Electronic invoicing gains as adoption barriers fall.

• Author: Haq, Shan
• Position: ACCOUNTS PAYABLE

Businesses are continually looking for ways to eliminate paper processes. In addition to driving high operational costs, paper creates slow, inefficient, manually intensive workflows. For most businesses, the single biggest paper hassle is inbound accounts payable (A/P) invoices.

While electronic invoicing has always offered a way to alleviate this paper pain, historical offerings have failed to catch on because the adoption barriers outweighed the benefits. But a new approach to electronic invoicing is catching on that makes use of previously existing but disparate technologies, integrated and delivered in a different, innovative way.

Many businesses are living the same scenario, where a large buyer receives thousands to tens of thousands of paper invoices each month from thousands of vendors. The data entry alone is overwhelming, draining the company of valuable resources. Combine this challenge with the vision of taking margin-enhancing, early-pay discounts (if only the approval process was fast enough), and it's easy to see why interest in electronic invoicing solutions has continued to grow over the years.

Until recently, however, electronic invoicing projects have had mixed results at best. The primary reason is that the value proposition is typically strong for the buyer but weak for the vendor. The business world is littered with electronic invoicing projects in which only a small portion of vendors participated.

Problems with Historical Solutions

There are three main historical approaches to electronic invoicing. Each has had limited success due to inherent drawbacks that often overshadow the tangible benefits:

Electronic Data Interchange (EDI). While companies have often been able to create electronic trading relationships with their largest vendors through EDI solutions, smaller vendors are unable to afford the upfront cost and complexity of such solutions. Furthermore, once the relationship has been established, there are high maintenance costs.

EDI is also a fragile process. Each time one party makes a change to a system or document, the connection breaks down and must be corrected. EDI can be a good solution for a subset of larger vendors, but it is unrealistic to implement it across the board. (For example, a buyer with 1,000 vendors may be able to convince the largest 50 vendors to send invoices via EDI, but the remaining 950 vendors are relegated to sending paper invoices.)

eInvoicing Networks. Over the past few years...