'E-invoicing from 2017 a fait accompli' read above many an article on e-invoicing barely a few months ago. 'Fake news' it was not, not entirely at least, because indeed suppliers to the Dutch central government have been required to send electronic invoices in XML format since the beginning of this year.
But practice is more obstinate. "The central government itself still has to take steps towards fully data-driven invoice processing and still seems flexible towards the business community. The big flywheel effect towards the business world has yet to materialize," says Danny Kind, Senior Product E-invoicing at ICreative, a company that supports organizations that want to receive and/or send electronic invoices.
On top of this, even the lower Dutch governments themselves are not yet required to switch to e-invoicing, although this is up in the air. For a long time, it looked like all public authorities subject to procurement would be required to be able to receive and process e-invoices in November 2018, but that date has been postponed by at least six months. "When it does become mandatory is unknown," Child said.
All depends on when the e-invoicing standard will be officially published: 18 months, after which it would become mandatory according to European Directive 2014/55/EU. "Whereas it was initially expected that the official publication would be achieved last May 2017, it is now expected that the publication of the standard will take place in October 2017, from which it follows that the final effective date of the obligation would be a fact as of April 2019."
Data is the new oil
In principle, the adoption of e-invoicing in business should not depend on Dutch or European laws and regulations. In business, it is frequently shouted that data is the new oil. In addition to the mechanical automation of the last 200 years, there is currently clearly a second wave of automation in the field of information and intelligence. Business processes are becoming more and more automated, but this can only be realized if information is available in data form. Invoice processing is a good example of this. Invoices can be sent and received on paper or as PDFs. But as a data file, an invoice can be processed directly and quickly by accounting programs or purchase to pay automation software.
E-invoicing can ideally take place fully automatically, i.e. without human intervention. As a result, invoices are processed and paid faster by the customer, leading to a reduction in the number of debtor days and less demand on working capital. The cost of managing the invoice flow on the customer side can decrease by 25 to 50 percent if all invoices are processed electronically. With e-invoicing, there is better insight into the workflow and invoicing process within the organization on both the customer and supplier side, and therefore better control: it means that invoices are no longer lost or delayed, better insight into accounts receivable and accounts payable portfolios, and better working capital management. All benefits that occur even without the government.
Babylonian Confusion of Speech
So you would say: e-invoicing brings so many benefits that it is coûte que coûte attractive to introduce it. Yet things are still not going so well with e-invoicing. According to a 2016 CBS study, 80 percent of Dutch SMEs were still just sending paper invoices, 16 percent PDF files by email and only 4 percent e-invoices in UBL format. By now those percentages will be different, but if 10 percent of businesses are sending and processing e-invoices, it's a lot. So don't all these companies see that they are selling themselves short? Also, says Child: "We are all busy with ongoing projects. Busy with the delusion of the day. A subject like e-invoicing is then often child of the bill. All the more so because it is difficult to see in advance how e-invoicing should be set up and what costs can be saved."
Much information can be added automatically based on the data available on the invoice.
Something else at play, Kind believes, is that there is no single standard for e-invoices and that each customer is free to request additional invoice information from its suppliers. "Each sector has its own requirements in terms of invoice information. In construction, they often want project numbers on an invoice, employment agencies send personnel information and energy companies use meter readings. In addition, customers increasingly expect their suppliers to put part of the invoice coding on the invoice. In itself quite understandable, but this makes it difficult to implement one standard. The supplier's invoicing system usually only contains the legally required invoice data and is generally set up. Additional fields cannot simply be added in such an ERP system. Let alone if not just one customer, but several customers suddenly mandate different additional invoice data." A Babylonian confusion of tongues, in short.
Legal standard
If companies were to comply with the legal billing requirements, this problem would obviously go away. The result would be a significant growth in the number of e-invoices. And if a customer wants more information than is legally required on an invoice? "Even then, the customer can still process incoming e-invoices automatically. Only he has to add the desired information himself, and thus has to do some extra work. With the rise of robotization, this does not have to be manual work. A lot of information can be added automatically based on the data available on the invoice."
If everyone adheres to the legal billing requirements, as a customer you may not get all the desired (coding) information. On the other hand, you can get nine out of ten suppliers to submit e-invoices, says Kind "And achieving a 90% efficiency gain with nine out of ten suppliers offers much more benefit than achieving a 100% efficiency gain with just one supplier, while the other suppliers continue to submit invoices on paper or PDF." So companies looking to adopt e-invoicing would do well to agree with their suppliers to adhere to the legal billing requirements.
Invoice operators
And as long as this does not happen on a large scale? As long as the Babylonian language confusion in the field of e-invoicing continues due to different billing requirements and format standards? "Well, in Europe there are dozens of languages, but in the European Parliament, thanks to the intervention of interpreters, people can still easily communicate with each other. So it is with already different invoices as well," said Child.
Companies like ICreative and other so-called "e-invoice operators" or "billing service providers" can ensure that companies get invoices delivered the way they want them, regardless of the format in which the invoices were originally prepared by the supplier. From paper or PDF to XML (e-invoice), or from one format XML to another format XML. And also standardized. It's all possible. So any company can, in theory, receive e-invoices from day one, regardless of whether its suppliers want to go along with it. It is an interim solution, but one that falls into the category of total relief. A solution that is also cheaper than entering, validating, coding and matching invoices yourself.
Of course, when e-invoicing becomes truly established and everyone speaks the same "language," e-invoice operators will lose their position, but it is a long way off - if ever.
This article first appeared on the Financial Management website.