By Chris Rauen, Senior Manager, Solutions Marketing at SAP Ariba
Most businesses have an electronic invoicing system, because paper-based would just be considered unfathomable.
However, something we see all too often is having this system work separately to the rest of the company, which doesn’t add much value at all, and with this in mind, isn’t that just as baffling?
Luckily, we’ve moved on from the paper-based system, to a much more efficient way of doing accounts. Since the 1990’s an array of electronic invoicing systems has entered an ever-increasing marketplace, all looking to streamline the complex way of processing invoices around the world.
Businesses are continuously looking to create value, and in today’s digital economy, most of this comes from linking invoice data to contracts, purchase orders, service entry sheets, and goods receipts for automated matching. Crucially, automation of the invoice management process must extend beyond direct enterprise operations and should actually include suppliers, yet few platforms have this ability of enablement. As a result, we see many accounts payable departments and their e-invoice systems fail to take advantage of this untapped potential.
This begs the question, how can linking electronic invoicing with a company’s other operational systems, and to suppliers,unlock this value?It turns out that an interconnected approach to invoice management in a digital age reduces costly errors, strengthens compliance, and facilitates collaboration both within the organisation and among trading partners.
A cloud-based network can assess trading partners against hundreds of criteria, including whether they can root out forced labour from their supply chain to how well they document the use of natural resources, and even giving work to minority suppliers. Of course, while software alone cannot ensure compliance with the plethora of policies that continue to come into effect, it remains a powerful tool towards efforts in achieving it. Compliance, once a tedious task, can now be managed from the convenience of a dashboard.
To reduce invoice errors effectively, a digital network must rely on intelligence — not just the ones that humans make, but through smart invoicing rules that are essential to a business network. These rules effectively validate invoices before posting for payment; To streamline processing, reduce operating costs, lower overpayment and fraud risk, and maximise opportunities for early payment discounts.
By enabling real-time collaboration between buyers and suppliers, digital networks not only bridge the information gap that usually delays invoice processing, but they also reduce the complexity often associated with compliance. That includes screening suppliers and monitoring business policies automatically before a transaction takes place.
However, perhaps the greatest advantage of digital networks is the ability to collaborate. Issuing an invoice, even when accurate and on-time, can sometimes be a one-way, asynchronous conversation. A buyer receives an agreed-upon product or service from a supplier, who at a later date sends out an invoice and, at an even later date, receives payment. This scenario has been the same for decades. But digital networks challenge that. The immediacy of network communications is so sufficient that it’s a wonder why electronic invoicing should merely replicate age-old processes that postal mail once facilitated, when it can be improved instead.
As a result, chief procurement officers are choosing the latter; to ditch the decades and improve..Through their day to day engagement with digital networks, invoice processing is now viewed as just a segment of the wider exchange of information amongst trading partners. It’s simply one cog in the multi-party collaboration machine that networks enable – and through intelligent rules – alerts users of any potential errors or exceptions that relate to the transaction made. Expectedly, buyers and suppliers will continue to extend their relationship to include product design, innovation, and product delivery in a bid to move forward in the digital age. To aid this continuing transition, expanding the scope of electronic invoicing to capture up-to-the-minute progress reports on the teamwork happening within and across organisations can only help to streamline the process.
As businesses aim to grow and expand, their electronic invoicing system should reflect this and should not focus solely on accounts payable, but provide other functions too. The value in having visibility of the rest of the operations in the enterprise and even of partners is of utmost importance if businesses are to move forward into the digital age, and work seamlessly with others.
The author is Chris Rauen, Senior Manager, Solutions Marketing at SAP Ariba, the company behind the world’s largest business network, linking together buyers and suppliers from more than 3.4 million companies in 190 countries.