Is mandating suppliers to e-invoice a good idea?

Maybe we should have warned when they decided to have a session on mandatory versus non-mandatory approaches to e-invoicing at their US Summit for Leaders in Finance Shared Services. Experience tells us that this subject can cause a heated discussion and this is exactly what happened. We’ll give you an overview of the pros and cons of mandated e-invoicing based on the discussion at this Summit. Now tell us, what approaches to e-invoicing projects has your organisation taken with suppliers? And suppliers, are you all happy campers?

Risk of a mandatory message

Some of you organisations out there might have the feeling that the only way to make progress in your e-invoicing project is to mandate. Please do realise that this is quite a tough stance. Think about the business relationship with your suppliers, they might not thank you for your decision. Try considering benefits beyond cost savings in your negotiations with suppliers. After all, they may have to make quite a large financial investment to implement the necessary technology. Offer them a number of options instead of bluntly mandating.

The cost of no mandatory message

Despite having varying policies with regards to e-invoicing in their own organisations all the delegates at the summit agreed that without strongly encouraging a preferred invoicing method to your suppliers, you will never see a return on your investment. One of them stated that a failure to enforce e-invoicing to some degree with your suppliers will only lead to an inefficient and ineffective process.

Which suppliers to mandate

“By strategically segmenting your supplier base and rolling out your mandated approach in stages, you’re slicing up a large obstacle into bite-size chunks”, said one delegate from a Fortune 500 company. Your high volume suppliers will be the most obvious category of suppliers to first approach with an e-invoicing project, as the business case for them will level out any financial investment they have to make in implementation.

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1 Comment

  1. In my experience I have found that the result of a non-mandatory strategy is that of an unsuccessful one. There needs to be real incentive for on-boarding suppliers and the simple reality is that from a supplier perspective, the benefits are very minimal. However it wouldn’t be ethical business practice to go out and start threatening your suppliers. The best way is to deliver the message that shows their value to the company, as if they werre an employee. For example, showing appreciation by thanking the supplier for accomodating your requirements, can go a long way. In leading the implementation for a branch of a global corporation, I have found that e-invoicing is equally supported and objected to by suppliers. Some see the benefits and treat the requirement as part of a customer service commitment. Others see it as a way of us not having to do the work. In a nutshell, based on my experiece, I am supportive of mandatory e-invoicing.