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?

How to communicate without saying a word

Posted by Tom Walker, portfolio manager, SAP Accounts Payable Solution, Open Text Corporation:

How to communication without saying a word?

This can be a difficult challenge in the world of Accounts Payable when working to post invoices accurately and quickly. Just accurately and quickly alone is a major task but when you add “quietly”…is it really possible?

Think of all the people involved…Accounts Payable Professionals, Approvers, Corporate Procurement, Field Procurement, Receiving, Contract Management, Master Data Management, Tax Professionals…just to name a few. There are a number of Vendors offering solutions to address the accurate and quick...although in many cases you have to decide…do you want it accurate or quick…one or the other but not both. Yet very few address the quietly issue.

Why is this important? For invoices that are received and immediately posted without any human intervention due to issues such as problem resolution or approval, communication is not a critical factor. Yet when that 80/20 rule kicks in where 20% of your invoices result in 80% of the problems, the Accounts Payable Professional must reach out and communicate. They need to communicate with the individuals that have both the knowledge and security authorization to resolve / approve invoices as required by best practice separation of duties.

As an example, in an ERP such as SAP this communication is often started by running a report such as MRBR to find invoices blocked for payment. Without a solution that includes “quietly” as a building block, the first communication triggers a barrage of activity including but not limited to emails, phone calls, entries into spreadsheets for follow up, follow up calls, making copies of invoices and pulling contracts.

So how do you add “quietly” to the process flow? You must examine the entire process flow from how you receive the invoice, how you capture the meta data at the header and line item level, how you determine if there is a problem and then who must be involved to resolve / approve. Equally important is anticipate what that person requires to complete the task…such as…access to invoice and related document images, history of others that have worked on the process including their comments, transactional data such as purchase order, goods receipt, prior postings to purchase order and options to resolution / approval.

One excellent example of a “quite” solution is provided by SAP with their SAP Invoice Management and optional OCR.

One last thought…quiet extends to reporting also…you need to anticipate the need for information related to the invoice. While invoice payment status is certainly important you must also anticipate others will want to know trends such as invoices paid without problem and if a problem…what type of problem is most common. Yet a truly quiet process goes beyond the expected reporting…the invoice occurred because of a purchase…the purchase occurred due to a larger business process such as a building project and so on. You must anticipate that others must be able to see the invoice as part of the bigger picture.

This bigger picture is ECM. You would expect that a large ERP would anticipate this more holistic requirement and SAP has also done that by providing an ECM solution through it partnership with Open Text that takes the invoice and quietly makes it available as part of the ECM big picture. This allows you to see for example all the invoices from one vendor on one project in one virtual view or to see all the invoices related to the project regardless of vendor. No longer is it required to communicate and ask the Accounts Payable Professional to accumulate all the related information and wait for a response…it is already waiting for you to access immediate and quietly.

So…accurate…quick…quiet…yes it is possible!