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Four Differences Between E-Invoicing and Email PDFs

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Editor Coda
2019/07/07

By Susie West

How can we define e-invoicing?

An electronic invoice is a structured data file, rather than an unstructured file. This structured data file is transmitted directly from the supplier’s system to the buyer’s system. During this transmission the data is never touched by a human, never printed, and never converted into an unstructured file. The data could be transported through a) a closed, point-to-point channel (EDI) which connects the supplier directly to the buyer, b) an open e-invoicing network that connects many suppliers to many buyers, or c) a supplier portal.

However, others argue that there is a broader view. This school of thought includes within their definition the receipt of “unstructured data,” namely PDFs received by email. 

Why is this confusing?

If two people from these separate schools meet and have a conversation, and compare the number of invoices they have converted to electronic, it is safe to say confusion will ensue. The person from the first school may be at a 50% conversion, and thrilled with this. The person from the second school may receive 60% of their invoices as emailed PDFs, and think they are in a “better” situation.

For more information on e-invoicing visit our Ultimate Guide to e-Invoicing

The truth is that the PDF person is a couple of years behind the structured data person, and their KPIs would be very different. Let’s have a look at four key differences:

1. Pre-receipt checks

e-Invoicing Structured Data File:

Electronic invoices go through many checks before they hit the buyer’s environment, including:

Is the sending supplier a legitimate supplier?

Is there a PO?

Does the invoice contain the information which qualifies it as a legal document?

Emailed PDF:

There are no checks made on emailed PDF invoices.

Comment:

Validations are becoming more important. As fraud increases, so does our need to systematically check that only legitimate suppliers are sending us invoices. Furthermore, electronic invoice networks like Tungsten Network check invoice data files to make sure a PO is quoted (if not, the invoice can be rejected), and such a network can validate the essential information that makes an invoice legal. These checks reduce the amount of effort the buyer needs to invest into handling invoices. 

 

2. Getting data into the buyer’s system

e-Invoicing  Structured Data File

A structured data invoice file can populate a system directly. As most shared services are reluctant for the data to populate the ERP directly, they, instead, have an “interface” that receives the feed. This interface checks the PO information and the Goods Received Note (GRN), before posting the data to the ERP. This happens automatically. There should be no manual intervention with this process. If there is, it is exceptional.

Emailed PDF

According to Mark Boswell, Procurement Business Process Manager from Mondelēz Inernational, there are “two kinds of PDFs -- one you can cut and paste from, and the other you can’t, so you have to use OCR. You can teach the OCR software to put data into fields, but it still needs to be verified.”

So you have a few choices with a PDF invoice. You can set up code to scrape (copy and paste) data from the PDF and convert it into a data file; you can run it through OCR software; or you can print it off and then have it manually keyed in by an AP clerk.

Comment:

The emailed PDF process, although certainly evolving, does not protect the quality of the data. There are human touchpoints in this process. This means that there are opportunities for error.

3. Visibility:

e-Invoicing  Structured Data File

When suppliers submit invoices via a portal or network, they either receive a notification confirming the buyer has received the invoice, or they can access a tracker which can confirm that the invoice has been received. Supplier portals also tell suppliers if their invoice has been approved, and when it will be paid.

Emailed PDF

Unless you set up a “Read Confirmation” in Outlook, there is no way of knowing if an email has been opened and the attachment has been read. Delivery is more certain through email than by paper, but it is not guaranteed.

Comment:

When using a supplier portal or e-invoicing network, suppliers are saved from calling the buyer’s help desk, and asking if the invoice has been received.  Mark Boswell goes on to say that there is a huge “…difference between e-invoicing and PDF invoicing, like the visibility of the data. Lots of things go away with e-invoicing, like debating if the supplier has sent the invoice and knowing where the invoice is. With e-invoicing, you avoid the lost invoices.”

 

4. Cost per transaction

e-Invoicing  Structured Data File

Invoices sent via a network, EDI or supplier portals are often touchless. This means the only cost you are paying is to the service provider handling your electronic invoice volume. You will have exceptional invoices to manage manually, but these should be in the minority. An average invoice cost here is between $0.50 and $1.50.

Emailed PDF

In Mark Boswell’s opinion, the cost to process an emailed PDF invoice is only a “little less” than processing a paper invoice. “If you look at paper, PDF and e-invoicing, and the costs related to each, there is little in it between paper and PDF, and there is a yawning gap till you get to the cost to process an e-invoice.” To cross this “yawning gap” could take four or five years.

Comment:

With a structured data file, your accuracy increases, you will receive fewer calls from suppliers, your matching rates improve, and your human intervention decreases. This means your processing costs are minimal.

Conclusion:

The two definitions should not be bundled. They are very different. We captured four ways in which they are different here, but the list goes on beyond these four. The definition you choose to work from, and ultimately the system you use, will impact the buyer’s productivity per FTE, ability to capture discounts, and time taken to process an invoice.

For more information on e-invoicing visit our Ultimate Guide to e-Invoicing

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