ELECTRONIC INVOICING: STREAMLINING THE BACK-OFFICE TO SAVE TIME AND UNLOCK OPPORTUNITY. No longer just for large companies

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1 ELECTRONIC INVOICING: STREAMLINING THE BACK-OFFICE TO SAVE TIME AND UNLOCK OPPORTUNITY No longer just for large companies

2 EXECUTIVE SUMMARY Invoicing has historically been a cumbersome, manual process for businesses. As managers know, invoicing inefficiencies equal lost revenue, poor cash flow, and customer dissatisfaction. Today, pressure from both the private and public sectors is making the old way of time-consuming manual invoicing obsolete. This paper explains why a growing majority of businesses and governments are now insisting on electronic invoicing, to reduce invoicing errors, improve profitability and achieve compliance with tax regulations. It also reviews the basic requirements for electronic invoicing, and how you can use Openbravo to meet your electronic invoicing needs.

3 BENEFITS OF ELECTRONIC INVOICING When your business grows, success dictates that back office processes like invoicing ultimately need to be formally managed and tracked. Invoicing with spreadsheets, text files, and accounting packages such as Quickbooks or Contaplus has become a relatively standardized and straightforward process, even if it remains a time-consuming and manual activity. However, what was good enough yesterday for invoicing will not be sufficient tomorrow because the competition and the majority of the global economy are rapidly shifting to electronic invoicing. In addition to enabling business agility by eliminating the operational overhead of manual invoicing, electronic invoicing offers a number of significant advantages over manual processes, including: Accelerated Invoicing Using an ERP for your invoicing eliminates the need for paper invoices because all your work is digital. Invoices already in an automated system can be delivered electronically in seconds instead of days or weeks, which translates to rapid account settlement and an improved cash position for your business. Accurate Invoicing With the invoicing process partially or fully automated by an ERP, you significantly lower the likelihood of error that can negatively impact financial reporting from a tax or customer satisfaction perspective. Tax and Financial Reporting The consistent, digital processing of invoicing helps you streamline financial reporting and provides easy auditing for tax reporting purposes. Access to Large Public/Private Transactions - To close sales today, a majority of governments and businesses require electronic invoicing for any and every transaction. If your company lacks the ability to send electronic invoices, your company also lacks the ability to compete for some of the largest possible sales. UNLOCK GLOBAL PUBLIC SECTOR BUSINESS WITH ELECTRONIC INVOICING The last benefit above, Access to Large Public/Private Transactions, merits more discussion because the sheer size of revenue it represents for small and medium enterprises. In both the U.S. and the EU, governments are exerting direct pressure to make non-electronic invoicing obsolete, to achieve the benefit of efficiency listed above. In the U.S., the Treasury Department now mandates all bureaus use an electronic invoicing system as part of the President s Campaign to Cut Waste by the end of According to U.S. Government studies, the agency expects to save at least $7 billion per year and cut invoicing costs by 50 percent. According to the U.S. Deputy Secretary of the Treasury, Neal Wolin, Electronic invoicing will mean lower costs for taxpayers and faster payments for private sector companies doing business with the federal government. In the EU, the European Commission has embraced the findings of a recent CAP Gemini study that reported, Although large companies have developed integrated electronic payment and billing systems, take-up has been minimal among the EU s 24 million SMEs and in the public sector. The report predicts that, if applied widely enough, electronic invoicing could save as much as 238 billion over six years in business-to-business transactions alone in the EU.

4 In other economies including Mexico and throughout South America and Asia, the insistence for electronic invoicing is growing from governments and large enterprises as well. So, whether you re conducting business in the U.S., EU, or elsewhere in the global economy, as a rapidly growing number of large businesses and national governments require all invoices be delivered electronically, it s essential that small and medium businesses begin planning now for a future where all invoices are electronic. ELECTRONIC INVOICING EXPLAINED To realize the above benefits, an electronic invoicing system will need to deliver new efficiencies to your business through the end-to-end automation of processes that permit streamlined invoice processing and simultaneously reduce invoicing errors. Now, let s explore what constitutes an electronic invoice. An electronic invoice is an invoice that can be generated, viewed and sent to your partner or customer online as a digital file. An electronic invoice is equivalent to an invoice generated by your current processes, when it meets these specific requirements: The invoice is in an electronic format such as xml or html The invoice is sent and received online The invoice includes a digital signature that guarantees the integrity of its content, and authenticates its origin The invoice includes a time-stamp to ensure the date and time of issue BASIC ELECTRONIC INVOICING PROCESS The standard electronic invoicing functional process is comprised of these 4 basic steps: Supplier Creates Invoice In this initial step, the supplier creates the invoice in the ERP, as usual. Supplier ERP Generates XML Invoice For customers that receive electronic invoices, the ERP must automatically generate the invoice in the specific electronic format required, and also archive it, to conform to international tax laws. Supplier Sends XML Invoice Electronically The supplier uses the ERP to send the invoice to the customer via , FTP, or a secure 3rd party electronic invoicing delivery platform. Customer Receives XML Invoice The customer assumes responsibility for the electronic invoice, automatically authenticating its origin and details, and then importing it into his system to process the payment.

5 MODULAR ELECTRONIC INVOICING WITH OPENBRAVO While this overall process is relatively standardized at the functional level, it is actually quite challenging for many legacy ERP software vendors to provide broad coverage for electronic invoicing, due to the large number of different electronic formats and invoicing platforms in use around the world. While this general requirement of adapting to different standards is difficult for a legacy ERP with a monolithic architecture, Openbravo s modular architecture is built to naturally and easily accommodate such variation through simple extension modules. Figure 1: Openbravo s modular electronic invoicing implementation CUSTOMER/ PARTNER ERP INVOICE 3rd PARTY PLATFORM OTHER SUPPLIERS As Figure 1 shows, to support electronic invoicing in a given country or region, an Openbravo partner (or IT-capable customer) need only create the 2 small extension modules at the top, to convert the electronic invoice into the required file format, and then to securely transfer it to the customer s specific platform. These modules are formally packaged and published to Openbravo s curated Central Repository, and then bundled into a country-specific Professional Localization Pack, for easy one-stop installation into your ERP. For an example of this, review the Spain Professional Localization Pack on Openbravo Exchange. This module contains a wealth of country-specific functionality (including the electronic invoicing modules) and has a wizard-based installer so it can be deployed in just a few clicks. In the Spanish example above, support is also provided for Camerfactura, the dominant 3rd party electronic invoicing platform in Spain. In other countries, different platforms and file formats are required, and Openbravo makes those very easy to support as well. Extensible electronic invoicing is just one example of how Openbravo s modular architecture provides businesses with the agility to easily add functionality to your ERP. For more detailed information on the benefits of Openbravo modularity, you may want to read the Openbravo Agile ERP white paper.

6 CONCLUSION Because of the clear operational and financial benefits of electronic invoicing, it will eventually play a role in every business-to-business organization. Small and medium enterprises should begin planning for this inevitability now so they are prepared to capture new opportunities when they arise, and avoid the potential systems bottleneck when customers start insisting on use of electronic invoicing. Openbravo s modular and extensible electronic invoicing is a fast and cost effective way to add electronic invoicing functionality to your organization. When integrated with your regional electronic invoicing platform, you ll be able to quickly generate, view and send electronic invoices to your partners and customers. Small to mid-sized companies looking to increase their customer intimacy and collaboration will find that electronic invoicing is a good first step. As you look for additional opportunities to deepen your customer relationships, keep in mind that an agile ERP like Openbravo makes the process much easier and cost-effective. If you d like to learn more about how electronic invoicing with agile ERP can help with your daily business activities, Openbravo and our network of certified partners are here to help you. Simply fill out our contact us form at ABOUT OPENBRAVO Downloaded over 2,000,000 times, Openbravo is the world s leading web-based Open Source ERP solution. Downloaded over 250,000 times, Openbravo POS is also the world s most popular Open Source POS. The agile ERP company, Openbravo sells its Professional Edition exclusively through a global network of channel partners whose expertise provides rapid, cost-effective implementation services. Openbravo partners also provide deployment expertise for the rapidly growing selection of over 320 Openbravo modules that add localization and rich functionality to the core product. Openbravo has offices in the U.S., Spain, and India.