The benefits of electronic invoicing are still not fully realized by far too many US-based businesses. While e-invoicing is constantly evolving and is a wise business practice, many private enterprises are slow to adopt it. A recent study by the E-Invoicing Platform found invoices totaling over $1.2 trillion are currently outstanding in the US. With other
governments pushing for businesses to implement electronic invoicing mandates, is the US far behind?
A 2013 study by The Accounts Payable Network found that more than 56 countries have implemented e-invoicing mandates ranging from federally backed private initiatives to a nationwide push for full e-invoice adoption.
The advantages of switching to an e-invoicing platform are many, but even though the technology to implement these platforms is vastly improved from tech developed mere years ago (the foundations for e-invoicing have been around for decades), businesses have been slow in realizing these benefits due to concerns about integration and implementation as well as a lack of adoption practices. Businesses experience delays in invoice payments due to their resistance to adopting e-invoicing and continuing to utilize paper.
A study by Ardent Partners found that companies that processed invoicing electronically with e-invoicing and AP automation saw a savings of $16 per invoice. E-procurement also has the capability to potentially save businesses up to 20% due to the improved compliance that e-invoicing provides via online archives that facilitate better record keeping. In addition, since e-invoicing quickly connects companies via a bidirectional bridge connecting accounts payable and accounts receivable departments, the time it takes to process an average invoice is greatly reduced from almost 3 weeks to a mere 3 days. This severely decreased processing time results in more cash flow and this, in turn, helps bolster the economy – and governments are paying attention to this and making strides to implement e-invoicing.
The move to standardize, mandate, implement and regulate e-invoicing has accelerated in many countries. The European Union, due to the fact that it deals with a wide range of currencies from its member countries, introduced the Electronic Invoicing Directive of 2001, requiring all businesses to accept electronic invoices. Over half of the countries in the EU have helped speed up the adoption of e-invoicing by creating their own mandates for implementation – with an emphasis on Business-to-Government (B2G) transactions. The use of e-invoicing has grown 20% in the last year, potentially saving the private business sector over $2.3 billion per year.
Rapid adoption of e-invoicing is also being seen in Latin America, with Mexico and Brazil requiring Business-to-Business and Business-to-Government transactions to be processed via e-invoicing. The results of this move are already evident, with Brazil already seeing savings of $78 million over the past 2 years. Private enterprises across Latin America are also seeing the benefits. Coca-Cola’s Brazilian and Mexican operations have experienced a 70% savings in processing costs since switching to e-invoicing.
So, why is the US dragging its feet in adopting an e-invoicing mandate? It’s not that small business owners experience difficulties and delays in getting paid on their outstanding invoices – the government is well aware of the impact unpaid invoices have on the overall economy and are taking steps to remedy this. 26 corporations, including Apple, IBM, Coca-Cola, FedEx, Honda, CVS and Walgreens have signed on are technology giants Apple and IBM. Coca-Cola, FedEx, Honda, CVS and Walgreens will also participate in the initiative, which the administration’s SupplierPay program.
This new initiative evolved from the earlier QuickPay program that requires federal departments to reduce the time taken to pay small business contractors. Since its inception in 2011, QuickPay has already saved small businesses $1 billion in processing costs alone by encouraging payments within 15 days.
With these corporate giants signing on to adopt e-invoicing platforms under SupplierPay, the government hopes that small businesses will also sign on to the program - paying their suppliers for parts and services more quickly or providing access to help less-expensive financing. This move also has the potential to give the nation’s sagging economy a much-needed boost.
According to a recent White House statement, “For the larger companies, joining SupplierPay demonstrates a recognition that a healthy supply chain is good for business.” And, with small firms selling to those corporations, it will translate into “more capital to invest in new opportunities, new equipment, and new hiring.”
With the obvious benefits and ease of implementation, the government is hoping many other businesses will take the lead from these large corporations and make paper invoicing – as well as the economic headaches and hassles associated with it – a thing of the past.