I’ve been using the word “e-Invoicing” for the past ten years, and it can indicate many different things. Most managers still see this as a way to eliminate paper through workflow and OCR, but some now see it as a way to ensure compliance with the law.
In my conversations regarding e-Invoicing, I have yet to hear the word “Strategic,” nevertheless. Most businesses view e-invoicing as strictly “Operational,” especially when it comes to accounts payables. However, in the modern global economy, operational problems directly influence strategic problems.
The most typical requests, for instance, in Accounts Payables are:
- Please assist me in getting rid of the paper payment and invoice processes (checks)
- How can the time-consuming manual reconciliation procedure be automated?
- Can we reduce lengthy cycle durations (45-60+ days) to make our FTEs more productive?
- To prevent audits, I must abide with the tax authorities around the world.
These requests always boil down to a simple monetary cost reduction. The idea always boils down to cost reductions, whether we’re talking about efficiency, time, or restructuring like shared services or BPO. These cost savings, however, must support an automation project; other ideas should also be carefully considered. I mention this because the requests alter when my meetings venture outside of Accounts Payables and into the CFO and Treasurer’s offices. On the strategic level, I frequently hear the following issues:
- Not being able to maximise cash flow (e.g., Missed Discounts)
- Concerns about liquidity for supplier operations
- Cash investment for the near future
So, here is my main query. Why are operational concerns only considered from a cost-savings perspective during assessments if the Strategic issues can only be achieved if the Operational difficulties are resolved? We rarely examine dynamic discounting or other Supply Chain Finance issues in further detail in the AP exams.
Helping your supplier with their liquidity needs is where a CFO may earn a 36% annual rate of return on highly guaranteed short-term loans (they are your major suppliers). The entry point into supply chain finance is e-invoicing. The only way for a firm to truly implement a successful supply chain finance programme is with full automation and Straight Through Processing of invoices. This brings me to my second query: why do businesses concentrate on the implementation of e-Invoicing in Europe while Latin America has already succeeded in “electronifying” their suppliers’ invoices? We shall delve deeper into AP e-Invoicing the following time.