Finance professionals are tasked with not only implementing technology that can automate invoice processing, but in collaborating with suppliers on the accounts receivable (AR) side to shift away from sending paper via snail mail.
With the pandemic putting enterprise modernization efforts into hyperdrive, the digitization of the B2B invoice has accelerated — sort of.
Although mailing and faxing physical documents is falling by the wayside, simply using an electronic means of submitting invoices does not provide the kinds of efficiencies AP departments need in today’s remote and cloud-based working environment.
“Many organizations would mistake an email for being a digital means of submitting an invoice, but in fact, email is really only digital for the sender,” said Pagero Vice President Oscar Wegland in a conversation with PYMNTS. “The recipient of 1,000 invoices via email [normally] would still have to open the PDF and key that data into the systems they’re using on their side.”
Luckily, said Wegland, there are efforts emerging all around the globe to truly digitize the B2B invoice. Whether the motivation to implement such technology is part of efforts to bring more efficiency in the back office, or simply to comply with regulatory mandates, a multifaceted push toward eInvoicing is opening up the doors for a more automated AP department.
A Global Digitization Effort
Although businesses are growing increasingly aware as to what does not constitute a true eInvoice — i.e., a PDF document sent via email — there is less clarity over what does.
Various regulatory efforts across the globe are promoting adoption of eInvoicing through the development of standardizations of the digital document that enables back-office systems to automatically capture and process information. In many instances, tax transparency is behind the government-led eInvoice push.
“If you look across the globe, there are tens of countries announcing new mandates or legislations that require organizations in that country to adopt electronic invoicing or report tax in a new, digital, real-time fashion,” said Wegland.
But there are other drivers, he added, including industry-specific efforts to embrace eInvoicing (the logistics sector, for example, is embracing the technology as a way to enable track-and-trace through supply chains).
Overall, finance leaders are also broadening their awareness of the residual positive effects of eInvoicing compliance, including efficiencies and automation in the back office.
Closing The Payment Gap
With the digitization of the invoice, the gap that has historically separated the workflows of receiving and processing an invoice, and actually paying it, is narrowing.
In recent years, eInvoicing and invoice standardization have enabled back-office machines to automatically capture data and approve a bill to be paid, creating opportunity for faster supplier payments and a more agile working capital strategy. But innovations in eInvoicing are driving this trend even further, with some vendors finding value in including links or QR codes on digital invoices to more efficiently connect recipients to online payment portals.
Emerging innovations as a result of open banking and its payment initiation capabilities, as well as the potential for blockchain-based smart contracts, are also heightening interest in the potential for eInvoices to not only be automatically processed, but automatically paid.
With more businesses prioritizing modernization in their procure-to-pay workflows, the value of automated payments has grown, and not only for the AP department.
“You have small and large organizations taking the step towards digital purchase-to-pay and order-to-cash,” said Wegland. “Many times, that will expand throughout their supply chains. The process also involves their suppliers and the way they communicate with them.”
In this way, the adoption of eInvoicing is embracing a domino effect.
Government mandates that require organizations to embrace eInvoice standardization are quickly realizing value-added efficiencies that compliance can bring. And, as corporates embrace eInvoicing, opportunities to expand its value throughout the supply chain to business partners also proliferate.
As Wegland noted, these global trends are accelerating digitization, driving efficiencies and encouraging a fully digital means of B2B collaboration. Plus, there is more value ahead as businesses consider opportunities in integrating invoice data within other back office systems.
“As a result of becoming digital, you ensure that the data you have in your systems is complete and accurate,” he said. “Having that full set of data is great for many organizations in terms of increasing control, monitoring spend and more.”