In todays fast-paced business environment, companies need to be able to conduct business in real-time, regardless of the location of their trading partners.
As a result, e-invoicing is growing worldwide, and companies are benefiting from closer collaboration with their partners, as well as the improved financial operations and reduced costs that e-invoicing enables.
According to a recent study by Ardent Partners, 29% of companies are implementing e-invoicing today, with 55% planning to adopt it within the next two years. And the cost savings they receive are significant. According to Billentis Research, a company can save nearly up to 80% by implementing e-invoicing and automated invoicing processes, instead of paper-based systems.
In tandem with the growth of e-invoicing is the rise of business commerce networks, which enable companies to automatically transmit and receive e-invoices and e-payments anywhere around the world. Today 19% of companies are using business commerce networks, and this number is expected to rise to 41% within the next two years, according to the Ardent Partners survey.
Recognizing their role in transforming the way business is conducted, governments around the world are advancing global e-commerce through e-invoicing and related infrastructure. At least 56 countries have adopted, or are seriously considering adopting e-invoicing mandates.
There are many factors that are causing governments to embrace e-invoicing, including more effective tracking of invoices for tax compliance, as well as the need for efficiency gains and cost reduction. In addition to mandates, governments around the world are promoting infrastructure development that facilitates e-invoicing and improves commerce everywhere. The European Union is working to make e-invoicing mandatory for government procurement this yearand the norm for companies shortly thereafterto create a uniform standard with interoperable systems to facilitate borderless commerce. The U.S. government has mandated e-invoicing in its Treasury bureaus to lower processing costs by an anticipated 50% and gain expected annual savings of $450 million. To date 86,000 government vendors use the U.S. governments Invoice Processing Platform (IPP).
E-invoicing also helps suppliers by reducing inefficiencies and logjams in the approval process, as well as solving the problem of lost and missing invoices, that can delay payment. However, that in and of itself does not solve the problem of delayed payments. According to Creating Payment Energy research conducted by Basware and MasterCard, more than half (57%) of international businesses surveyed said that they delayed payment to suppliers within the past 12 month-period. This practice is pervasive, with three-quarters of respondents considering late payments to be business as usual, and two-thirds using late payments as a strategic lever to manage cash flow.
While e-invoicing can expedite transactions, enabling delivery and receipt of e-invoices to be nearly instantaneous anywhere in the world, it is not until it is coupled with payment that the problem of vendor payments can be fully solved. The industry is focusing on innovative e-payment approaches to complement e-invoicing practices, for example, enabling suppliers to get paid immediately upon invoice approval, while extending terms to buyers.
Businesses and governments are promoting innovative approaches and solutions that provide quick, easy, and seamless e-commerce transactions anywhere around the world, while also delivering accountability, accuracy and substantial cost savings. Buyers no longer have to choose between effective cash management and efficient payment processesor between boosting their financial position at the expense of their suppliers. By combining invoicing with e-payment solutions, the barriers to more effective commerce can be removed, creating closer relationships between trading partners and enabling real-time, cooperative commerce.
Bob Cohen is vice president of North America for Basware.