The More Demanding, Global Future Of E-Invoicing

Over the last few years, experts have consistently noted the rise of e-invoicing. Studies show that digital procurement practices are gaining traction and increasing in prominence around the globe, largely propelled by government mandates.

While it is all but certain that the e-invoice landscape will grow in size in the coming years, a far less discussed topic is just how that landscape will look.

New analysis from e-billing service provider Billentis, sponsored by digital invoice firm Basware, paints a picture of the future of the e-procurement space. Together, their “E-Invoicing/E-Billing – Entering a new era” report, published last week, explores the future topography of the digital procurement market and looks far beyond the mere size of the industry.

Addressing Demand

According to researchers, the e-invoicing market is growing at a rate of between 2-3 percent every year. But that expansion is based on an array of factors that address the varying needs of industry players. Those unique demands, the report’s author Bruno Koch concluded, will be driving the direction of e-invoicing growth.

Government mandates are perhaps the strongest propeller of digital procurement practices, as well as an especially effective tactic in driving mass adoption. Over the last decade, however, while large corporations were among the first to implement e-procurement strategies, market fragmentation failed to achieve widespread digital invoicing practices.

Today, e-invoice service providers are now focusing on SMEs, as the role of small businesses remains key to achieving mass digital invoice adoption. But getting SMEs on board with e-invoicing means service providers will be focusing on their specific needs. According to Billentis, small business owners are demanding faster, earlier and less expensive e-invoicing services and platforms.

At the same time, large corporations themselves have their own demands for procurement services beyond just e-invoicing. Their needs mean service providers will need to balance SMEs’ demands with large businesses’ demands for a more holistic approach to digital invoicing, including procure-to-pay and automated processing tools.

Adoption Of Big Data

According to Billentis researchers, an estimated 500 billion electronic invoices zoom across the globe every year already. Each one of them contains about one dozen data fields. That is a lot of information just waiting to be tapped into.

From service providers to tax regulators, an array of industry players will be increasing their demand to access this data, which also needs to be analyzed, according to experts.

While the e-invoicing industry will need companies capable to aggregating and analyzing this data, it will also demand a major improvement in the quality of that data.

Consider Billentis’ findings, for example, that for businesses in the Asia Pacific region, inaccurate data leads to payment delays more than one quarter of the time. What’s more, in nearly one-fifth of cases in the region, an invoice was sent to the wrong recipient altogether.

Just as governments play a role in the adoption of e-invoicing, they can also play a part in the improvement of e-invoice data quality, for instance through the development and consistent maintenance of public directories that contain accurate information. But moving forward, Koch said that service providers should be focusing on data synchronization capabilities that automate e-invoice data entry and align with the information found in those government databases. Further, e-invoicing firms must also be focusing on data validation mechanisms.

A Real-Time Economy

Supporting the flow of accurate data from e-invoices will be key in reinforcing businesses’ need for real-time services to manage their cash flow, paying invoices on time, and taking advantage of time-sensitive features like Dynamic Discounting. According to Billentis, Latin America is at the forefront of making the most out of real-time data flows as tax authorities use that information for business reporting and validation purposes.

But as companies’ calls for real time invoicing procedures grow louder, Billentis said that service providers will need to focus their innovations on tools that support that need. Key to that innovation is the mobile adoption of cash flow and invoice management tools.

For the accounts payable side of transactions, officials are now seeking mobile apps and services that allow them to manage, approve and review an e-invoice through their mobile device. Billentis “does especially expect an increasing number of integrated apps for mobile payment invoice payments” in the future, too.

Perhaps a bit further off but still a likely development are mobile services for the accounts receivable end. Billentis cited Chile, for example, where tax authorities are already developing a mobile app that allows businesses to submit tax documents through mobile devices.

Industry Consolidation

The ability to develop and manage all of these needs – including affordable e-invoicing solutions for SMEs, holistic procure-to-pay services for major corporations, mobile apps for AR and AP officials, data aggregation and analysis, and account automation tools – is a lot to juggle, and not every industry player in action today will be able to meet these demands in the future.

According to Koch, the e-invoicing services industry is headed for significant market consolidation, especially as businesses begin to prepare for international procurement mechanisms. Today, competition is “strong” among these businesses. But that competition will likely only intensify.

“Consolidation in the e-invoicing space towards fewer, larger vendors will…continue to be a trend,” concluded Basware CEO Esa Tihila. “The demand for e-invoicing is increasing as people realize the importance of it as a document of trust between buyers and sellers. The security and protection of the critical data it contains is something people are willing to pay for from trusted experts.”

To be come a “trusted expert,” these service providers must meet the multifaceted challenges of an evolving landscape. In the next four-to-five years, Billentis added that the demand for international invoice issuers will continue, which is also likely to promote market consolidation as e-invoice companies will not be confined to the national borders in which their offices sit.

The future of e-invoicing includes more holistic, customized service for buyers and suppliers. But if industry players can rise to the challenge, Billentis believes that the industry will launch a new era of automated, secure, and cost-effective practices that strengthen economies throughout the globe.