- AP departments would not have nearly the paper burden they currently have and could process invoices in a timely, accurate manner;
- Supplier inquiries such as "when will I get paid?" would be eliminated;
- Purchasing departments could dictate favorable terms with suppliers;
- Finance departments would enjoy increased margins.
There are options for companies looking to extend their EDI investment to suppliers regardless of their size. For example, electronic invoicing communities connect suppliers and buyers through hosted solutions delivered via software as a service (SaaS). The hosted communities serve as an intermediary that converts whatever a supplier sends (in terms of invoice format) to whatever the buyer needs. ( Figure 1.) For example, if a supplier wants to submit an invoice in XML (a common data format) and the buyer company wants to receive EDI, the community will translate the data accordingly. Thus, a business can leverage its EDI investment by extending it to suppliers without actually requiring the supplier to submit EDI.
Not All Communities Are Alike
When researching electronic invoicing communities it is critical to look for important characteristics. Because supplier adoption is the key to extending your EDI investment (or any electronic invoicing project for that matter) the community must remove all barriers to supplier adoption.
A report issued in September 2008 from Forrester Research states: "One of the biggest challenges in the electronic invoicing presentment and payment (EIPP) market has been getting electronic invoice data from vendors that still primarily send out paper invoices."
Following are a few best practices to adhere to:
- Suppliers should not be forced to type invoices into a Web portal. Suppliers should have the option to submit invoices directly from their existing billing system;
- Suppliers should be able to connect to the community in minutes;
- Suppliers should not have to pay for implementation costs;
- Suppliers should be able to connect to the community without investing their own IT resources;
- The electronic invoicing community should provide supplier on-boarding and recruiting services so the buyer is not responsible for supplier participation.
By taking advantage of new technology and the evolution of electronic invoicing communities, companies can extend their EDI investments and realize previously unattainable success. Not all communities have the ability to fulfill the promise of reduced paper, so it is important to look for communities that maximize supplier participation by removing technical and financial barriers to supplier adoption.
About the Author: Shan Haq is vice president of Marketing and Product Management at Transcepta (www.transcepta.com), a provider of electronic invoicing solutions.