10 MUST DOs for Leading an e-Invoicing Project

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Editor Coda
May 5, 2015

e-Invoicing is “all the rage.”  Ask most shared services directors what 3 projects, large or small, are on their plate for the next 12 months, and more than half will mention e-invoicing.

In recent years, e-invoicing has pulled our interest more and more. The chief reason for this is its connection with supply chain financing (SCF). What used to be an attractive business case offered by e-invoicing (based on reducing head count) now really must be described as utterly compelling. E-Invoicing is the key enabler for SCF and can therefore take a business case from hundreds of thousands USD a year to tens of millions.

This article lists the best practices for you to follow in your e-invoicing project so you can secure high conversion of paper to electronic, high adoption of your suppliers, and a great return through cost reduction and leveraging SCF.

1. Know your scope

Before you can calculate your business case, you need to start with the basics. Begin by answering the following questions:

  • How many paper invoices do you receive today?
  • From how many suppliers?
  • How many are PO invoices?
  • How many suppliers send you 80% of your invoices? (You might want to onboard these suppliers first.)
  • Which countries represent your highest volume of invoices?
  • Are there any suppliers/countries/invoices you would leave out of scope?

Once you have these questions answered, you can start looking at the financials. This includes your current cost to process an invoice today. But it also includes looking at your spend and your cash flow. Based on the scope, your operating costs, your spend and your cashflow, you will end up with your business case. Below is an example of what a business case might tell you:

Operating Costs:

e-Invoicing can seriously reduce your overhead costs. If you are currently processing 200,000 invoices per annum, and have a team of 20, you will likely only need a team of 5 to 7 once e-invoicing is rolled out.

Spend:

With e-invoicing in place, you can now pay invoices quicker. This means you can leverage early pay discounting! Best practice figures suggest you can save $13 million per billion USD of spend if you set up early pay discounting.

Cashflow:

You may wish to hold on to your cash, rather than pay early. e-Invoicing programs can support this too, by authorizing a third party to pay your suppliers early, and have you settle with the third party later than your regular settlement day. This stretches  your Days Paid Outstanding, and increases your cash reserve. This can make for a great case if your company is acquiring or looking to be bought.

Once you have your scope and your first draft of your business case, you are ready to secure internal buy-in, and sell the vision

2. Know your stakeholders

Selling the vision starts with knowing who your key stakeholders are. You would think a document like an invoice would only prick the interest of your colleagues in finance. However, we have learned over the past 15 years that e-invoicing projects generally fail if led and run exclusively by finance. Other stakeholders to engage are:

Procurement

They own the supplier relationship. Any communication sent to a supplier has to be approved (and ideally signed) by procurement. The last thing your project needs is suppliers asking their buyers about “this request to join some e-invoicing program” and your buyers undermining it – because they are either ignorant of the project, or not on board – and replying, “Nah! Just ignore it!” Secure procurement’s buy-in early, at concept stage. Have them as a key member of the team. Some of the best e-invoicing projects are jointly led by project managers from finance and procurement.

Finance

This can be an easier sell, but having the right sponsorship in finance is critical (is it the CFO? Do they understand the business case? Are they clear on the consequences of doing nothing?). If your project sponsor is the CFO, have them connected to the project at key points, to keep momentum. e-Invoicing can be hard – make sure your CFO is “on message” and is briefed well on his or her role in helping to stamp out any whining.

IT

e-Invoicing solutions are fairly non-invasive. However, IT needs to be okay with:

  • ERP compatibility
  • Security and firewalls
  • Connectivity

 Have them onboard the project team early, especially if they are the kind of IT team that likes to build solutions themselves.

 Treasury

Your business/commercial case can mushroom with the supply chain financing aspect. Because your project will have an impact on your company’s cash – by leveraging it for dynamic discounting, or inflating it through third party financing – treasury needs to be on the team. Again, engage them nice and early.

3. Know your requirements

There are a plethora of solutions “out there.” Before you make your approach, have a clear idea of what you are after, as these solutions are often quite varied.

Questions for you to ask yourself when determining your requirements:

  • Are you looking for an end to end solution, including e-procurement?
  • What functionality are you looking for to solve your problem/achieve you goal?
  • What countries does the technology need to support? If you need a solution for the Americas, Asia, and Europe, what languages need to be supported?
  • Do you have the manpower to do the supplier onboaring? Will you want your solution provider to manage the onboarding?
  • What technology will support the receipt of your e-invoicing? Do you need an auto-matching tool, too? Do you need workflow?

 Be clear on your requirements and then articulate these within your RFP.

4. Get into the detail regarding compliance

With every day, comes a corporation's desire to manage itself as one, globally. Some companies may prefer to use one solution in the US, and another in Europe. However, because of this desire to operate as a single organization, most companies are pressuring e-invoicing providers to be truly global, so companies can use a single solution anywhere in the world. Whichever route you choose, when processing invoices – especially in countries like Germany, Switzerland, India, China and Russia – you will want to be 100% sure you are handling the invoice (which is a legal document after all) in the legally compliant way.

This legal conversation can appear daunting, but you need to dig in and explore. Questions for you to ask your service provider can include:

  • In what way are you legal in country X?
  • What are the legal requirements in country X?
  • What is your exact process to fulfil these requirements?
  • Has this process been signed off by a compliance firm (like PWC or KPMG)?
  • How long does the invoice need to be stored for country X?
  • Do you store it and if so where? Is your archive located in a place that the compliance firm approves of?

Compliance is key. Spend time making sure you are happy with the answers. Not every company needs to hire a Deloitte to do this compliance assessment for them (it’s expensive and can slow you down), but you do need to secure assurance. One best way to do this is by meeting with long-standing clients of various solution providers, and asking them about their program and compliance experience.

5. Have a tight RFP process

Once you have your RFP, you will want to issue it. By now, you will have a clear idea of what you are shopping for, and may have reduced a list of 30 possible solutions (based on preliminary evaluations) to 8 or 10. Issue your RFP to these 8 or 10, and once you have the responses back, short-list them to, say, 5. Meet with the 5, and then select your two preferred, from which you’ll sign up with one.

Once you have completed negotiations, then sign your contract with your partner-of-choice, carefully but swiftly. Use your service provider’s contract – I doubt your procurement team will have a suitable contract – and move quickly to your project kick-off.

There is much work to do between knowing your requirements and selecting the right provider, but the key is to keep momentum. Avoid project fatigue by impressing your colleagues internally, and by impressing your newly signed provider with your expedience and “sticking to your word.” Running your RFP process at a clip makes everyone sit up and realize the importance of this program.

6. Assign the right resource to the project

e-Invoicing is not a project that has a neatly contained life span. Getting a project to full maturity can take 18 to 24 months. Therefore, it’s important to have the right resource allocated. Initially, in the first 3 to 6 months, your project manager may have to dedicate half their time, or perhaps all their time, to the project (depending on the scale). After the sixth month, depending on the number of upcoming country roll outs, your project manager might be in a position to take on other side projects, while still retaining ownership of this e-invoicing program.

It’s an intense time. It is essential that your project manager:

  • Has authority and will be heard by the business
  • Can run an excellent project with meetings, actions, and follow-up, and can keep things moving
  • Likes the solution provider (especially the main contact) as they are going to be spending a good deal of time with them
  • Is bonused on project success

For all the above reasons, it’s a good idea to have your project manager be part of the project team from concept stage, if possible.

7. Get your supplier messaging right

Your e-invoicing success is reliant on how many suppliers engage. You may have 2,000 suppliers in scope, or you may have 20,000. Whichever the case, bear in mind each of these suppliers has its own agenda and pressures, and you are asking each of them to change something they do – adding to their “to-do list.” Most suppliers will warm to e-invoicing, especially if it means they’ll get paid quicker, but realize there is a process to work through (from tiny to more substantial) before they’ll be electronically invoicing you.

All this means it’s important to get your messaging right.

a) Determine what the strength of your message will be:

  • Can you mandate e-invoicing?
  • Can you say your mail room is closing down?
  • Can you say paper invoices will be paid later than electronic?
  • Can you say you are consolidating your supplier base, and one consideration when deciding to part ways with a supplier will be whether or not they are onboard your e-invoicing program?  a) Have your C suite sign the communication. Your suppliers will respond more favorably if the email requesting them to join has your CPO’s or CFO’s name at the bottom.

 b) Have your triage of communication ready. Some suppliers will onboard early. Others will need chasing (what communication will they receive as a follow up?). And some suppliers will refuse (what will be your communication approach with them?).

8. Be confident in your supplier onboarding methodology

Service providers have varied approaches to onboarding suppliers, but most have an army of staff in call centers, ready to contact and onboard your vendors (if you can, during the evaluation phase, go and visit these centers – the staff will be communicating with your vendors on your behalf after all, so make sure they are good people!).

Familiarize yourself with their process of onboarding:

  • What system do they use to reason-code each supplier?
  • How electronic is communications?
  • What is the success rate of earlier campaigns?
  • What do you need to do to see that the methodology is as successful as it can be?
  • What reporting will be provided by the solution provider to update you on the supplier onboarding progress?
  • How self-serviced is the process for smaller suppliers? Have you tried it yourself – what was your experience?
  • At what stage in the supplier dialogue does the project manager need to step in, versus your solutions provider? And why? And with what message?
  • When does someone more senior than the project manager need to step in? With what message?

All these questions need to be addressed before your communications campaign begins.

9. Do an internal communications campaign, too

Often, when overseeing a vendor onboarding program, project teams can overlook the need to communicate with their own peers. There can sometimes be this relaxed notion that internal colleagues will just naturally “get” the program. This often is not the case. Internal peers need to be “bought in,” too. This means the project manager needs to oversee the internal communications campaign, including educating buyers and colleagues on:

  • What the e-invoicing program is
  • Why the company is doing this
  • How it fits into the company’s strategic objectives
  • How it affects them personally
  • How it might benefit them personally
  • What they need to say if a supplier asks them about it (very important!)
  • Where they can find further information
  • Whom they can refer a supplier to, if needed

Again, set this up early, and provide a list of answers to Frequently Asked Questions. You may want to create your own website for this project to help manage your internal communications effort.

10. Make it attractive for suppliers

Increasingly, e-invoicing is becoming more attractive for suppliers. The technologies provided are becoming more intuitive, like the technologies we like to use on weekends. And there’s more up-side for a supplier to convert to electronic invoicing, because providers are now offering supplier portals (offering deep visibility on invoice status), and the early payment aspect. When evaluating your solution possibilities, be aware of the functionality that benefits the supplier, by:

  • Making the process easy (you will find out how easy it is by testing the onboarding functionality yourself or having your Accounts Receivable onboard. Please note – always check with your Accounts Receivable team to see if they are already using a solution provider as a supplier with one of their customers. If so, find out what the experience was like).
  • Giving the supplier something back (make it clear what the benefits are: prompt payment, early payment, visibility of invoice status through a portal, reduced costs on invoice postage).
  • Giving the supplier a choice (it will help your campaign if a supplier has a choice regarding taking a discount. A supplier may want to take a discount once in a year, or for every invoice issued. Also it might want to take your discount offer, or offer its own. Build in flexibility).

By following all these “must do's,” you should see your e-invoicing program move at a solid pace and deliver on its business case. Good luck!

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