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"It is a truth universally acknowledged that only the very largest organisations can get the full advantages that full electronic processing of invoices bring."

Apologies to Jane Austen for barbarising her lovely opening line to Pride And Prejudice, but I hope she (and you) will forgive me enough to see the point: we've become fairly rigid in the market when it comes to moving forward with EDI (electronic data interchange).

Why is that? Probably because EDI - which has its roots in vast logistical operations such as the 1948 Berlin Air Lift, you may be surprised to learn - has for the most part been mainly an option for the largest enterprises and multinationals only.

That's not that surprising, given that moving to a paperless way of exchanging fiscal data between trading partners and up and down the supply chain, which is really what EDI delivers to an organisation, often involves a commitment to changed business processes - as well as significant up-front investment to make the transition.

But as stated, this has become something of an unexamined assumption. And the reality is that - especially for users of major business suites like SAP, which now include many companies and public sector bodies that should more properly be classed as mid-size than 'large enterprise' - use of EDI is now becoming not just perfectly possible, it may even be becoming necessary to operate at maximum efficiency in our almost-fully globalised market.

RISING - BUT DIFFERENT - REGULATORY BODY EXPECTATIONS
It is worth saying that many people have started doing EDI by any other means in any case. This is often via email, where as much invoice and payment detail as possible is pushed around the organisation by electronic messaging - a default way of taking inefficiency out of the system, where such inefficiency is defined as the time-wasting shuffling of paper and keying (often re- and even re-re-keying) of data in and out of disparate systems.

Email-style 'EDI-lite' does have a place in a move by a midsize SAP user towards full EDI, yes. But clearly, it has gaps and does not offer the full functionality that richer EDI systems offer. That wouldn't be too much of a problem were it not for the fact that e-invoicing - the shift to doing more and more invoice handling in as digital a fashion as possible - is not just on the rise, it is increasingly becoming an expectation by regulatory authorities, of which more below (as it is actually a critical factor).

We can see two forces, then, coming together here: from the bottom-up, we have a rise in demand by the business for greater efficiency and as 'friction free' a set of workflows as possible around invoicing, accompanied by a 'top down' push by regulators for more use of common digital formatting and standards. It is also becoming an expectation of more and more of your trading partners, suppliers and customers, too, we expect.

There is also the plan and simple cost-benefit analysis perspective on moving to e-invoicing. The European Association of Corporate Treasurers has identified the cost of processing by hand (i.e., by a paper-heaving process) as at least €30 per invoice… while the same authority judges the electronic, or e-invoicing, equivalent to bring the cost of that process down by 80%, to get to more like €7 each, predictions that a number of case studies right across Europe have backed up.

The good news is that more and more organisations can - and should - get on to the EDI route, as prices are dropping for systems offering such functionality. This confluence of forces has recently been characterised by the industry's most authoritative analyst and trend-tracker, Gartner, as meaning that "after a few dormant years, e-invoicing adoption [has] finally increased and showed solid growth in the past three to four years" - growth, its recent study into this market adds, that will continue.

BEWARE E-INVOICING'S PITFALLS: PLAN AHEAD!
That doesn't mean there aren't challenges around getting to EDI-style seamless data exchange via e-invoicing. There are many, which even authorities like Gartner are open about. A major one is government and regulatory expectations, as we noted above. Let's now briefly expand on that point - and explain why modern Document Management (DM) might be the best way of dealing with it.

Tax and VAT authorities, it turns out, are encouraging more use of electronic financial processes - but vary on how they want you to do it from geography to geography. For example, while France and Germany are very keen on EDI, their auditors have different expectations about the validity of, say, electronic signatures than do other European Union member states (let alone, say, Canada). There is also the fact that different regulations kick in depending on the volume of invoices that you propose to handle electronically in various different nations. Again, there are differences in the way that some countries (e.g. most of Europe, Japan, the US and Hong Kong, among others) want you to account for the integrity and authenticity of your e-invoices versus others (such as Argentina, South Africa, Portugal and others).

The bottom line is that you need to approach e-invoicing with enthusiasm - but need to be aware of the potential administrative and compliance pitfalls you will need to plan for. A very real example (and one that helped inspire this very article) is how we are at this very moment helping a very well-known Fortune 50 level company implement a workable e-invoicing project off its core SAP engine in Europe. The company, which happens to be headquartered in Asia-Pac, was simply unaware of the many subtle differences between EU member countries (such as the UK, Denmark, which is very advanced in this area, and Germany) around e-invoicing, e-signatures, proof of payment and retention of data.

We are able to help them deal with this; as a specialist in the use of DM technologies, as well as being fully conversant with the many subtleties of e-invoicing regulation, we have in effect rescued an eight month SAP project that could have gone expensively wrong. But I don't want that negative to be your final impression of what we are saying here about the importance of e-invoicing - far from it.

What is it that we do want to say? Just this: one, that to meet your goal, as a CFO, of optimum efficiency and cost-savings around what can be a very expensive (€30 versus €7!) process here, it really is time to look at e-invoicing.

Two, you must in parallel ensure you do so by safeguarding yourself from any auditing challenges if you do go more electronic; and three, the best way of doing so may well be to work with a partner with extensive experience of moving your Finance function off paper.

It may be not quite as memorable as Jane Austen, but we'd say that was using DM as the on-ramp to full EDI. Could that soon be as much a 'universally observed' truth as the 'fact' that a single man in possession of a good fortune must be in want of a wife?
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