Electronic Billing: Send or Not Send
To maximize the ROI of your e-invoicing investment, you ideally want as many vendors as possible to join your e-invoicing platform and send invoices electronically. However, as we’ve seen over the years and explored in more detail in the sharespace hub, there are a number of factors that will influence the success of your paperless onboarding rates. A crucial consideration is whether or not you require electronic billing and how you communicate your policy to your providers.
What are the risks of having a mandatory paperless billing message?
Some organizations may feel they have no choice but to mandate e-invoicing if they want to advance their e-invoicing project and see ROI as quickly as possible. But could this jeopardize the business relationship with your suppliers?
Suppliers with a stronger bargaining position will have a harder time requiring electronic invoicing unless they can see the benefits to your business. So before you send your messages, think about how you can customize your communications to emphasize the particular benefits of paperless billing for your business. For example, if you’re a major supermarket, you might want to emphasize that e-invoicing means faster invoice processing, which means stock can be on shelves faster and ready to sell sooner.
Considering benefits beyond cost savings remains a key factor in e-invoicing negotiations with your providers, especially given the large financial investment they must make to implement the necessary technology.
What is the cost of not having a mandatory message?
Some organizations vary their electronic billing policies depending on the provider. For vendors without the technological or financial resources to immediately move to an electronic invoicing platform, some organizations may offer the option of submitting invoices through non-electronic formats. But at least you want to encourage electronic invoicing as the preferred method, again emphasizing how it will be beneficial to your particular operations. If you don’t encourage e-invoicing with your suppliers, you could slow down the ROI of your investment and make processes less efficient and effective.
With which providers can you afford to have a mandatory message?
Following the 20/80 rule (that is, where 20% of your suppliers provide 80% of your invoices), there are a few categories of spend where it makes more sense to use paperless billing.
By strategically segmenting your supplier base and implementing your mandatory approach in stages, you can break a big hurdle into bite-sized pieces. With this approach, it is possible to implement electronic invoicing in a relatively short space of time, setting realistic deadlines by addressing specific issues of the type of provider in each segment.
Your high volume vendors will be the most obvious category of vendors to approach first with an e-invoicing project, as the business case for them will even out any financial investment they have to make in implementation. The more they depend on your company to do business, the less likely they are to want to take chances.