Anoek van der Riet
Not even half of large corporations have already embraced e-invoicing and receive e-invoices regularly. In fact, one in five corporate organizations says they rarely if ever receive e-invoices. That's according to the annual Digital Transformation Finance and Procurement Trend Survey, for which independent research firm DirectResearch surveyed 200 finance and procurement professionals at organizations with more than 500 FTEs.
With its legislative proposal VAT in the Digital Age (ViDA), the European Commission prescribes that by 2028 at the latest, e-invoicing will become mandatory for business-to-business transactions in all European member states. So also in the Netherlands.
This means that in a few years, companies will only be allowed to send and receive e-invoices. Invoices in the form of a PDF via e-mail or even still on paper will no longer be acceptable. That's a world of difference from the current situation.
Most businesses receive invoice as PDF
In fact, by 2024, most invoices will still be received as PDFs through the mail. More than half (53%) of large companies always or often receive their invoices this way. At the same time, 41% say they often or always receive e-invoices directly into their accounting or invoice processing system. Just under a third (31%) regularly receive e-invoices in XML form via e-mail. In contrast, one in five large companies rarely or never receive e-invoices in any form.
Other ways that invoices arrive at Accounts Payable is by retrieving them from an online portal (23% of finance employees surveyed do this regularly) or via EDI (this happens often or always at 20% of large companies). It is also striking that one in five large companies still often receive paper invoices. Only 15% of the corporates have definitely said goodbye to this form and say they never receive invoices by mail anymore.
E-invoicing is slowly gaining ground
So although e-invoicing is certainly not yet commonplace in Dutch business, it is slowly gaining ground bit by bit. This becomes clear when we compare today's results with those of last year.
Trend Report
Digital Transformation Finance and Procurement 2024
Last year, 34% of financial professionals surveyed said their corporate organization rarely if ever received an electronic invoice in any form. Now 20% of large companies rarely if ever receive an e-invoice as XML in the mail, and 26% almost never receive an e-invoice directly in the accounting or invoice processing system. These numbers illustrate an encouraging trend: although the road to full adoption of e-invoicing is still quite long, more and more companies are taking significant steps forward in the digital transformation of their financial processes.
Pay faster with e-invoicing
Moving to e-invoicing should not just be a matter of compliance. In fact, e-invoicing also offers many advantages to the companies that make the switch over traditional methods of invoicing.
One of the most compelling benefits of e-invoicing is its significant efficiency gains. By automating the invoicing process, companies can dramatically reduce the time it takes to prepare, send and process invoices. This not only results in cost savings by reducing the number of FTEs required to be involved, but also reduces the likelihood of errors, thus reducing the need for corrections.
In addition, e-invoicing enables faster payment processing. Electronic invoices can be sent and processed immediately, reducing turnaround time and thus payment times.
READING TIP - Royal Gazelle on e-invoicing: "The faster we can process invoices, the faster we can pay."
Many invoices are paid late
And there is an urgent need for this, according to the same trend survey by DirectResearch. This is because companies often fail to pay their incoming invoices neatly within the agreed payment period: one in ten large companies even pays more than half of their invoices late. Only a quarter of large companies pay almost all (90-100%) of their incoming invoices on time.
The main reason for late payment is too long an approval process. Payment is also often delayed because many corrections are required in the invoicing process. For example, because the invoice is incorrect, because it was not sent in the right way, or because human errors are made while processing the invoice.
Average lead time invoice
The average turnaround time for an invoice is 14 days, trend research on the digital transformation of finance and procurement departments reveals. So from the moment an invoice arrives at the organization, it takes another two weeks or so for it to be ready for payment.
In an era where speed and efficiency are critical to business success, there are plenty of opportunities for companies to optimize their invoicing processes. This is where e-invoicing offers opportunities. With e-invoicing, organizations can not only significantly reduce invoice turnaround time, but also increase accuracy and reduce costs by eliminating the need for manual entry and review.
In addition, moving to e-invoicing enables companies to gain better insight into their financial obligations and available resources. This improved visibility, combined with faster processing, enables more effective budgeting and financial planning. It also enables companies to build better relationships with suppliers by ensuring reliable and timely payments, which is essential to maintaining a healthy supply chain ecosystem.
When will e-invoicing become the norm?
Despite the fact that not even half of large companies receive e-invoices on a regular basis, upcoming legislation from the European Commission points to an inevitable shift to full electronic invoicing. But the adoption of e-invoicing should be more for businesses than just a legal requirement; it is a strategic choice that helps companies increase operational efficiency, reduce costs, accelerate payments and gain greater insight into their finances.
The question is not whether e-invoicing will become the norm, but when e-invoicing will become the norm. Will companies wait to make the switch until new legislation forces them to do so, or will they take the first step themselves?
Digital Transformation Finance and Procurement 2024 Trend Report available for free
Want to know more about the current status of the digital transformation of finance and procurement departments at large and medium-sized companies in the Netherlands? Then download the full trend report for free.
In it you will read about, among other things:
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How do purchase orders and invoices come about among Dutch companies?
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To what extent does indirect spend pose a problem for Finance and Purchasing?
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What trends and developments affect Procurement and Accounts Payable?
Anoek
van der Riet
Contents Specialist
Anoek writes daily about purchase to pay, order to cash and Robotic Process Automation. She enjoys diving into topics such as e-invoicing, working capital and hyperautomation.