e-signature is
that their invoices are real and unchanged, but
required; in Germany, the enterprise must create
the deregulation would not change the fact that
the signatures using a certificate issued by an
every company ultimately must be able to produce
approved certification authority and issued to an
such proof for their EU invoices . Any change to
approved individual representing the enterprise) .
the current regulations would require unanimous
The directive includes policies about: approval by all (27, at the time of this publication)
EU member states . This new regulation, if
• Integrity and authenticity guarantees through
approved, is not likely to formally enter into force
e-signatures or “EDI” or “other means” (the
before 2013, at the earliest, and e-invoicing
directive states that invoices are not required
projects typically break even within one year, so
to be signed)
holding investments only because a change in
• Storage of invoices in any European country regulations may be coming is not a good idea .
• Content of invoices
5.0 Countries That Mandate the
• Outsourcing of invoice issuance to third parties
Use of E-Invoicing for Government
• Self-billing (the buyer issues the e-invoice on The first European country acting on the European
behalf of the seller based on received goods or directive was Denmark, which made e-invoicing
services – as opposed to waiting for the seller mandatory for the public sector in February 2005 .
to issue and send an e-invoice) The scanning of documents at the post office
was possible initially, but has since been replaced
Invoice storage location and retention period
with direct sending . Approximately 15 million
(ranging from three to 11 years) requirements also
transactions that the state previously handled
vary widely among countries . Some countries have
on paper are now managed electronically, with
specific requirements about whether invoices can
huge benefits . According to Claus Juhl, of the
or must be retained in the sender’s country versus
government’s digital task force, public-sector
the receiver’s country or a third country altogether .
savings amount to around €100 million in three
There are also state-specific requirements for the
years; this result gains importance when you
use of outsourcing providers that may or may not


Pick Up Speed
consider that Denmark’s population is only 5 for the use of e-signatures for e-invoicing, but
million . Sweden set a deadline for public-sector mandates guaranteed integrity of e-invoices during
e-invoicing readiness (not completely mandatory) the whole e-invoice life cycle, including storage .
in July 2008; it’s too early to discern the real
In the U .S ., there is no real VAT concept in
difference e-invoicing is making .
taxation, but the final transaction between buyer
Finland is an active e-invoicing country in which a and seller carries a tax that depends on state
number of consolidators cooperate with a growing and federal administrations . This tax is generally
bank scheme supported by the government . enforced by examining the records of a company,
Finland has set a public-sector “e-invoice or which the Internal Revenue Service regulates
no invoice” (paper invoices will be returned very heavily for taxpayers who keep records only
to the sender) deadline for the end of 2009 . in electronic format . Despite a 1996 law that
Several major corporations in Finland (including, requires the U .S . government to make payments
interestingly enough, some of the biggest paper electronically, only 27% of federal contractors
companies in the world) are enforcing the deadline use e-invoice presentment and payment (EIPP) to
already . Most government ministries in Spain present invoices, and only 26% receive payments
will honor only e-invoices from September 2009 . from the government via EIPP . Many companies
Italy mandated use of the European directive (by (several U .S . government agencies have e-invoicing
prohibition to accept and pay paper invoices) in mandates as well) send and receive payments
2008, but even more than the level of readiness electronically, but the purchase-to-pay and order-
of public-sector suppliers, it’s the red tape and to-cash processes are not fully automated, nor
internal cultural resistance that are making the are they particularly well-integrated to process
transition difficult . Implementation seems to be or produce e-invoices . There are no explicit
postponed to later in 2009, inevitably causing requirements for e-signatures .
confusion .
The Canada Revenue Agency (CRA) has issued a
Approximately 10 other European countries are in series of circulars on electronic transactions and
the process of setting up deadlines for mandatory records for income tax purposes . These rules also
e-invoicing in government . The size of a country apply to e-invoices .
seems to matter most; the smaller the country, the
According to TrustWeaver, a pure-play e-invoicing
faster it can adopt e-invoicing . Some remaining
technology provider that bases its business on the
countries might already have a lot of e-invoicing
research it conducts on international e-invoicing
experience, due to the activity of local businesses
norms, the situation in other areas of the world is
(such as Poland with its retailers, or France and
still at initial stages of development:
the U .K . with their utilities over EDI) .
• Japan is a notable exception among
Outside the EU, the Singaporean government
economically strong Asian countries in that
has allowed e-invoicing since 2003, and has
paperless invoicing is not permitted without
made it mandatory since May 2008 . Mexico has
explicit approval from the tax authorities .
been pushing e-invoicing (mandating the use
of e-signatures), albeit with some local twists in • E-invoicing, as known in other parts of the
regulations, similarly to Brazil, where e-invoicing world, is prohibited in China . The Chinese tax
is already common in some public-sector areas . authorities are rolling out a central-government-
Chile, Uruguay and Costa Rica are in the process controlled e-hub under the Golden Tax Project,
of passing similar legislation . Australia, New which will increasingly be the only permitted
Zealand, Taiwan, Indonesia and Malaysia as well channel for invoicing, reporting and paying
have started legislation on e-invoicing . applicable taxes . The project is designed for
the communication of tax-relevant transaction
6.0 Situations in Other Countries information among businesses, which makes it
Outside the EU, important European countries an automated law enforcement engine requiring
such as Switzerland and Norway also allow little manual intervention by the tax authorities .
e-invoicing . Switzerland has closely coordinated • E-invoicing remains illegal in the vast majority
its legal framework for e-invoicing with that of the of African countries . Some Northern African
EU, but only e-signatures are allowed – there is no countries, such as Tunisia and Morocco, have
EDI option or other alternative . Norway (not an EU mature regulatory and institutional frameworks
member, but closely aligned with the EU), contrary for the recognition of electronic transactions
to Switzerland, does not have explicit requirements


(including e-signatures) in general, but they do agreed standard to structure an EDI message.” So
not have specific regulation for e-invoicing . the Commission really means “B2B infrastructure,”
under the current Gartner definition . Some EU
• South Africa has allowed e-invoicing since
member states (for example, Lithuania) still define
September 2002, but e-invoicing traffic
EDI strictly as systems using a specific EDI for
remains low among businesses and tax
Administration, Commerce and Transportation
authorities .
(EDIFACT) standard only . Is Web EDI (where one
transacting partner manually keys in, supplements
7.0 E-Invoicing Challenges and/or approves invoice data) EDI under the
As anticipated by the considerations in the directive meaning, and will tax authorities recognize
previous sections of this research, there are a it as such? What trading partners consider EDI will
number of intricacies in doing cross-country not necessarily be viewed as EDI by tax authorities,
e-invoicing projects . Supplier e-invoicing and and vice versa .
generic e-invoicing projects with all business
partners in one country are considerably easier, Another complication with the current EU
and this tends to be the initial point of many e-invoicing system is that most requirements
e-invoicing pilot and emerging projects . However, that are in practice are not published by member
the vast majority of midsize to large organizations states and are extremely difficult or expensive for
in Europe and the rest of the world has suppliers businesses to obtain, interpret and monitor . In
or sales channels or customers outside their home the absence of information, how do e-invoicing
countries, and because the value of an e-invoicing systems handle errors? Even this becomes
solution typically is related to the number of country-specific, because of the tax implications
invoices processed electronically, restricting the of a wrong invoice and the possible actions you
projects to one country is not generally wise, viable might want in place to deal with or correct the
or both . error . At the moment, there is a knowledge gap
between businesses and tax departments around
This section highlights the main difficulties requirements, liability and legal questions . Wide
international e-invoicing projects suffer from so that knowledge differences frequently exist between
stakeholders will be aware of and actively work to different revenue department workers . Sometimes
avoid them . businesses end up educating the revenue services
We have introduced the several axes of on their own legislative texts, with the inevitable
variance of e-invoicing requirements (internal delays for discussion and interpretation . Big
and multienterprise business processes, IT accounting firms, such as PricewaterhouseCoopers
infrastructures, law and security, to name a few), or Ernst & Young, are only slowly getting into the
and how they cause differences, from the seller’s business of certifying e-invoicing solutions . Thus
and the buyer’s perspectives; it is common, for far, this is happening in Scandinavian countries and
example, that different laws will apply to buyers in the U .K ., and is likely to be extended to other
and sellers . This, by far, is the most common geographies, but it is difficult to predict how quickly
source of difficulties in e-invoicing projects, this will occur .
and is compounded by regulations and general Additionally, if you are procuring or running an
requirements that are not fixed in time; these often e-invoice solution, then how do you know that
change because interpretations and practices it is compliant with the EU directive, or with the
evolve . various tax laws abroad? There is no such thing
For example, the European directive explicitly as compliance with the EU directive itself; what
talks about EDI as a way of transporting invoice matters is whether there is interoperability with
information having the attributes of integrity your business partners and fulfillment of local
and authenticity. But what is EDI? The concept requirements as applied by local tax authorities,
of “EDI” (and of “e-signatures”) differs among VAT laws and general industry practices . Mexico
countries, and largely consists of rules that is the only country that is putting in place a
existed long before the e-invoicing directive . certification program for e-invoicing; in Europe, the
Frequently, the legal and business definitions European Committee for Standardization is working
of these concepts are not the same . The on “good practice guidelines for e-invoicing,” but
directive refers to a definition of EDI from a 1994 it will take at least two years for this work to be
European Commission recommendation: “The finished and for all tax authorities to endorse it . In
electronic transfer, from computer to computer, addition, major cultural differences persist among
of commercial and administrative data using an country views of a “typical e-invoicing process,”


Pick Up Speed
and these differences will continue to slow the did not receive the e-invoice). Most “managed
adoption of e-invoicing for years to come . networks” run by integration service providers’ use
of certificates for authentication and/or signing of
8.0 E-Signatures, EDI or the certain types of content .
“Third Option”? Using e-signatures will mean dealing with poor
The e-invoicing directive requires invoicing parties interoperability internationally, and you certainly
to guarantee the authenticity and integrity of don’t need even more problems in your e-invoicing
e-invoices in transport and in storage, through projects . However, consider that:
e-signatures, EDI or “other means.” To respect
• If your e-invoicing project includes business
the various ways of guaranteeing authenticity and
partners in Switzerland, Mexico or Brazil (or if
integrity of the processes in use in Europe, and to
you are running your e-invoicing project from
allow each member state to build on the policies
one of those countries), then you have no
they have already, the directive is not intentionally
choice; these countries mandate e-signatures .
prescriptive .
To comply with the e-invoicing directive (for
However, some member states are more which the e-signature is only one of the three
prescriptive than others, so it is up to each allowed options), no EU member state strictly
government tax office to rule on whether a specific mandates e-signatures; however, e-signatures
method of guaranteeing authenticity and integrity seem to be the preferred option for Spain and
is acceptable . A lot of government tax offices Germany .
worldwide simply do not have the necessary
• Top e-invoicing pure-play vendors, and
knowledge to do this .
the integration service providers using
Historically, different methods have been employed their software, are slowly getting around
in different countries to guarantee the authenticity interoperability problems, and working solutions
and integrity of e-invoices; for example, there is a are in place for some countries .
lot of EDI use in France and Germany, and a lot of
• E-signatures are better-regulated than
“other means” in use in Sweden and Finland, and
e-invoices; requirements are fairly clearly
most of these systems can guarantee integrity . In
defined in most countries .
a few cases, authenticity is guaranteed, too, or
can be guaranteed by extending the functionality • E-signature software is now available at
of the system (typically through e-signatures) . But reasonable pricing (if you choose a service-
whether the tax authorities in all the countries based offering, then you will use your service
where you implement e-invoicing recognize those provider’s software, and the cost of this
methods as valid for tax purposes is another approach is generally subsidized between
question . different users – in other words, if you do
e-invoicing through a service provider, then
Security never was a necessary component
you don’t need to worry about the cost of
of EDI . A lot of EDI systems are far from being
e-signature software) .
secure, because the threat of breach is not high
enough, and the potential damage of a breach • No matter how you do e-invoicing, the need
can be reasonably contained . In other words, for e-signatures will arise in some way in the
the fact that a system can legally qualify as EDI requirements when you start analyzing how
says nothing about the guarantees it provides for to implement integrity, authentication, secure
e-invoice integrity and authenticity . Nearly all EU storage or time stamps (required in several
member states have additional requirements that countries – for example, Italy) .
systems must comply with under the EDI option .
In summary, for your e-invoicing project:
Furthermore, EDI (remember the directive basically
means generalized B2B with that – see Section • If your current ways of doing B2B can
7 .0 E-invoicing Challenges) and e-signatures guarantee the authenticity and integrity of
are not two mutually exclusive options . Modern e-invoices in transport and in storage, and if
B2B standards make room for the use of the tax authorities in all the countries you are
e-signatures; for example, point-to-point security doing e-invoicing in accept this, then it’s likely
standards (like Applicability Statement [AS2]) that your current B2B system can deliver all
are based on e-signatures as the most effective e-invoicing benefits (and you might be doing
way to guarantee integrity and authenticity (and e-invoicing already) .
nonrepudiation – the receiver cannot say that it


• If your current ways of doing B2B cannot to reconcile the invoice with the goods or
guarantee the authenticity and integrity of services received (typically, by integration with an
e-invoices in transport and in storage, then ERP package) . The vast majority of e-invoicing
estimate how difficult and expensive it would implementers that have done invoice printing and
be to add this function . You are likely to be scanning have found that it is not enough and have
forced to introduce e-signatures at some point, moved on to something else . If you need to send
but the extension costs often are repaid quickly e-invoices to the governments in Europe or the
by the savings (ensure that you carefully supply chain masters who mandated (or will shortly
estimate savings and costs before starting the mandate) e-invoices, then printing and scanning
project) . will be of little use .
• If your B2B projects do not deal with invoices, By implementing supplier e-invoicing, you
or if extending their functionality proves to be immediately remove one of the biggest issues in AP
too costly, or if you are starting e-invoicing – the processing of paper invoices . These frequently
from the ground up, then you are better must be manually entered into the AP system, which
off planning for an e-invoicing project using is time-consuming and error-prone . Also, when
e-signatures, despite all the complexities paper invoices are routed around the organization
associated with this approach . for approval, they sometimes get lost and frequently
get delayed . E-invoicing addresses these issues
9.0 Reasons for Doing E-Invoicing and improves AP efficiency, without having to make
So far, this research has surveyed several major changes to internal processes .
arguments against e-invoicing, and we have Current case studies indicate that you can quantify
covered in some detail the complexities associated e-invoicing savings in many ways, including the
with it . However, there are excellent reasons that cost per invoice, as above, or the total savings due
prompt companies to face these complexities, deal to reduced number of resources and computing
with them and start an e-invoicing project . power (60% to 80%, as compared to paper invoice
To reduce invoice-processing costs, the first processing), or even a percentage of a midsize
thing companies try is centralized invoice printing to large company’s turnover (approximately 1%) .
and scanning (with or without optical character Whichever way you decide to demonstrate savings,
recognition) . More large organizations are the clear indication from case studies is that the
increasingly trying this option, because they can savings for companies that have to deal with a
negotiate costs down with printing and scanning large volume of invoices (more than 100 per day,
providers and, thereby, cut paper invoicing costs inbound and outbound) are significant , because
sometimes drastically, somewhat reducing the of the economies of scale obtained by aligning
pressure to move to full-fledged e-invoicing . technical, business and compliance strategies .
Printing and scanning do not require process Other benefits include:
adaptation, but are mainly add-ons to well-tested • Better spending analysis, leading to some
paper-based processes . This alternative does spending reduction
provide savings, but this is only a fraction of what
an e-invoice project can deliver (see Section 11 .0 • Faster processing times and payment cycles
Can Paper and “E” Go Together?). • Enhanced contract performance analysis
The next step is to formalize the existing, • Better tracking and enforcing of trading partner
unchanged invoice processing process(es) into compliance with commercial terms
a business process management suite or a
workflow . This puts more order into the work, • Improved dispute handling and avoidance
and gives more visibility over the processing of • Opportunity to realize more supplier rebates
an invoice . However, in this case, the savings and discounts
are marginal, and they need to be offset from the
costs of the software being used to support the • Better auditability of invoices through integrity
workflow, and of training the invoice processing and authenticity guarantees
staff for using the software . • Easier availability of data for regulatory
Most of the e-invoice savings are due to more- compliance, for example, supply chain
streamlined payment processes, taking humans traceability
out of the picture as much as possible, and • Greener approach, big reductions in
providing the whole set of data that is needed consumption of paper


Pick Up Speed
The potential for benefits is much greater for the 11.0 Can Paper and “E” Go
buyer than the supplier/customer, because the Together?
buyer is improving internal processes for handling The road to full e-invoicing is gradual . First, you
invoices and typically has to process a lot of them, will make electronic-only a subset of all invoices,
compounding the benefits (which is why we are according to several criteria (selected business
seeing a bigger uptake in buyer e-invoicing and partners or types of invoices, for example), then
customer e-invoicing) . However, e-invoicing does you will gradually increase the number of invoices
provide benefits to senders, too, such as improved that can be dealt with automatically, or with minimal
customer satisfaction, reduced administrative human intervention . So, for practical purposes,
costs in credit collection, more-effective capital paper and “e” will need to go together anyway
management and cash flow control (suppliers can for a few years . During this transition, companies
see when invoices will be settled, so they can should ensure that a tax inspector can easily
forecast receipts more effectively), and, above and clearly distinguish in the accounting systems
all, lower customer churn . This would apply also between what is done electronically and what is
to smaller senders, which would not have the not . Companies tend to deal with this years-long
e-invoicing volumes of the suppliers . “transition” in different ways, as described in this
As always in B2B, the key in e-invoicing projects section . Because of internal process intricacies
lies with the recognition of the shared benefits (or because it is hard to get small suppliers to go
that suppliers and buying organizations can electronic), certain types of invoices will tend to stay
realize . This typically implies improved business on paper, at least in the initial years of e-invoicing
processes (with the associated organizational and initiatives .
change management challenges) and technology To ease the transition, some companies continue
additions . to accept and issue paper invoices, and to accept
and issue e-invoices at the same time for the
10.0 The Main Reasons Why same goods or services, as a sort of transition
E-Invoicing Use Will Grow to full e-invoicing . Receiving paper and electronic
After a few dormant years, e-invoicing adoption is records for the same invoice will not remove the
finally increasing . Although none of these reasons problem (which, primarily, is processing the paper
in isolation is likely to be enough to warrant invoice), and will duplicate work . Except for brief
continued growth, all of them together are driving periods of time during pilot programs, this is not an
and will continue to drive increased widespread ideal situation, and dramatically raises the costs of
adoption: dealing with invoices, instead of driving them down .
• Strong user demand, because of the benefits, More frequently, some companies are receiving
especially savings invoices electronically, but they also keep paper
copies for tax and legal purposes . Doing this
• Increased supply, and an associated increase
(electronic data transfer) is quicker, less-expensive
in the maturity and effectiveness of e-invoicing
and less-complicated than full-fledged paperless
solutions; in particular, several banks are
e-invoicing and still delivers some benefit . However,
promoting e-invoicing in their strategies
in a solution like this, you still incur high invoice
(especially in Spain, Finland and Switzerland)
storage costs (driven down only partially by
• More governments mandating e-invoicing, scanning) and higher fixed costs of reconciliation
especially in the EU between what is on paper and the electronic
transactions . This means that you won’t harvest
• Increasing availability of viable (and compelling)
the full scale of benefits that e-invoicing can deliver,
e-invoicing references and case studies as
having done most of the work for it .
more companies adopt e-invoicing
Yet, there is plenty of room for development . Some
Other factors may come into play (for example,
studies estimate that pure e-invoices (with no paper
some e-invoicing pioneers are asking suppliers for
summary attachment) currently represent only 2%
extra money to process paper invoices), but the
to 3% of the total amount of invoices in Europe,
four factors above will constitute the main push .
so the market potential is immense . Bo Harald,
Thus, e-invoicing will grow steadily during the next
chair of the EU e-invoicing expert group, says that
few years, despite all the difficulties overviewed
paper invoices have no future . In the long term, it
in this research, simply because the momentum
is difficult to disagree with him . In the short term
of these factors is stronger than the decelerating
and midterm, there is still a lot of complexity to
force of the difficulties .


Tieto The Future Of E-invoicing

Tieto The Future Of E-invoicing

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