e-Invoicing: A global view

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Transcript of e-Invoicing: A global view

  • 1. April 2011 e-Invoicing: A Global View Research Report April 2011

2. A Basware Reporte-Invoicing: A Global View02/03Contents3Executive summary5Why do companies need e-invoicing?6What automation currently exists?7What are the challenges in automation?8Why does supplier connectivity matter?9Conclusion10 Recommendations 3. Executive summaryThe 2011 Basware e-Invoicing: A Global View research report provideswww.basware.coma snapshot of the trends shaping the improvement of financial systemsand processes for businesses across the world. Whilst businessesseek to create greater cost efficiencies in 2011, the reality for mostorganizations is that realizing this strategic goal is very challenging.61%Businesses in the study are faced with interoperabilitychallenges, supplier enablement issues and the removal ofpaper and manual processes from payment systems strugglingto meet corporate expectations. Think interoperability presents e-invoicingchallenges for suppliers or customersIn the pursuit of high level efficiencies in payment processes,42%companies large and small seek immediate benefits frominvestments made to improve existing infrastructure. However,the common experience of businesses aspiring to realizeautomation goals is a staggered process where supplierSend paper purchase orders to suppliersenablement, compliance and changes to legacy processesabsorb significant time and energy. Ultimately, this impactsthe bottom line.It is encouraging that respondents in the survey identify78%Would send e-orders ifwith the value of automation in improving payment suppliers could receive themprocesses. However, automation ranges from leading-edgeimplementations of solutions to remove all aspects of manualprocesses to a simple transitioning from paper to PDF formatsfor exchanging PO and invoice information between suppliers.The report describes a desire for change that is shadowed by51%Believe open networks leadan operational reality that is failing to meet expectation. to reduced supplier costs Efficiency Gaps 72%Improving operational efficiency is a strategic priority for 2011.93%Believe invoice processing can be somewhat or significantly (34%) improved. Supplier Issues 53%Think greater supplier awareness of the benefits will move e-invoicing forward.Top rated responses46%See supplier reluctance/cost to supplier as a barrier to e-invoicing adoption. 4. A Basware Reporte-Invoicing: A Global View04/05Executive summarywww.basware.comThe key findings of the e-Invoicing: A Global View 61% of respondents believe that [supplier]research report can be summarized as follows: interoperability presents e-invoicing challenges forsuppliers or customersCommercial Drivers Suppler reluctance towards additional costs (46%) was 72% of respondents cite improving operationalthe most common barrier to e-invoicing, with lack ofefficiency as a key financial priority for 2011supplier activation capabilities rated second 93% of respondents believe that invoice processing canbe somewhat or significantly improved Open Networks 50% of respondents believe that e-invoicing can help 51% of respondents believe that an open network (tosignificantly to achieve operational efficiency objectivesimprove interoperability) would reduce supplier costsfor e-invoicingEfficiency Gaps 66% of respondents associated open supplier networks 64% of respondents claim to suffer time loss as a resultwith flexibility, whilst 61% felt they offered increasedof manual processes related to payment processing efficiency Only 9% of respondents describe high levels ofe-invoicing activity (80%+ invoices managed The concept of e-invoicing appears to be well establishedelectronically) across the commercial landscape. However, this manifests 41% of respondents do not send out electronic invoicesin many cases as a reliance on PDF-based paymentat all, and 18% do not receive them processes and significant amounts of paper and manual On average, 1 in 4 invoices (26%) are not captured in resources to create a base-line level of automation.systems where invoice scanning is in placeFurthermore, taking manual processes into an automatedframework that relies heavily on compliance fromSupplier efficiency a supplier base is a journey with many milestones. 35% of respondents would definitely send e-orders ifCompanies are not automating all payment processes allsuppliers were able to receive them a further 43% of the time even if that is the desired outcome.would probably do soResearch MethodologyBasware conducted an online survey of 1,373 professionals in relevant roles during February 2011. Surveys were globally distributed in locallanguages, with 88 responding to the US survey, 288 responding in Western Europe, 74 in Australia, 451 in Scandinavia, and 30 elsewhere. 5. Why do companies need e-invoicing?Finance efficiency is the holy grail of AP and purchasing professionals,www.basware.combut it is a very difficult goal to achieve, even though the potential forimprovement is readily apparent.72% of respondents see improving operational efficiency can be somewhat or significantly improved in theiras a key financial priority in the coming year, as shownbusinesses. Many of these businesses feel they can usein Figure 1. Existing automation appears to have done e-invoicing to meet their key efficiency goals. 50% say thatlittle to keep improving operational efficiency from beinge-invoicing can help them improve operational efficiencya continuing priority. Other measures of efficiency are to a great extent, and 47% say that it can create somealso important strategic issues for many companies, improvement, as shown in Figure 2. 19% expect greatwith 48% citing optimising cash flow and working capitalimprovement in optimising cashflow and working capitalmanagement, 43% seeking to reduce overall purchasingmanagement, and another 74% expect some improvement.costs, and 35% hoping to improve forecasting and planning 15% expect significant reductions in purchasing costs toability. This efficiency focus stands out particularly strongly come from better e-invoicing, while 70% expect someagainst the 45% who list increasing profits as a priority.improvement.Clearly, the need to improve existing processes is relatedto the bottom line. Longer-term change, leading to longer-It seems that business efficiency, and long term businessterm benefit, is a focus for many businesses. sustainability and profits are very much on businessleaders minds. Process and technology improvements areFinancial automation is a tool for achieving this long-term tools to achieve these goals.gain. 93% of respondents believe that invoice processingFIGURE 1: What do you consider to be the key financialFIGURE 2: To what extent do you think e-invoicing excellencepriorities for your organization for the year ahead?can help achieve the following financial objectives?Improving operational Improving operational 50%72%efficiencyefficiency 47%Optimising cash flow andImproving environmental 35%48%working capital managementpractices (e.g. green sourcing) 62%Increasing profits and topImproving auditing/ 24%45%line performancecompliance67%Reducing overall purchasing Improving relationships 23%43%costs with suppliers/customers69%Improving forecasting/Optimizing cash flow and 19%35%planning abilityworking capital management74%Improving relationships Reducing overall15%34%with suppliers/customerspurchasing costs70%Improving environmental Improving forecasting/13%practices (e.g. green sourcing)27%planning ability 71%Improving auditing/ Increasing profits and top 11%22%complianceline performance75%Better managing currencyBetter managing currency 4% 6%volatilityvolatility65%0%20% 40% 60% 80% 0%20% 40% 60% 80% Great extent Some extent 6. A Basware Reporte-Invoicing: A Global View06/07What automation currently exists?Efficiency Gapswww.basware.comBusinesses focus on process improvement is well-placed. There is clearlyroom for improvement in many businesses current operational practices,and lack of current automation is resulting in loss of time and profits.64% of the respondents say that they lose time becauseOn average, 1 in 4 invoices are not scanned into anof manual processes related to payment processing. Theautomated processing system. These are likely dealtneed to move invoices, POs and other information around with via entirely manual, paper-based systems. 76% ofthe business in paper form or to manually enter data into businesses have some sort of scanning in place, as shownsystems is costing resources, and ultimately profits. in Figure 4, with roughly one-third of those using anoutsourced scanning service.Few businesses escape this problem entirely. Only 9%describe high levels of e-invoicing activity where at Efficient invoice processing is one of the keys to theleast four in every five invoices (or 80%+) is received greater operational efficiency, but not all businesseselectronically, as shown in Figure 3. 56% say that they are taking full advantage of the tools, and the levels ofhave less than 20% received electronically fewer than operational excellence, available to them.one in five. Most striking is the fact that 41% do not sendelectronic invoices at all and 18% do not receive them,almost certainly resulting in time and resource loss.FIGURE 3: What proportion of all the invoices your companyFIGURE 4: Do you use any invoice scanning services?sends out in a typical month is fully electronic? (I.e. legallyrecognizable invoice data files that can be passed directlyto the customers computer system, without being manuallykeyed in) 2 17%22% 3% 6% 3% 56% 53% 6% 23% 11% Less than 20%: 56%81%-99%: 6% Yes, in house 53% No 22% 21%-40%: 11%100% / All: 3%Yes, outsourced 23% Dont know 2% 41%-60%: 6% Dont know: 17% 61%-80%: 3% 7. What are the challenges in automation?Supplier efficiencywww.basware.comBusinesses understand the possibilities that invoice automation represents (only14% of respondents say they are not clear about