Sigh. The adoption of e-invoicing. It’s still a hot potato. And unfortunately we still hear people claiming that it isn’t coming from the ground properly. Celent, for example, writes in its latest report “The Opportunity for E-Invoicing” that the level of penetration is still below 10% in most countries. The report examines why e-invoicing remains a relatively untapped area of opportunity for businesses, with a focus on the banking industry.
What’s the problem?
According to Gareth Lodge, senior analyst with Celent’s Banking Group and author of the report, a large part of the problem is that banks deal with business cases that require returns on investments in short timeframes. And e-invoicing has a lot to offer, but that is a requirement it cannot satisfy. Banks may believe that the savings of adopting e-invoicing are for corporations and society only, but Celent is of the opinion that they too will one day benefit from these savings. By starting with the invoice banks are enabling greater efficiencies in a vital part of the value chain, if we may believe Lodge.
Celent’s solution
Unfortunately, the report isn’t freely accessible, but ABA Banking Journal was kind enough to post the key findings online. We have made our own selection for your reading pleasure:
- Celent believes that the business case will need to be multifaceted. E-invoicing undoubtedly creates some opportunities to provide the corporation with additional services, particularly in the supply chain finance space. But these opportunities don’t exist with every invoice or every client. The benefits that can be achieved from e-invoicing are tied to its scale. This means that banks need to push it to every client (and hope that their competition does as well) to make it ubiquitous and achieve the benefits. This is a classic example of the network effect.
- The bigger picture is the digitization of the relationship. This isn’t just about self-service or going paperless, though those elements shouldn’t be underestimated. Indeed, the benefits of driving everyone paperless, both consumers and corporations, are massive. For example, some estimates suggest that over 4% of all bills in Europe are for credit cards. Add to that statements, letters, etc., and there is a huge volume of paper circulating. Recent studies in Europe put the savings at a figure that they feel is conservative and realistic: €240 billion over six years, the equivalent of 1% of GDP for Europe.
- While the saving is for everyone, banks will benefit not just from those savings and the improved economy but also from the data that can flow from an invoice. These range from opportunities to provide services around FX and supply chain finance, but greater insight into the client base, and therefore an increase in risk and liquidity management.
- The invoice could well be the magic key that links and unlocks many of the other areas. An invoice contains—or should—all the critical data that makes business happen. All the processes in both parties are linked to that invoice. The accuracy of it is critical, and has some real cost implications downstream, from rekeying to accuracy of keying data. This is why the invoice is often referred to as the “queen of documents.” It is the key document for banks to focus on, and why e-invoicing has had this allure for so long. Banks have understood the logic but not made the business case.
Cláudia Wada on