Cash & Liquidity ManagementCash ManagementAccounts PayableCase study: Tungsten Network and driving e-invoicing

Case study: Tungsten Network and driving e-invoicing

Tungsten Network is a London-based electronic invoicing specialist. In this interview with GTNews, company president Prabhat Vira and senior vice president Kevin Wilbur outline the factors driving growth in e-invoicing and how corporates are using it to streamline finance management.

Headquartered in central London, the staff at e-invoicing specialist Tungsten Network describe themselves as “a team of technologists, business-to-business (B2B) commerce experts, process mavens and digital evangelists dedicated to accelerating global trade through the intelligent use of data and the death of paper.”

The Tungsten Network is largely devoted to e-invoicing and its re-launched Early Payment product allows companies to submit an invoice electronically via Tungsten’s digital platform for immediate payment

Tungsten Network Finance’s president, Prabhat Vira and Kevin Wilbur, its senior vice president for accounts payable (AP) automation, spoke with GTNews on the rapid growth in this particular area of payments technology.

GTNews: What is driving the growth of e-invoicing?

Prabhat Vira: Automation in payment solutions – driven by e-invoicing – has been proven to be viable and beneficial to the trading relationship between suppliers and their customers.

E-invoicing significantly reduces supply chain friction, particularly for global supply chains, and maximises efficiency through eliminating manual processes and much error-prone human intervention. With the current level of macroeconomic uncertainty putting a squeeze on margins, any opportunity for efficiencies can only be a good thing. E-invoicing is clearly becoming an integral strategic advantage used to transform growth potential, and it’s no surprise that there’s an accelerated shift towards mass adoption, as businesses and governments recognise the financial gains of going digital in their invoicing process.

E-invoicing automates paper-based, manual billing processes. It can accelerate collections, providing immediate benefit to corporate liquidity management, and also cut costs and improve efficiency in the receivables business. An effective e-invoicing solution demonstrably provides a vital missing link in finance management – and can make the critical difference between a business just surviving and positively thriving – with better efficiency, control, transparency, financing and working capital management.

Today, the introduction of e-invoicing is often welcomed by buyers of products and services, as it can enable them to improve their own processes by making them more efficient and transparent. Governments and public bodies also recognise that the trend is inexorably towards e-invoicing, especially given its effectiveness at minimising tax leakage and combating the ‘black economy’.

What statistical evidence illustrates the recent growth of e-invoicing?

PV: The latest figures from members of the European e-Invoicing Service Providers Association (EESPA) report that 1.25bn electronic invoices were processed and delivered for their clients in a 12-month period, representing a growth rate of 27% compared with the previous year. The 2016 Market Report published by Billentis estimated the total volume of electronic invoices worldwide would reach 30bn.

What are the main benefits of e-invoicing? 

PV: The statistical analysis mentioned provides definitive evidence of the momentum that e-invoicing is gaining, as more businesses seek to digitise their processes to gain efficiencies, reduce costs, combat fraud, eliminate paper and improve the customer experience.

Generally, e-invoicing helps with fulfilling regulatory compliance requirements, enhancing the quality of master data exchanged between trading partners and eliminating operational inefficiencies; additionally, it supports the handling of invoices which lack matching purchase orders.

In accounts payable (AP) processing, e-invoicing provides real time visibility of invoice data, accelerating the approvals process and eliminating the often-extensive and unproductive manual exercise of matching incoming invoices to purchase orders.

A digitised solution enhances efficiency in managing high volumes of invoices, and assists in common problematic situations, such as working with many small suppliers with low invoice volumes. It also reduces exception frequency – and the related research and repair workload – through improved levels of invoice accuracy.  As an added bonus, it can enhance companies’ abilities to quantify and capture discount opportunities.

The benefits in receivables management include enhanced visibility, streamlined invoice query administration and a reduction in mistakes and handling errors.

What is the current regional pattern of e-invoicing adoption?

PV: E-invoicing is presently developed in regions such as the UK, the US, Australia and Canada. Latin American nations, which have had historic tax collection challenges, have been leaders in e-invoicing for some time.

In the US, the number of e-invoicing networks is expected to grow from 19% currently to 41% in the next two years; in 2015, the US Office of Management and Budget (OMB) directed federal agencies to implement e-invoicing systems by 2018.

There have been European Union (EU) directives mandating standard specifications for e-invoices in European countries; these are reflected, for example, in the UK National Health Service’s eProcurement strategy. Significant steps have been taken by China to move towards e-invoicing and there are various Indian legislative initiatives around tax collection and e-invoicing.

Given today’s strong focus of fraud prevention, what security features can be applied to prevent bogus e-invoices from being issued? 

PV: E-invoicing can eliminate invoice fraud, as the responsibility for issuing outgoing invoices – and for thoroughly checking incoming invoices – is transferred from the finance team to a rigorously tested and secured automated system. The system functionality and the implemented workflow must be designed and configured so that all inputs are fully validated through sophisticated rules-based data and authorisation validations before an invoice is issued, or payment release is approved.

An efficient e-invoicing solution enhances the organisation’s ability to detect fraudulent – and also error – conditions, blocking out bogus invoices.  This enables the business to react as needed to eliminate or repair problems, delivering a significantly reduced level of operational risk in this sensitive business area.

How are your corporate clients benefiting from e-invoicing adoption?

Kevin Wilbur: To give just one example, over the past three years, one of the world’s largest confectionery manufacturers has grown from processing 80,000 invoices digitally over the Tungsten Network per year to 500,000, enabling the company to streamline its processes, increase efficiencies and significantly reduce costs.

E-invoicing has allowed it to process invoices more intelligently, and without manual intervention, reducing processing time and helping suppliers to get paid quicker. By eliminating antiquated paper-based processes such as invoice scanning and portable document format (PDF) creation, e-invoicing has facilitated a more effective review and enrichment process, and has also yielded improvements in areas such as supply chain finance (SCF) and capital usage, including the opportunity to choose early payment.

A global professional services firm has also achieved significant efficiency gains via e-invoicing, with a reduction in essentially unproductive human effort and error rates in the back office through the end-to-end electronic process. Its vendors now enjoy enhanced visibility of key invoice information, so they can see their estimated payment date and follow the input of the invoice. The company is also pleased with the environmental benefits being achieved through paper elimination.

And the key strategic suppliers for a large British telecoms company has processed around 200,000 e-invoices in the past year alone, representing significant time reductions and savings totalling more than £900,000 (US$1.12m) based on the average digitisation saving of £4.80 per invoice suggested in Billentis’ latest e-invoicing report.

Can e-invoicing also help small and medium enterprises (SMEs)?  

PV: A scalable and cost effective e-invoicing solution can benefit companies of all sizes, which are facing invoice management challenges. The potential to submit an invoice electronically and get paid immediately rather than wait until the end of the agreed payment terms creates improved cash transparency and flexibility for the SME.

SMEs can gain better access to competitive funding, and more effectively combat late payment issues, helping to reduce the estimated US$825bn tied up in unpaid SME invoices.

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