e-invoicing – still not much to show for after all these years

Remember the 90’s when everything “e” was the next big thing? That’s when e-invoicing came about. Unfortunately, it seems like it got stuck there. Two decades later, a recent report published by PayStream Advisors reveals a disappointingly underwhelming progress:

• Less than a fourth of the survey respondents are currently utilize an electronic invoice solution.
• 59 percent of invoices are still received in paper format, and additional 20 percent are received by email and fax.
• Even among suppliers that utilize electronic invoicing, the majority submit just 10% or less of their invoices electronically.

Why is that?

There are many reasons stated in the PayStream Advisors survey, ranging from shortage of IT resources to suppliers not willing to adopt electronic invoicing. I believe that whenever a solution fails to gain ground, there is a reason that goes beyond these tactical issues. IT resources can be allocated if the solution is important. And suppliers would get onboard if the benefits can be demonstrated to them.

The reason electronic invoicing has failed in my mind is that it focused on the wrong part of the problem. Receiving an invoice electronically removes paper from the process. That’s helpful, but not strategic.

Improving supplier collaboration, providing real-time visibility into accounts payable, and accelerating the procure-to-pay process are strategic goals that can be achieved by automating invoice processing. But e-invoicing doesn’t get you there.

To help organizations achieve these goals, we must move beyond document transmission. The real payoff is in making the process not just paperless but frictionless—and that means removing the errors, time delays, and excessive manual handling the process is currently plagued with. Matching the invoice to the purchase order data, validating the goods were received as ordered, ensuring prices and taxes are calculated accurately—all these steps are still largely manual, time-consuming, and error-prone even when the invoice is transmitted electronically.

As Ben Kepes rightly says in his recent blog post, any solution which introduces an electronic version of invoicing without including flexible workflow around that invoicing is doomed to failure.

So why is it that we’ve been at it for so long yet we have so little progress to show for? That’s exactly the question we asked ourselves when we started Nipendo.

We had to dig quite deep to come up with answers. To put it in simple terms, conventional, database-driven technologies that have been thrown at the problem were just not agile and scalable enough to address the complexity of many-to-many relationships of a buyer-suppler network. It took us three years to build something totally different from the ground up. I am not going to get into the details here, not so much because I don’t want to give away the crown jewels but mostly because it requires a longer conversation, and terms such as state-machine and polymorphism might scare some people away.

We recently held a lively conversation on the topic with the folks at Spend Matters. I don’t need to tell you, these guys understand the procure-to-pay space in and out, and would probably do a better job than I would connecting the technology to the practitioner’s vocabulary. You can find some high-level elements of the technology discussed in their initial coverage of Nipendo.

As much as I love talking about the technology, what really counts is whether it translates to business benefits for our customers. We’ll be sharing these stories in the next few weeks on this blog and elsewhere, so stay tuned.

We’ll also get back to the technology and further peel the onion in future posts on this blog. In the meantime, drop me a note if you are interested in a deeper dive.