Read Watch

e-Invoicing: The 10 Mistakes to Avoid

{{article.creator.firstname}} {{article.creator.lastname}}
Editor Coda
2018/10/04

Most shared services are engaged in an ongoing quest to simplify, eliminate or automate. As RPA and AI solutions continue to attract our attention, we need to remind ourselves of the vital role of enabling technologies, which are increasingly instrumental when building our overall solution set.

e-Invoicing is a classic example of an enabling technology that continues to stack up as a complete solution for automating the invoice. e-Invoicing networks can:

  • Eliminate paper at source
  • Offer key data verification
  • Loop invoices back to original contracts
  • Facilitate discounting
  • Offer a compelling service to suppliers which is cost-friendly and based on the value that comes from visibility of process
  • Manage all of the above in a legally compliant way, and on a global scale

There is a short list of providers in the world that tick all these boxes. This article refers to one of them: Coupa. These requirements may sound demanding, but e-invoicing networks have been around for two decades now, and our businesses demand we have a grip on our data, offer process excellence, and manage end to end (not operate in silos). The fulfilment of the above list should be ‘business as usual’ by now.

However, even the most sophisticated GBS organizations get the basics wrong. Here is a list of mistakes – and the behaviors companies must follow so their e-invoicing campaigns can take flight:

For more on e-invoicing, visit our ultimate guide to e-invoicing

Mistake No. 1: The Numbers:

Know your as-is process and the costs behind this (your baseline). Be realistic about the business case. Knowing your as-is process will help with understanding the scope of your project (how many invoices are in scope and what value of spend this amounts to). Once you know your scope (based on size of suppliers, percentage of PO invoices, percentage of Right First Time invoices), you will begin to know what the approach will look like – and, therefore, the ROI. Are you heading for a phased or Big Bang approach? Each will impact your ROI differently. Many business cases are based on transactional cost reduction (either on unit cost or head count reduction), but other components should be included (see Mistake No. 9).  Amanda Prochaska from Coupa client MGM Resorts International talked about “Defining what success looked like – in measurements” – i.e. in numbers. Using her baseline figures and projected finish-line figures, she could help see that her program stayed on track, and be sure she had hit success when targets were met.

 

Mistake No. 2: Dirty Database:

Know it. Consolidate it. Clean it.  These are the 3 rules to follow when going into any program involving your suppliers. Having a tight grip on the database will mean you will know the scope (i.e. who the big suppliers are) and where to start. You will also have a clearer view on the business case because of this (if 80% of your invoices are sent by 20 suppliers, you could see a very speedy ROI). Consolidating your database is key. This is a great time to work with Procurement and think about a strategic consolidation, where ‘purchasing power’ can come into effect. If you have 50,000 suppliers, ask if this program can help you reduce it to 20,000. Maybe use e-invoicing as a condition to be a supplier, and non-participation in the program could mean they don’t make the cut. MGM Resorts International saw their onboarding rates hit 100% because of their No PO No Pay policy and their No Paper policy. All this helped them with their supplier consolidation efforts.

Databases get dirty. And e-invoicing programs rely on clean data. Why? The communications effort to onboard suppliers is huge, and you want the email/possible phone call to reach the right person.  

 

Mistake No. 3: Operating in Silos

Businesses used to be functionally led. Now many are process-led, and some of the very mature ones are customer/service-led. You would think that most of the process-led organizations who operate end to end would see that Procurement and Finance are aligned. This isn’t always the case. The net of it is: Finance cannot make e-invoicing work without Procurement. Most Finance teams realize this but wait too long to get Procurement on side. Procurement needs to be engaged before this concept has even germinated so they feel 100% part of the team. If they engage too late, they can kill this as a program.

 

Mistake No. 4: Working in Fragments

Try and have a global approach to this. This doesn’t necessarily mean working with one global solution, but having a single, joined-up solution will help keep focus, keep the pace, apply economies of scale, and strengthen the message to suppliers. Programs where different businesses or countries have signed up to different local providers become complicated to manage, encourage fatigue, and tend to run out of steam. And, importantly, strategic suppliers that work with you in multiple jurisdictions are being asked to sign up to multiple networks, which is impractical.

 

Mistake No. 5: Treating the “Point” Problem

The invoice could be seen as one small step in the end-to-end process. However, so much of the quality of the invoice is affected by ‘upstream’ behavior and activities. These upstream activities also affect how slow the invoice and payment process is, and therefore how many supplier queries end up hitting your Help Desk. Treat your electronic invoicing program as a connected piece of your end-to-end view, and as much as possible see that the PO invoice can link back to your contract information (to provide you with greater control). Most e-invoicing networks come with good-looking e-Procurement platforms and catalogues (like the Coupa tool) and also with Supplier Portals these days. Make sure your Supplier Portal is user-friendly and intuitive, and solves your main reasons for queries, so your Help Desk activity reduces.

You will want to make sure you have a solid auto-matching tool and a robust workflow tool, so that data transactions don’t need to be reviewed once they hit your environment. You want to be looking at your e-invoicing program as a tool to help the entire end-to-end process, and as a tool that can liaise smoothly with end-to-end systems.  You want to be looking at e-invoicing to help you reach a “touchless process” – end to end.

 

Mistake No. 6: Failing to do your Tax Homework

If you want to lose the paper, you need to make sure you comply with tax/VAT requirements. Bring your VAT people in to meet with the service provider you are assessing. Be sure about the process, and who the provider is partnering with (PWC? KPMG?), and set up a few calls between your VAT team and some of the providers’ referenceable clients’ VAT teams, so they can dive into the technicalities. This is a check-box requiring a resounding tick in it before you can comfortably move on.

 

Mistake No. 7: Weak Internal Communications 

The last thing e-Invoicing Project Managers want is to be undermined by colleagues, simply because they didn’t know about the program. In the past, e-invoicing programs have failed because suppliers have reached out to their contacts in the business and asked if they knew about this new e-invoicing request, only to hear the contact say, “Don’t worry about it too much.” A casual comment like this can unravel a determined program. Put effort into building awareness. Educate the company on the Why, When, Where, Who and How, so they ‘get it’ and support it. Furthermore, give your program a cool name, so it stays in the slightly-longer-term memory. Even better, run a small competition to select a name, and use the PR to help spread the word about this program. MGM Resorts International created a “Coupa Corner” to help internal buyers better understand the move to the Coupa solution, and how to be part of the transformation.

 

Mistake No. 8: Lack of Pop and Direction

If you want there to be change, most of us humans (99%) need to be told why the change is happening, what’s in it for us, what the steps are, what the deadlines are, and how we need to proceed. Otherwise we might not move. So your supplier onboarding communication needs to contain all of the above – and pop with excitement. Typically, suppliers onboard in 33.333% ‘chunks’. The first third come on board willingly and need little persuasion, the second third need selling to, and the final third will take their time, come up with endless excuses, and slow your campaign down. It’s useful to determine upfront who you think will fall into which category, so you’re prepped. Make sure your supplier communication is exciting and directive, and make sure you use the advice from your e-invoicing partner – they are the real experts here.  MGM Resorts International saw a staggering 100% adoption rate when they rolled out Coupa. Their No PO No Pay approach helped with this, along with their No Paper policy.

 

Mistake No. 9: Leaving the Transaction Savings at That

The transaction savings that can come from e-invoicing are huge. However, those companies that have used their e-invoicing process as an enabler to capture discounts have seen the transaction savings dwarfed by the tremendous savings that come from early payment discounts. Typically, e-invoicing delivers savings measured by the hundreds of thousands each year, but the discounting part of your program can deliver savings measured by millions. Less than 25% of e-invoicing programs include discounting initiatives. Make sure you’re not losing out, and tie this into your program.

 

Mistake No. 10: Exclusive Focus on the Wedge

When running an e-invoicing program, people talk about the “ramp up” or the “wedge.” This refers to the ramp-up period that often happens during the first 12 months of the program, while you’re ramping up from 0% electronic to 50% or 70% electronic. This wedge will end up looking as wide and flat or as narrow and high as your investment in the above nine points. However glorious your e-invoice program, and your wedge, you need to recognize that you will, in the short- to mid-term, and probably the longer term, have to deal with paper invoices. Work with your service provider on how to deal with the paper. Much of this paper may come from tail suppliers, and solutions to these may be P-card or tail-centric network solutions like Candex. Other providers may offer data OCR with exceptionally high accuracy rates, or work with a solution like Symbeo to handle the paper. Whichever provider you work with, you will want to focus on the non-converted invoices, as much as the converted, to see that you have a short- and long-term solution.

 

 

For more on e-invoicing, visit our ultimate guide to e-invoicing

To read this article you have to be registered.

Become a member to access all content and / or download it