Accounts Payable News^®

How E-Invoicing across Europe Increases Profits at Home

More and more companies are making the shift away from paper based invoicing and taking the first steps towards e-invoicing.  To a certain extent the lead in this area has been taken in many European countries with their increase rising by 81% over 2006 level in Sweden during 2007.  Where they lead, the UK has followed, with many organisations, especially those operating in the EU, recognising the benefits of e-invoicing.  There are many reasons why it is an attractive proposition for many, but cost savings and increased cashflow are the driving factors.

In the past, an unrelated business event such as a postal strike could have disastrous effects on business operations.  In fact it has been predicted that the potential saving to UK business of adopting e-invoicing could run as high as £12.5bn – this can come from profits lost due to duplicate invoicing, slow transaction process and sometimes, fraud.

E-Invoice or No Invoice

This is now an accepted business practise across the European Union.  With various government initiatives in countries such as Finland, Sweden and Spain, this trend has accelerated and acts as a driving force for e-invoicing across Europe.  As part of an EU Council Directive, there are now common standards for sending electronic invoices across the EU and within individual EU countries, including the UK.  One of its primary objectives is to remove the ability of a member state to prohibit electronic invoices.

The fact that e-invoicing is fast becoming the way to do business was demonstrated at EBAday 2008 in Helsinki at the end of June.  Bo Harald – Chair of the European Commission Expert Group on e-invoicing, stated that paper invoices have no future and laid out the solid business case for e-invoicing before further adding that many countries were looking to move to “e-invoice, or no invoice”.

Banks Recognise E-Invoicing Benefits

In the UK, if we needed any more evidence that e-invoicing is fast becoming a dominant force for change, this was provided by two global financial institutions, Citi and the Royal Bank of Scotland. Both announced partnerships recently with e-invoicing specialists Ariba and Accountis respectively.  Both banks were attracted to the higher level of visibility that e-invoicing provides – generating a platform whereby they can offer an extension of their products and services.

Don’t kill the Potential

Despite the benefits of e-invoicing, those involved need to be careful not to undermine its benefits under a mound of complexities, by the introduction of an operating model shunned by other companies by example, or by insufficient dialogue between vendors and large invoice senders.  Understandably large invoice senders were initially reluctant to show enthusiasm for a service capable of reaching only some of their recipients depending on their bank selection.  However, the banking sector, as we have seen, and in fact since the beginning of 2007, is increasingly receptive to e-invoicing.

Together with the introduction of SEPA (single euro payments area), e-invoicing represents a chance for a swift, compliance friendly and efficient processing of funds throughout European business, adding value to the individual organisation’s bottom line, whichever country they’re in.