Now PEPPOL is here, what e-invoicing methods are available and which is best?

E-invoicing has been around in various guises for over 40 years, yet there is still confusion and misunderstanding about the different types of e-invoicing. Let’s take a look at the options available and why some approaches are having more success than others at on-boarding suppliers.

1

XML or EDI invoicing

The traditional e-invoicing approach was for a supplier to send XML or EDI files.  Conceptually it is simple: the billing system of the supplier sends (often via a service provider) an XML or EDI invoice document to the finance application of their buyer.  But for suppliers it is less simple. In the majority of cases, the supplier needs to change their billing application and infrastructure in order to send XML or EDI documents.  If the supplier is sending 1,000 invoices a year to the buyer, they may be able to justify the effort and cost to do this (assuming they also have the skills available that is).  But if they are only sending 100 invoices a year, it is far less likely they will be willing to make the changes to support this method of invoicing. As a result, on-boarding rates remain low and paper invoicing remains.

2

Invoice Portals

Portals were supposed to remove the barriers to e-invoicing which exist with XML and EDI. And they do, but only for a minority of suppliers.  The problem for all except the very smallest, micro business, is that to use an invoice portal creates duplication and operational inefficiencies.  If an organisation already raises their invoice in an accounting application, why would they want to do it all over again in a 3rd party portal?  Duplicate time, duplicate effort and duplicate cost. They also add risk that the invoice details recorded in the supplier’s finance application are different to that in the portal.  So, portals may help the very smallest of suppliers who don’t use an accounting package, but for everyone else it makes no business sense. As a result, on-boarding rates remain low and paper invoicing remains.

3

PDF e-invoicing

It is common knowledge (backed up by reports from the likes of Accounts Receivable Network) that PDF invoicing is the second most popular way to invoice after paper. It simply requires the supplier to create their invoice as normal within their own accounting package and send as a PDF file via email instead of printing and sending as a paper document via snail mail. Almost every billing application can generate an invoice as a PDF – what many people aren’t aware of is that when a PDF is generated by a billing application, in almost every instance it will be a text PDF with all the invoice data items embedded in the document and visible to the right technology (CloudTrade technology as it happens). This type of e-invoicing is accessible to all – large and small companies alike. Suppliers are not required to change their processes, or incur any technology or infrastructure changes or costs – as a result on-boarding rates are extremely high.

4
Don’t ask suppliers to change their applications or infrastructure to send XML or EDI
5
Don’t ask suppliers to raise their invoice in their own accounting package and then do it again in a 3rd party portal

By adopting these principles, you can be confident of driving supplier adoption rates in your PEPPOL and e-invoicing programmes.

Source: http://blog.cloudtradenetwork.com/resources/articles/peppol-changes-the-way-the-nhs-does-business


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