Monday, November 29, 2010

Electronic Invoicing: A Dog Chasing the Car

By Tom Walker of Open Text

What is electronic invoicing? Just a simple search of the Internet provides several answers. What is the correct way to write the term … spell it out or abbreviate with a big E or little e? Does this relate to outbound invoices or inbound invoices? Is this just electronic data interchange (EDI)? I ask for your comments based on my observation below; when you hear e-invoice…what comes to mind?

For my comments, I will use e-invoice and assume it relates to inbound invoices and I will assume that SAP is the backend solution.

Invoices can be received electronically through several methods. EDI has been around for many years and seemed to have reached its peak. Most major trading partners were EDI-enabled. EDI also requires a specific internal skill set to maintain. The maturity of EDI provides a proven electronic methodology but somewhat relegated to large corporations. Both large companies and small to mid size receive invoices through direct loads from vendor website and upload of files sent from vendors. The direct link to vendors is common with purchasing cards while files uploads are common with utilities.

The thing all of these electronic methods have in common is the elimination of mail room activity and manual data entry. Another commonality is that all may still contain errors in the invoice meta data. Some consider fax or email attachment as electronic but both of these typically require first capture of the image and from that point they are handled the same as paper invoices.

There is a current trend to consider electronic invoice presentment and payment (EIPP) to be e-invoicing as provided by vendor networks. These networks accumulate invoices (typically those invoices still received by paper) from multiple Vendors and then submit them to the respective multiple clients…a many to many relationship. While these networks continue to be unique to specific providers, it is assumed they will eventually provide the ability to “roam” similar to cell phone networks.

Regardless of how a corporation receives e-invoices, it is how you process the header and line item meta data that creates significant additional value to e-invoicing. Moving from paper to e-invoice does not eliminate the vendor from providing incorrect meta data. It does not remove the labor required to correct invoice meta data, to route for approval or to report on the overall end to end processing. It does not provide the necessary process control or audit trails.

SAP not only provides the vendor network capabilities through their Crossgate solution, they also provide SAP Invoice Management which is designed to work with all forms of e-invoice.

So, not unlike the dog chasing the car, it is what you do with it when you catch it that makes the story most interesting.

What do you think?


flint said...

It all depends on your perspective. EIPP was originally a solution offered to A/R groups to allow their customers to receive and pay online. It has since been used for A/P solutions as well.

Our definition from an A/R perspective is that Electronic invoicing, or what we call eBilling, is any invoice that is not physcially delivered to the client (i.e. USPS, Fedex,etc). Since over 70% of the cost of mailing a bill is postage; any other delivery channel is a victory for billers.

Anonymous said...

ООО, Браво, какие нужные слова..., замечательная мысль