Ricoh UK FD on flicking the electronic invoice switch

E-INVOICING is big news right now. The European Digital Agenda states that from January 2013 electronic and paper invoices should be treated equally. And the European parliament has called for making e-invoicing mandatory in public procurement by 2016.

The European Commission’s consultation on e-invoicing in public procurement, which closed on 14 January 2013, is a key milestone in the delivery of the e-invoicing vision and it should be on the agenda of all business leaders.

E-invoicing will deliver efficiencies throughout the supply chain, allowing information to be processed more efficiently and in turn, improving the overall delivery of services. But there are a range of different national rules, procedures and policies applied to the governance of invoicing. In particular, national taxation rules have severely limited the ability of businesses to reap the benefits of e-invoicing when working with customers or suppliers outside of their local market. This also has a profound impact on the efficiency of many companies operating internationally.

In addition, there are a vast number of systems and processes applied by individual businesses and public sector organisations across all 27 member states. To be sure that the final policy reflects best practice across the EU, it is critical that organisations of all types and sizes contribute to the debate. The ideal scenario is to have a common benchmark that ensures all invoicing processes are audited to a common standard to satisfy all tax authorities, while allowing businesses to retain the key document processes that underpin the efficient running of their organisations.

There are three key considerations for any business taking part in the EU’s consultation and looking to make the switch from paper to electronic invoicing.

Focus on migrating invoicing processes

It is essential to look at the processes that underpin invoicing rather than simply the output. Organisations need clear, defined processes and procedures to ensure invoicing is integrated into the overall information flows throughout the business, so they are able to make the transition to e-invoicing. And the EU must recognise that businesses can’t simply switch from paper to digital overnight. For many UK businesses, a shift to electronic invoicing needs to be done in several stages, meaning the business needs a process to manage both paper and electronic invoices in tandem as they, their customers, and their suppliers, make the transition to a digital way of working. This can be challenging for many organisations no matter what volume of invoices are being processed

Avoid focusing on technology

This isn’t just about the technology or straightforward interoperability of systems. The outcome of the EU’s consultation should not be about mandating certain systems or technology across the entire EU. It should instead be the start of the journey towards removing the barriers that currently prevent European businesses from working at optimum efficiency when trading within the single market. As an essential business process, invoicing can’t rely on just technology alone. Rather, any technology investment should be considered alongside the invoicing process itself – that is, the way information flows through the business – and the people managing it. Technology on its own will rarely provide the best solution.

You’re not alone

Don’t feel you have to tackle the transition alone. Changing a business-critical document process can be time consuming and the key is to manage it without impacting day-to-day core business tasks. A business can gain advice from, and entrust the task to, a document process expert who can manage the transition on their behalf, leaving them to focus on meeting the needs of their customers.

The European Commission has listened to organisations across the region with its consultation, wanting to understand their challenges and opinions. The collective views of the business community should inform the level of action at the EU to provide maximum interoperability of processes and technology.

This will ensure best return on investment for businesses of all sizes, as they will be able to roll out electronic invoicing processes more quickly, with the confidence that the information will be understood by any of their trading partners, while also being able to retain the internal processes and technology which drive their own organisations.

The challenge now for the European Commission is to take a comprehensive approach, ideally with the support of qualified independent experts to ensure that the final policy recommendation is grounded in business practice.

If executed properly, the potential benefits to UK businesses are vast.

Rick Hewitt is finance director at Ricoh UK