E-INVOICING A COMPANY-WIDE PROJECT?

Transcription

1 Hot topics, Perspectives, and Debates - Trending in Procurement brings you the trends and analysis for your Procurement needs. E-INVOICING A COMPANY-WIDE PROJECT?

2 In the context of a stepped-up search for greater productivity, reduced use of paper and rationalization of the purchasing and accounting processes, Supplier e-invoicing has become a strategic lever in the Procurement departments of large companies. Formerly managed in a paper format, in specific supplier accounting applications that were separate from the Procurement IT system, supplier invoices are now included within the scope of Procure-to-Pay (P2P) solutions. The entire supplier invoice processing chain can now be part of a unique, collaborative tool that interfaces with company ERP systems or other accounting tools. Since a supplier e-invoice project involves the Procurement, Finance, Accounting and IT departments, it requires a preliminary internal discussion on the strategy and goals of each department so that a solution meeting each business unit's needs can be implemented. Trending in Procurement surveyed the e-invoicing project stakeholders (Procurement, Finance, Accounting and IT) to determine the goals, preferred techniques, impacts and success factors of e-invoicing projects.

3 Trending in Procurement survey panel The questionnaire for the Trending in Procurement survey e-invoicing a company-wide project? was sent by to a database list of European and North American Procurement, Finance, IT and Accounting professionals and distributed in a paper format during the latest Ivalua events. Geographical distribution of participants A total of 173 responses was collected and analyzed: 35% of respondents are located in North America (60 responses) and 65% are in Europe (113 responses). What department do you work in?

4 Who do you think is in charge of suppliers E- invoicing in your company? According to the Trending in Procurement #6 panel, the responsibility for supplier e-invoicing projects lies primarily with two company departments: Finance (57%) and Procurement (30%). It should be noted that although invoice digitization projects necessarily involve the company's Procurement, Finance, Accounting and IT departments, Finance is the department that takes the initiative and responsibility for deploying supplier e-invoicing solutions. This involvement of Finance in the procure-to-pay (P2P) process concerning e-invoicing indicates that the scope of action of the Procurement departments in large groups is still often limited to support functions (negotiation, supplier panel management, etc.). The supplier invoice, which is a key item for producing financial statements (working capital management and cash flow forecast, etc.) and guiding company strategy, is not under the control of Procurement, thus preventing this department from grasping the strategic goals directly related to its activity and the added value it represents for company performance.

5 What are the main objectives of deploying an E-invoicing tool? The two strategic points linked to e-invoicing most often mentioned by the panel are: the reduction of administrative processing costs (68%) and the improvement of invoice tracking during processing (50%). Securing archives (10%) and meeting payment deadlines (11%) are less often mentioned as key project goals in e-invoice projects.

6 Reduction of administrative processing costs A recent survey by EY estimated that it costs 15 euros on average to process an invoice: The implementation of an e-invoicing solution for supplier invoices is motivated in most cases by major productivity gains that allow teams in charge of processing invoices to refocus their efforts on tasks with higher added value. The automation of supplier invoice processing enables eliminating tasks that are sometimes manual and redundant (reception, data capture, management of litigation and errors, reconciliation between purchase orders and delivery, etc.) and tied to the processing of several dozens, or even hundreds, of invoices received daily by large companies. By choosing to automate this process, companies reduce the risk of error and fraud. Better invoice traceability in the procure-to-pay process The implementation of a supplier invoice digitisation solution enables automating a certain number of processes, including recording, reconciliation of purchase orders, validation by the contracting party and implementation of request for payment at the proper time. This computerized process provides better traceability of financial and decision-making flows from purchase request to supplier payment, thus reinforcing internal control and facilitating the processing of litigation between Accounting and suppliers. Among other features, a supplier invoice digitisation tool should propose: Configuration of blocking or non-blocking alerts that enable automatic identification of anomalies Pre-initialization of invoice fields using supplier / contract / order / reception data. Configurable invoice approval workflow with price and quantity exception management Configurable workflow circuits with functions to check price, quantity and budget consumption Multi-budget and accounting allocation

7 In your opinion, what is the most efficient supplier invoices processing method? The term "e-invoicing" covers different systems that allow transferring a supplier invoice from a paper to an electronic format. According to the Trending in Procurement #6 panel, the EDI (Electronic Data Interchange) system is the best performer (45%) for processing supplier invoices, followed by the "PO flip" (21%), the ADR (Automated Document Reading) scan and the electronic invoice, each chosen by 17% of respondents. A summary of the different digitisation techniques EDI is the exchange between the IT systems of suppliers and clients of data corresponding to an electronic invoice emitted in a recognized standard format; the data is read without human intervention. The PO flip is a function of digitisation tools that lets suppliers create an invoice from the purchase order sent by a company by using data extracted directly from this purchase order. The ADR scan is a digitization technology for invoices received in a paper format by a company. Based on Optical Character Detection (OCD), it enables the company (or a service provider) to segment and extract the data needed for automatically including information contained on the invoices in the accounting system. The electronic invoice corresponds to an invoice edited in a secure Word, PDF, etc., format using an electronic signature and sent as an attachment.

8 Although EDI is considered to be the most effective system and leads to major improvements in performance, the choice of a system or combination of systems depends in reality on factors inside and outside the company: Supplier maturity Budget allocated for the project Volume of invoices to be processed Available technical resources ERP tool used for company accounting Method of managing other elements in the procure-to-pay process (supplier / contract / order / reception data)

9 In terms of integration with eprocurement tool features, what are the most powerful levers? According to the Trending in Procurement #6 panel, integrating e-invoicing functionalities within the accounting / finance ERP system (69%) and with the tool for managing purchase requests, orders and reception (50%) are the two main performance drivers for a digitisation project. Integration ERP & e-invoices E-Invoicing projects stakeholders naturally prefer connecting the ERP system to the e-invoicing tools in order to export and post invoices and the data needed for analytical allocation in the ERP system or the accounting software and manage accounting records. Interfaced with the company's ERP accounting system, supplier e-invoices provide a true means of collaboration between the Purchasing, Finance and Accounting Departments that allows sharing information in real time and creating specific analyses for each company business unit. The fact that vendors of e-invoices solutions can provide access to and integrate standard interfaces within the market's main ERP systems is one of the key factors behind the success of supplier invoice digitization projects.

10 Integration Procure-to-pay & e-invoices Another important performance lever for the Trending in Procurement #6 panel is the integration of e-invoicing tools that include functionalities for processing purchase requests, order forms and reception within procure-to-pay tools. A tool that includes full invoice processing in the e-procurement chain enables fast and easy reconciliation of information from purchase orders and receptions with that from supplier invoices received. A key link in the procure-to-pay chain, the integration of supplier invoices within a processing tool allows an overall view of the procurement chain, from purchase request to invoice payment. This integration provides even greater performance when it is based on the integration of modules built on the same data model (same database) within a complete and homogeneous e- procurement suite.

11 What are the success factors for the deployment of an E-invoicing tool? According to a majority of respondents (59%), greater collaboration between the Finance and Procurement Departments is the key factor behind the success of a supplier e-invoicing project. Thirty percent feel that the mobilization of a multidisciplinary team that includes participants from Procurement, Finance and IT is an essential condition for this type of project. Finally, only 11% of the panel feels that sensitizing suppliers is a factor in project success. Although supplier e-invoicing projects are most frequently initiated by a company's Finance Department, a project like this provides an opportunity for the Procurement and Finance Departments to reinforce their collaboration. In the end, an e-invoicing project should enable Procurement departments to reinforce checking and evaluation of their performance and help create a partnership between their department and Finance, based on achieving shared goals of improved working capital management, reduced expenses and controlled risk.

12 In conclusion... Electronic Invoicing Projects: bringing Suppliers, Finance and Procurement closer E-invoices make the process of handling supplier invoices easier, faster and more reliable. While e-invoicing provides significant benefits to Procurement, Finance and AP departments the benefits to suppliers (including faster payments, fewer rejected invoices and enhanced account reconciliation) should not be underestimated. The automation of supplier invoice processing enables eliminating tasks that are sometimes manual and redundant (reception, data capture, management of litigation and errors, reconciliation between purchase orders and delivery, etc.) and tied to the processing of several dozens, or even hundreds, of invoices received daily by large companies. By choosing to automate this process, companies reduce the risk of error and fraud. Although e-invoicing projects are most frequently initiated by a company's Finance Department, a project like this provides an opportunity for the Procurement and Finance Departments to reinforce their collaboration. In the end, an e-invoicing project should enable Procurement departments to reinforce the evaluation of their performance and help create a partnership between their department and Finance, based on achieving shared goals of improved working capital management, reduced expenses and controlled risk.

13 About Ivalua Established in January 2000, Ivalua is one of the leading global vendors in Spend Management Software today. The company s software suite Ivalua Buyer covers the whole Spend Management spectrum, from supplier relationship management to spend analysis, with e-sourcing, e-procurement and invoice management in between. Based in the US and Europe, Ivalua has successfully implemented more than 150 projects within large international companies in all sectors, enabling Ivalua to demonstrate strong growth while remaining profitable since its creation. Ivalua solutions have been widely tested and adopted by several tens of thousands of users worldwide. Thanks to its ecosystem of partners, Ivalua supports its clients with a wide range of services and content integrated within its solutions. For more information, visit or contact us by on info@ivalua.com