Despite the benefits of paperless invoicing, not everybody is on board. Vishal Patel, Head of Solutions Marketing at Tradeshift, recently spoke with PYMNTS about what’s causing the delay in the adoption of electronic invoicing, and what needs to be done to move it forward.
There’s no question that digital invoicing can save businesses time, money and reduce errors associated with manual data input. That being said, still only a small fraction of all of the world’s invoices are digital.
Why do you think this is still the case, even with increasing government mandates for the adoption of electronic invoices?
VP: That’s a great question. The move towards digital invoicing is faster in some regions of the world, such as Latin America, due to the government mandates you mentioned. That’s not the case everywhere, of course, such as in the U.S.
There is still a great amount of paper invoicing, due in large part to the fact that migrating to digital is a difficult process…especially if a business is working with hundreds or thousands of suppliers who are used to the paper invoicing process that they have been employing for decades.
That said, there certainly is a large amount of big, global multinational companies that are in the process — some further along than others — of migrating their suppliers from paper to electronic invoicing. To date, most of the technologies available to do so have held little value for the suppliers themselves, so there’s been little incentive. Some of these technologies actually involved charging the suppliers to send their invoices electronically; that in and of itself is an inhibiting factor: Suppliers don’t want to add any cost, so they’re less likely to move all of their invoices to electronic.
For electronic invoicing to be adopted at a larger scale, the systems should not only be free for suppliers, but also offer additional value to them — such as allowing suppliers to have a profile of their company on the network, manage their products, and so on. The more successful of the newer technologies related to electronic invoicing are those that provide an equal value to both the supplier and the buyer, not just the latter.
What it will take for a greater acceleration of digital invoicing adoption to occur? When might that happen, and why?
VP: Different companies approach the process differently. Sometimes it’s based on geography, and they implement electronic invoicing country by country; that’s something we have done with DHL, for example. We’re now in the process of converting all of their suppliers throughout Europe — who send millions of invoices — to digital, one country at a time.
I think that as more large companies experience the success that comes with onboarding their suppliers to an electronic invoicing system or to a network that facilitates that, the rate of acceleration will increase.
Another obstacle is that there are multiple e-invoice networks, some of which are closed — they don’t allow, for example, a supplier from one network to invoice a buyer that’s on a different one. By contrast, on open networks, invoices can be moved between suppliers and buyers regardless of what network they’re on. If the interoperability between networks is solved, that, too, will help to further accelerate digital adoption on a large scale.
A recent study showed that incorrect information found on paper invoices led to more than 15 percent of B2B payment delays in Europe alone. Can electronic invoicing alone solve this problem? What should organizations be doing to increase productivity and save money in that regard?
VP: Inaccuracies in invoice information certainly cause delays; even going back further, so, too, can inaccuracies in supplier data, such as bank account information or personal preferences or addresses.
Invoice inaccuracies create issues because invoices can’t be processed in time to make a payment; that can lead to dispute resolution with suppliers, which is often a manual process that take days or weeks. Once an electronic invoice system is in place, all of that becomes a lot easier — assuming that the system in question is a collaborative one.
At Tradeshift, we refer to our process as a “collaborative workflow.” Within an invoice that’s sent electronically, the buyer and supplier can actually chat with each other. This allows for a much faster resolution of potential disputes, compared to a process that requires a back-and-forth of emails and phone calls.
How do you expect digital procurement solutions to evolve, and what role will Tradeshift play in that evolution?
VP: Tradeshift is planning to play a big part in it. We’re actually going to be launching an e-procurement solution shortly.
We’re getting into that space because we think that the existing e-procurement solutions in the market have continuously overpromised and underdelivered. A lot of that has to do with the participation of suppliers. For example, the amount of goods and services you can currently buy from electronic catalogues is very limited; only a small percent of suppliers actually contribute to them.
We think that there’s a huge opportunity to introduce a more intuitive and easier approach, to allow people to go outside of the system but still capture information that is in-policy and relevant.