If you missed our Chief Product Officer Maex Ament’s presentation at this year’s “Smart Public Procurement” conference in Prague, no worries! Above is Maex’s segment from the conference, in which he discusses a somewhat perplexing topic: the death of eInvoicing.
I know what you may be thinking. “I thought eInvoicing was a good thing, providing greater savings and efficiencies!” And that’s not entirely wrong.
It’s true that eInvoicing reduces errors and duplicate invoices, improves efficiencies, reduces administrative costs, increases productivity, and increases visibility into the invoice process.
But on its own, eInvoicing doesn’t provide nearly enough value creation—the operational efficiencies gained are minimal. With eInvoicing alone, your suppliers are merely asked to change their invoicing processes, even if they may believe that the manual processes have worked perfectly fine for them. Furthermore, they’re often charged with networking fees just to do business with you; and though the process might be automated, the invoice often still isn’t paid until the due date.
Maex explains that rather than seeing eInvoicing as a solution to greater savings and efficiencies, it’s best to see it as an enabler to greater savings and efficiencies, or as the foundation for truly pivotal solutions such as supplier financing and dynamic discounting.
Take this large U.S. utility company for example. In 2002, the company saved about $1 million with just an eInvoicing solution in place. In 2011, they extended their program with a early payment discounting solution. Just how much did they save in 2012?—A whopping $46 million. In the first four years alone, the company realized a total of $163 million in savings through discount capture.
Not to mention, paying invoices early impacts the global economic recovery, as well as fulfills a business’s corporate social responsibility. Company efforts should go beyond what is required by law to further social goods beyond the interests of the firm, and extend to their supply chain.
The key takeaway of Maex’s presentation? The real mission is simply create a more efficient supply chain, through decongesting the global flow of money. eInvoicing lays the foundation for supplier financing, which needs to be implemented and used for either technology to reach its full potential. It’s a widely documented and acknowledged view: supplier financing is where the true value lays.