Cash & Liquidity ManagementCash ManagementAccounts ReceivableTo Invoice or to E-invoice: That is the Question

To Invoice or to E-invoice: That is the Question

Electronic invoicing (e-invoicing) is the electronic transfer of invoicing information between business partners (supplier and buyer). It is an important part of an efficient financial supply chain and links the internal processes of an enterprise to the payment systems. E-invoicing is a new solution for the collection of receivables. It greatly complements such services as mass payment reconciliation and direct debit for companies with a wide client base and mass payments.

Between 2005 and 2009, the number of e-invoices issued in Europe increased at the rate of 41% a year, reaching one billion items. The growth rate does not come as a surprise when you look at recent analysis conducted by consultants Roland Berger in Poland, which shows that the cost of distributing paper invoices to two million clients constitutes an expenditure of approximately PLN38m (€9.5m) annually.

The majority of the cost lies in postage. For example, it costs approximately PLN1.60 (€0.40) to print and mail an invoice. The costs associated with sending an e-invoice through an internet banking system can be up to 50% less. This is a result of the electronic bill presentment and payment (EBPP) system available in most internet banking systems. The system enables invoice collection for a given client from issuers, such as utility, telecommunications, cable TV, insurance and leasing companies. These invoices are then incorporated into the internet banking system of that particular client.

Benefits of E-invoicing

E-invoicing has a number of advantages. The recipient has the comfort of having all the bills sent to one destination and they can pay in just one click. Recent polls carried out by the Polish OBOP, an opinion polling company, demonstrate that as many as 65% of the internet banking system users are interested in e-invoicing services. At the same time, 40% of Poles indicated that they would be ready to change banks if the new bank offered e-invoicing. On the other hand, issuers benefit, not only because of the significant reduction in postage and paper costs, but also because e-invoicing also limits the number of disputable payments that need to be reconciled as it eliminates the human error risk in filling out a payment order. The e-invoice recipient receives all the invoicing details already filled in with no editing option; all they need to do is accept the invoice and send the payment by clicking on the pay icon in their internet banking application.

The lower costs of e-invoicing, in combination with the gains in processing speed and accuracy, translate into a reduction in days sales outstanding (DSO) and a shortening of the cash conversion cycles on the accounts receivables (A/R) side. This, in turn, creates more payment flexibility on the accounts payable (A/P) side and helps to free up cash to expand operations and/or reduce debt. The average invoice settlement period for paper-based invoices is estimated at 30 days, while companies that have introduced e-invoicing report a settlement time of 1.5 days. The settlement time is the time from the moment the client receives the invoice in their internet banking system until they pay it. With traditional invoicing, most of the delays occur due to the time constraints and forgetfulness of the clients, rather than due to fund shortages. For invoice issuers, such delays are of much greater importance as they prevent them from effectively investing their cash surpluses, or, even more painful, delays create higher financing costs for them as they need to use their overdraft facilities for higher amounts than necessary

These were exactly the reasons why Pekao Leasing decided to roll out e-invoicing. “We were looking for a solution to deliver invoices to our customers quicker than through the regular postal service. The delivery delays at the Post Office caused our clients to pay too late. We charged them with penalty interests, which were later reclaimed by these clients. Compensation claim management was very painful from a monetary, workload and timing perspective. Besides, at the time we were looking for innovative solutions to facilitate the management of a large number of invoices, so the solution perfectly suited our needs,” says B?a?ej Szczecki, board member of Pekao Leasing, the first leasing company to have implemented e-invoicing in the Polish market.

E-invoicing Impetus

The future for the e-invoice in Poland seems to be bright due to the increasing popularity of internet banking systems. Zwi?zek Banków Polskich (the Polish Bank Alliance) reports 10 million people in Poland are active users of internet banking, while there are as many as 16.8 million signed internet banking agreements. These numbers prove the common use of internet banking, as well as increased consciousness of the security of electronic transactions among Poles.

The above arguments pushed the KIR SA (National Clearing House) to persuade most of the Polish banks to implement a local EBPP system called Invoobill. Thanks to the initiative, Polish banks will be able to reach as many as 90% of all internet banking users. Bank Pekao, member of the UniCredit Group, was the first bank in Poland to introduce an e-invoice service (eFaktura24) for its corporate clients. In October 2011 Bank Pekao implemented the service for one of the Polish mobile phone network operators, Play.

Bank Pekao was the first to enable co-operation in the EBPP service for the business-to-business (B2B) model. “eFaktura24 is currently the best method of electronic distribution of e-invoices and facilitating the fastest collection of payments. This unique solution of Bank Pekao, based on the interbank invoice presentment and payment system Invoobill, enables invoice issuers to reach as many as 90% of the internet banking users,” says Piotr Pinchinat-Miernik, director of the electronic banking products office at Bank Pekao. “Customers emphasise how happy they are with the additional benefits they receive when simultaneously using the payment reconciliation scheme.”

The market trends have also caused the legislative bodies to react. The European Commission (EC) adopted Council Directive 2010/45/EU 13 July 2010 amending Directive 2006/112/EC on the common system of value added tax as regards to the rules on invoicing. Paragraph 11 of that document waives the mandatory use of electronic signature to ensure the authenticity and integrity of e-invoices. Following the European legislation, the Polish Ministry of Finance has issued an ordinance on e-invoices, which stipulates that invoices can be sent and presented in electronic channels in a free format on condition that such a method of invoice presentment has been accepted by the invoice recipients.

Szczecki says that the company also wanted to test the solution in the context of the VAT Council Directive amending the Directive 2006/112/EC and the above mentioned Ordinance of the Polish Finance Ministry, which both allow for abandonment of paper-based invoices and the introduction of electronic documents in the B2B invoicing. “Our corporate clients use internet banking services on a daily basis and it is easier for them to receive our invoices electronically and to verify and pay them through an electronic channel. We are aware of the existence of alternative e-invoicing systems that require logging into certain web applications, but we view them as less comfortable than the eFaktura24 solution that Bank Pekao offered to us,” says Szczecki.


E-business is becoming part of everyday life as new internet and mobile banking channels continue to develop. Following the trend corporates and individuals are switching from physical to electronic collection channels. E-invoicing is one of the evolving e-business channels to boost efficiency of invoice processing through dematerialisation of paper invoices.

Figure 1: E-invoicing Trend

Source: UniCredit


The EC has also taken up the subject and held the First Meeting on the European Multi-Stakeholder Forum on Electronic Invoicing on 13 September 2011 in Brussels. The forum brought together representatives of National Fora and other stakeholders at EU level. It aimed at exchanging experiences and best practice on e-invoicing. The forum should also help the EC in identifying further measures to facilitate the mass adoption of e-invoicing across borders in line with its objective to make e-invoicing the predominant method of invoicing by 2020. The key issues discussed were:

  • Adoption of e-invoicing for small and medium-sized enterprises (SMEs).
  • The challenges resulting from the co-existence of different invoicing standards in various Member States.

Nevertheless, the ongoing creation of the single euro payment area (SEPA) offers an ideal launching pad for a successful European e-invoicing initiative with the savings estimated at around €64.5bn per year for businesses.

To learn more about UniCredit, visit the company’s gtnews microsite.

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