The buyer side of electronic invoicing and its associated benefits have been covered in-depth in this and other reports. However, a lot of education is still required in understanding the value proposition to suppliers from adopting electronic invoice management solutions.
Given that one of the biggest barriers to e-invoicing and payments is supplier adoption, rather the lack thereof, it is critical to look at e-invoicing from the supplier perspective. Suppliers who have jumped onboard the electronic bandwagon have reaped a number of tangible benefits from automating the invoice presentment and payment process.
While they vary with the type of solution implemented and functionality being used, here are some common benefits of e-invoicing to suppliers:
- Increased Efficiencies: Significant time is saved when employees do not have to print paper invoices and mail them to their customers, freeing up accounts receivable staff to focus on more value-added activities like collections and customer relations.
- Lower Costs: Reduction in labor, material and postage costs are common with all e-invoicing solutions. Our research reveals that suppliers who adopt electronic invoicing can slash their invoice management costs by more than 50 percent.
- Error Reduction: Validation rules configured into e-invoices solutions flag errors at the time of submission itself and prompt suppliers to correct them, reducing the number of exception invoices downstream.
- Faster Settlement: Electronic invoicing compresses the invoice processing and approval cycle on the buyer side. This, combined with electronic payments, will ensure that suppliers are paid on time, or even early in some cases.
- Improved Visibility: Suppliers have real-time access to invoices and payment status from a standard Web browser, reducing the number of calls and emails to AP Help Desks.
- Better Cashflow Forecasting: Automating invoice processing and payments reduces the uncertainties around payments. Consistency around payment timing means that suppliers have enhanced ability to perform cashflow forecasting.
- No More Reprint Requests: Electronic invoicing solutions drastically reduce the number of lost and missing invoices, which means that reprint requests from buyers will virtually be zero.
- Quicker Dispute Resolution: Suppliers now have the ability to view disputed invoices at any given time and provide supporting/backup documentation, as needed, making dispute resolution a collaborative process as well as accelerating resolution.
- Decrease Days Sales Outstanding: Dynamic discounting and supply chain finance capabilities available as part of e-invoicing solutions allow suppliers to decrease days sales outstanding (DSO) without adversely affecting customer relations.
- Access to Cheaper Capital: Dynamic discounting delivers financing at more attractive rates to suppliers than factoring or asset based lending.
Sushmitha,
This is a great post.
THE KEY TO SUCCESS for any e-invoicing solution is supplier adoption.
I believe there are 5 critical reasons why e-invoicing and supplier portals have failed to attract suppliers:
1. Sending invoices costs $$$ … Are you kidding???
Many solutions charge suppliers either an up front enrollment fee, a fee per transaction, or both. If you were a supplier, why would you agree to this?
2. Too many stinkin’ portals!
Suppliers do not want to deal with a different portal for each customer. Frankly, it’s just too much of a hassle to learn how to navigate and manage separate usernames/passwords for each portal site. Suppliers would much rather go to a single site that allows them access multiple customers.
3. Change our invoice format? No way!
Some portals require that the supplier change their invoice submission to a specific electronic format. Many suppliers are unwilling to change their invoice delivery process and subsequently cannot take advantage of the benefits offered by these type of portals.
4. A Pain in the A#% to use…
In my last blog entry, I discussed the value of simplicity. Well, from a usability standpoint, many portals are just plain complex and difficult-to-use . Locating and accessing invoice information is a chore. AR departments are busy … very busy – there is no way a supplier AR department is going to have the patience for learning a complicated interface that makes their job harder. They will just pick up the phone instead.
5. Way too expensive for buyers
For buyer organizations, many supplier portal solutions require a substantial per supplier licensing fee. Additionally, the hardware, IT, and operational costs to install, configure, and deploy these solutions involves investment of time, money, and internal resources. Beyond this upfront investment, there is also the on-going cost of maintaining the hardware and software running on these extranet deployed solutions.
Finally, some portal solutions require that the buyer organization purchase and deploy a separate procurement software package (beyond what is available in their ERP) in order to leverage the benefits of a supplier portal. This investment in a separate procurement package is often questioned as the customer often already owns and utilizes a procurement package provided as part of their ERP suite.
More here:
http://blog.170systems.com/bid/7411/5-Reasons-E-Invoicing-Supplier-Portals-Have-Failed
And more here:
http://blog.170systems.com/bid/7453/6-Critical-Requirements-for-for-E-Invoicing-and-Supplier-Portals
-Rakesh Shukla