Microsoft Dynamics 365
How Prepared are You for Electronic Invoicing?
According to various research firms like Forrester Research and Sterling Commerce, switching from manual invoice processing to an invoice automation solution typically results in major savings. Conservative estimates for manual invoice processing costs hover around $12 to $15 per invoice, whereas fully automated invoice management solutions offer a unit cost of approximately $3.50. So even businesses that only process five invoices per day stand to save $1,000 each month. That’s why I found it so shocking to discover that B2B adoption of e-invoicing solutions in most developed countries remains as low as five percent! Why would companies pass up on such a clear opportunity to improve their margins?
The reasons that researchers cite include lack of awareness and lack of a business strategy for implementing a digital invoice processing system. At least some of the difficulty in formulating a solid strategy comes from the absence of a clear framework for determining where an organization currently stands with respect to implementing electronic invoicing capabilities. Thankfully, information management researchers have recently outlined a maturity model for electronic invoice processes (Cuylen, Kosch, and Breitner, 2016). Using their Electronic Invoice Process Maturity Model (EIPMM), businesses can gain a much clearer understanding of which parts of their invoicing procedures require the most immediate attention, and how large an ROI they can expect from adopting e-invoicing.
The EIPMM covers four categories: Strategy, Acceptance, Processes & Organization, and Technology, each of which are further divided into between three and five subcategories. Against these subcategories, evaluators can award between zero and four points, depending on the current state of their invoicing procedures. Assuming you weight each subcategory equally, your organization’s final maturity score will range from zero to sixty.
The Strategy category reflects an organization’s preparedness in terms of how well-aligned its business strategy is with implementing invoice management software, how willing stakeholders are to adopt new technology, whether detailed cost-benefit analysis has been performed, and so on. Since factors listed in the Strategy category are critically important for successful implementation, improving their maturity scores will help e-invoicing proponents secure internal acceptance and executive buy-in.
The Acceptance category details the degree to which internal groups, business partners, and external entities agree to adopt or support electronic invoicing. This involves ensuring that employees (especially management and accounting) understand the benefits of e-invoicing, how willing partner organizations are to adopt or otherwise facilitate electronic invoicing, and how mature the external environment is for supporting e-invoicing, including communication with regulatory bodies, invoice management service providers, and government revenue agencies. In the same way that a clear strategy makes implementation much easier, high levels of acceptance indicate that the time is right for adopting an invoice management solution.
The Processes & Organization category outlines how clearly electronic invoicing processes have been designed, and how proactively legal matters and internal policies have been addressed. Businesses that have practices in place that are well-suited to e-invoicing will have an easier time transitioning to invoice management software. Similarly, businesses that have ensured that their internal practices already align with government regulations on electronic invoicing will be able to adopt fully automated invoicing with fewer complications.
Finally, the Technology category measures how prepared an organization’s IT infrastructure is for the paperless processing of invoices. Companies that can reduce manual effort more effectively receive a higher maturity score, as do companies that apply technical standards more consistently. Businesses with well-integrated IT operations also score higher. Companies that already manage most documents electronically will transition to e-invoicing more smoothly, and so will companies with strong information security standards.
Using the EIPMM or a similar method for evaluating your organization’s readiness for electronic invoicing is a great way to address various implementation challenges in a systematic way and convince decision makers of the value of investing in a digital invoice processing solution. For more information on how your organization can improve profitability by adopting e-invoicing, please contact Visionet Systems.