Over the past years we can see an increasing trend from paper and PDF invoices towards e-invoicing, but the thing that is still bothering me, or maybe it’s better to say that I don’t really understand it, is why companies are still sending paper invoices
I have always sent my invoices via paper or PDF; they are always paid on time and I don’t have any issues with my clients. Why should I change my internal process to e-invoicing?
A typical situation that I encounter during meetings with suppliers is that they are very comfortable with their current process and are not asked by their clients to make the switch to e-invoicing. During these conversations I always explain the advantages of e-invoices.
One of the commonly known advantages is that e-invoicing can improve your cashflow. Even the Prime Minister of the Netherlands, Mark Rutte, mentioned this during a debate in March. He commented that it was good to see that some suppliers to public authorities are already using e-invoicing, but that it’s still a pity that not all suppliers use this invoicing method as it will result in quicker payments from public authorities. As an e-invoice can be processed and approved automatically and there is almost no manual interaction, your customers can process the received invoice(s) and send them for payment within three to five days instead of the 18-25 days for paper or PDF invoices.
Another advantage is that, as an e-invoice consists of structured data, it can be automatically validated before it has been received by the client. This ensures that the invoices that are being sent will be returned instantly if something is not in accordance with the client’s standards, resulting in less discussion with your client, which in turn improves the relationship between you and your business partners.
Furthermore, I sometimes get receive a comment from a supplier that they are hesitant to switch to e-invoicing because they won’t know if the invoice has been delivered correctly. I can definitely understand where this is coming from; when you send an email and the email address is not valid, you’ll get an auto reply stating that the email has not been delivered. Nonetheless, when you send an e-invoice that can’t be delivered it will also give an error that the message could not be delivered. Nowadays, service providers offer extensive tracking tools to give you an update on the message status and will indicate an error if you send the e-invoice to an email address that doesn’t exist anymore.
We are currently receiving PDF and paper invoices and we process them via OCR. This method is very clear to our AP clerks as they can actually see the invoice, but are not able to read XML or EDI files.
This is one common issue I encounter when talking to finance or AP department managers about receiving invoices. I can fully understand this point of view, as it also took a couple of days before I was able to read XML files, and I’m still not able to completely understand the EDI language.
Finance and AP managers usually think that they will have to involve the technical people from their company to process invoices that are not correct, or that their AP clerks will suddenly need to learn how to read XML. This is actually not the case because there are multiple ways that your AP department can see a PDF Invoice. It can either be that the XML file includes the original PDF file from your supplier, or that they send a zip file with both the EDI file and the PDF included. Using these methods, suppliers can even add more than one attachment to the invoice.
If you supplier isn’t able to use one of these methods and they can only send an XML or EDI file without attachment, there is always a third method. Nowadays, most service providers are able to generate a PDF automatically, based on the information they receive in the XML/EDI file, so you don’t have to worry that your AP clerks will not be able to see an actual image next to the data in their AP/ERP system.
One of the tasks of our AP clerks is to be able to identify whether an invoice is actually from one of our suppliers and whether it is valid. How will we be able to identify invoice fraud if we can’t actually see where the file is coming from?
Typical finance fraud targets large corporations and has been used by cyber-criminals all over the world in the past decade. Did you know that someone scammed Google and Facebook, by posing as one of their suppliers, defrauding those companies of over $100m? According to the FBI, crimes that involve deceiving companies via email have grown more common – and much more sophisticated – in recent years, resulting in billions of dollars in losses.
Looking at the situation at Facebook and Google, I can definitely understand why corporations have dedicated procedures, or sometimes even people, to detect invoice fraud. I also see why, at first sight, they really don’t see how e-invoicing could be a more secure option. Well, it definitely is. By using secure communication protocols so that documents are encrypted and access to communication channels is only shared with your suppliers, we can conclude that it’s actually a lot more secure then receiving invoices by post or email. This is because a cyber-criminal can easily find or guess the email or postal address of a company’s AP department, but can’t find any login details or IDs for SFTP servers or AS2 channels.
Multiple articles have been published about why your company should switch from PDF to paper e-invoicing, but in this article, I wanted to re-emphasise why the change should be made by explaining the above advantages, especially when it comes to sending or receiving paper invoices. According to Eurostat, 97 percent of all enterprises in the EU with more than 10 employees (figures for 2018, including the UK) have access to the internet, but 80 percent of these enterprises still send paper invoices.
As I can understand that companies face other internal challenges, such as change management or the internal support of different entities or departments within the organization when it comes to e-invoicing, my advice would be to set up a global or continental strategy to implement e-invoicing. When all stakeholders are involved and the project is set up by a global or continental HQ, it is, from my experience, usually easier to roll out e-invoicing within your company.
Nick van den Berg has been working in e-invoicing for about five years. Within Comarch, he has the responsibility to service the Benelux market when it comes to e-invoicing. Within his role as e-invoicing consultant, he is focused on advising large organisations when it comes to automating their financial processes.