Are penalties an appropriate and promising way to increase e-invoicing adoption?

In the advent of the EXPP Summit, Bruno Koch from Billentis stated that more organisations plan penalties for paper invoices, or already charge extra for paper invoices. He asked whether this was an appropriate and promising way to increase adoption and a higher ROI?

Of course we can imagine that organisations are planning or already using this approach. So let’s take a look at how the customer experiences the uptake of e-invoicing and its in this process.

Basics

  1. A company sells products or services
  2. I and many other customers buy these services/products
  3. We allow the company to create revenue and (if it is an entrepreneur enough) some profits by paying the invoice

E-invoicing

  1. The company initiates e-invoicing (sending e-invoices to my and others customers) for his sake
  2. He has to ask me and other customers whether we accept his e-invoices
  3. Now if we (the customers that allow him to create revenue and profits) don’t accept e-invoices, we get penalized….
  4. However if we accept the e-invoice, we don’t get rewarded ….
  5. And no, not getting a penalty is not the same as getting rewarded (“Congratulations, you just didn’t get a penalty, applaus!”)

Conclusion

  1. Is this approach appropriate: heavens no! (Apologies for the rude language)
  2. Is it a promising approach: sadly yes.
  3. What effect does this: have Malus and no bonus approaches are hampering e-invoicing as a whole in a time frame where a company and its shareholder value are predominantly determined by the value and image perception by its customers.

So act responsibly and ask yourself what approach you can initiate to create an e-invoicing pull in your customer base.For better approaches to large scale adoption take a look at the E-invoicing Checklist: http://www.einvoicingchecklist.com

So what approach suits you best? Bonus, malus, no-bonus, customer centric?


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2 Comments


  1. After reading the entry about penalties being used to increase e-invoicing adoption, I could not help but come to the conclusion that the scenario being painted is not accurate and very misleading. I’ll explain…

    First, the scenario you paint is akin to e-billing more so than e-invoicing (specifically, third party e-invoicing). An e-bill might be something that a provider, such as the electric or gas company, will send to its many customers in order to initiate the payment process. If the provider wants to encourage the payers to use the e-bill to pay electronically, then there may be fees associated with paying outside of the e-bill process.

    Second, e-invoicing is the process by which buying organizations receive invoices from their suppliers. For example, a Fortune 500 company may have 1,000 suppliers. That company may ask their 1,000 suppliers to join a third party e-invoicing network in order to receive invoices electronically that are delivered directly into their accounts payable system (no data entry, no errors, no lost invoices, etc).

    Finally, based on the real definition of e-invoicing, those suppliers that join the network and submit invoices electronically benefit by having invoices submitted to their customers automatically (although there are portal submissions available as well), helps the supplier get paid on time and sometimes earlier than they had historically been paid due to the reduction in the float, decreases or eliminates the need to call your accounts payable person inquiring about the invoice and payment becuase invoice delivery is confirmed. There are many more advantages to the supplier, but these are among the most important.

    What you describe above is not e-invoicing, but e-billing. Thanks for allowing me to provide a bit of clarification.

  2. Hello Ernie Martin,

    Thank you for your comment.

    OFF TOPIC: We can imagine that the title is misleading. We can also imagine that this flows from the perspective of OB10 and OB10’s definition of e-invoicing: “the process by which buying organizations receive invoices from their suppliers”. We at the EEI Platform have a much broader definition of e-invoicing (something like not using paper when sending or exchanging invoice info).That makes it a bit a ‘what’s in a name/definition’ discussion….

    ON TOPIC: What is your opinion as a service provider? Do penalties help your client with reaching higher adoptions rates? And how do these suppliers of the buying client experience these penalties?

    Cheers,

    The EEI Platform team