By now, it’s undeniable that an electronic invoicing solution can help eliminate time and wasted money within the enterprise. So why is adoption still lagging?
Recent analysis from eInvoicing company Exchange found that, while nearly 94 percent of companies surveyed agreed digital invoicing has savings potential, there remains a lack of information eInvoicing. Coupled with a resistance to overhaul internal processes, and you’ve got yourself a major roadblock in digital invoice adoption.
Brian Shannon, chief strategy officer at Dolphin Enterprise Solutions, has a few ideas about why eInvoice adoption continues to lag despite all the evidence of its benefits.
“There is a fundamental challenge that accounts payable has by being perceived as a back-office function,” he recently told PYMNTS. “It doesn’t quite get the attention of the financial visionaries that it needs, so it keeps plodding along. And it’s doing OK, but it could be optimized.”
Electronic invoicing is hardly a new concept. For the last few years, even decades, Shannon said, the fundamental technology that fuels eInvoicing has been OCR, or optical character recognition, technology. It’s a tool that was supposed to automate data capture from paper or digital documents. Unfortunately, the technology has fallen flat — especially by today’s standards.
“The promise of OCR has never really been fulfilled,” Shannon said, adding that the lackluster performance of OCR has led to some disillusionment about the promise of eInvoicing and other AP automation solutions.
Another problem, historically, in this area is the business model many service providers deployed in the early days of eInvoicing. Shannon pointed to a popular model in which providers charge the vendors for transactions.
“The technology is not perfect, and the business model is not perfect,” he noted.
Amid all of these challenges, the U.S. has fallen behind other geographical markets in terms of eInvoice adoption. The economies leading in this area are traditionally in Latin America, where eInvoice mandates and government use of the technology encourage the private sector to follow suit. In the U.S., though, Shannon said a similar path to adoption is hardly likely.
“What you see happening with the federal administration in place today and the reaction of the stock market is that fewer constraints and regulations is the order of the day,” he explained, adding that there is likely to be less regulation around these types of processes in the years ahead.
But there’s hope for eInvoicing, Shannon added, and for companies to take the steps, they need to recognize the benefits of not only document digitization, but automated solutions overall. Ongoing conversations about the “digitization of the organization,” the executive said, and the rise of robotic process automation can help meet the high standards for data capture and processing necessary to make an eInvoicing solution truly efficient.
“People aren’t going to be satisfied with an 80 percent capture rate with OCR,” he said. “They’re going to be looking for 100 percent capture.”
Interestingly, while SMEs have a reputation for not having the resources to adopt sophisticated solutions like eInvoicing and AP automation, Shannon said some small businesses are actually leading the charge for the adoption of these tools.
“Some of the smaller companies are more optimized than the larger ones, just out of necessity,” he explained. “They can’t just keep adding people, so they look for ways to take that work out or automate it. So they press a little harder sometimes.”
Businesses of all sizes today are looking for ways to automate processes, both front- and back-office. It’s the mid-sized enterprises, he said, that are often challenged the most at adopting these tools — big enough to have lots of staff, but too small to deploy a single professional or function to handle the adoption and optimization of solutions like eInvoicing. Plus, Shannon said, while the technology around data capture and automation may be improving, service providers are still tinkering with their business models to ensure streamlined, easy onboarding of suppliers onto eInvoicing platforms and easy participation among corporate buyers without having to be onboarded themselves.
Ultimately, he said, as AP technology progresses, businesses will almost be looking to eliminate the AP department altogether.
“We had one customer who said, ‘My job is to eliminate the accounts payable department. That’s because it would mean our procurement processes are working flawlessly, and we’ve got transactions that can come in and automatically match and process, and the exceptions have been minimized,’” the executive recalled. “That’s ultimately what people are looking for.”
In other words, while data capture technology has certainly improved, grasping the true benefits of eInvoicing is about far more than that. It’s about integrating eInvoicing as part of a broader piece of the automated procure-to-pay journey.
“It really gears much more to the accounts payable process that can be socialized within an organization to get the level of optimization necessary,” said Shannon. “It’s not just focusing on the [data] capture, but it’s looking at those processes, the touch points and handoffs that cause delay and friction and ultimately allow for organizations to get that global optimization.”