In the days before the internet, AP departments dealt solely with paper and all transactions were manual – right? Well, not quite. In those days the new kid on the block was EDI (Electronic Data Interchange) which for the most part relied on VANs (Value Added Networks) to transmit data – such as purchase orders and invoices – between suppliers.
Developed (first of all in the car industry) to provide a platform where decentralised organisations could find an easier way to connect between regular suppliers, it created in effect a prototype of today’s “networked economy”. Then with the birth of the internet, organisations saw a way out of having to pay the relatively high VAN fees and looked to the budding e-invoicing and eprocurement providers.
In the initial development of many of the solution providers, a key part of the puzzle was missing – interconnection. Despite the downsides of EDI usage in some areas of today’s market, where it excelled was in its translatable format across B2B networks. Having a situation where large corporates could find themselves having to work with rigid templates across 10 or 12 vendor portals was always going to slow down internet based einvoicing adoption.
So today, contrary to some of the marketing spin, a very high percentage of organisations still use EDI, and with some vendors EDI remains very much a part of their business and they don’t see much changing in the immediate future.
Nigel Taylor, Chair of the UK National e-Invoicing Forum and MD of Information Economy Exchange, went on to explain that one of the key benefits of introducing an increased level of automation is the development of systems to track error and to reduce the chances of fraud – something which cost the UK economy £2bn last year. While of course, no system can completely eradicate fraud – the right combination of automation software makes it more difficult– especially if that scrutiny is cross departmental.
Increased scrutiny and raising the level of financial visibility is something which Nigel Taylor takes seriously. In fact, he participates in the European Multi Stakeholder Forum on eInvoicing - where the strategic business benefits of e-invoicing have long been recognised. The mounting evidence of cost savings, increased efficiency and fraud prevention as a result of einvoicing has meant that some level of mandating its use across the public sector could well be on the cards. Although a lot of the drivers for e-invoicing which exist in other countries such as Mexico or Brazil don’t exist in the same way in the UK, Nigel emphasised that mandating is “not off the table”.
So does it matter that commentators frequently say that EDI is not really einvoicing? Only if an organisation using EDI thinks the same way, bypassing the business benefits which could very well be sitting in an existing infrastructure. Finance and procurement departments are best served by taking an overview of systems – in other words, taking a step back and deciding on goals and objectives across the different areas before implementing processes and technology changes. For the most part organisations will find that a one-size-fits-all solution doesn’t exist, so a combination of solutions – including legacy infrastructure – is likely to provide the answer. On top of that, the evolution of SaaS solutions will enable many SME organisations to take advantage of automation that was previously only available to larger Enterprise size organisations. In a confused marketplace it’s important to keep sight of objectives – it’s not so much what you call something that matters – more what it does and how it can help keep the organisation one step ahead.