What to ask when buying e-invoicing
Knowing the questions to ask service providers when looking to purchase e-invoicing solutions can be a minefield. With a number of service providers offering different solutions, often the nuances of what they are offering are difficult to differentiate.
The e-invoicing market has certainly matured over recent years and there is now a higher degree of awareness surrounding the questions that need to be asked. However, there is still confusion about, not just exactly what those questions should be, but also what to do with the feedback received.
Here we will be examining five not-so-obvious, but very important areas that need consideration when you are choosing your network.
1. Supplier on-boarding
Supplier on-boarding is an important consideration. Without suppliers sending you invoices electronically, you have no e-invoicing programme. Realising that the supplier on-boarding piece is key, you’ll come to realise that the ‘service’ part of this project is instrumental to success.
The change management component of e-invoicing needs to be held in high regard by your service provider, and getting this right will hugely impact on your chances of being successful with the implementation. Most service providers will on-board your suppliers for you, but the way they do this differs from network to network. Ask them exactly what their process is in detail and they will hopefully tell you that they will:
- Ensure that your vendor database is clean so that any communications will ‘land on the right desk’ and keep the momentum of your campaign
- Write the communications piece based on communications that have been successful in the past with other clients
- Follow up with the suppliers once they have received the request/instruction to join the network and walk them through any implementation
- Report on supplier uptake and advice on how procurement should liaise with suppliers that refuse to join
Do you want to meet the people that will be liaising with your suppliers on your behalf? If so, go and meet them. Take the afternoon to sit with the supplier on-boarding team to see how professional they are, what native languages they speak, what systems they use to log calls etc.
2. Open vs. closed?
Open vs. closed refers to the service providers’ views on interoperability which is fast becoming a popular method in very mature markets, such as Scandinavia. Whilst most geographical markets have some time to shunt their way up the adoption curve from 10% electronic to perhaps 30%, interoperability is currently a key consideration rather than a key requirement. But this will change as markets mature.
Questions to ask are:
- How many interoperability relationships do you have and with whom?
- To what degree do you actively seek interoperability with other service providers?
- What volume of invoices cross your network from interop partners?
With the view that once the market becomes fully mature, and interoperability will be common practice, you will want to partner with a service provider who is open to it today (even if they do not currently have many invoices coming through this arrangement.)
It will be fairly obvious to you that you need to discuss the commercial aspects of the deal. However, what needs to be understood is the ‘total cost of ownership’ for you and indeed the supplier. You also need to understand the value e-invoicing represents to your business.
Therefore your questions need to be about pricing, but also about the cost of change for you and the supplier. Understanding the cost of change for you, and the supplier in particular, will give you a clear idea of what your conversion will look like, and therefore the value that e-invoicing will lend your organisation.
Here are some of the questions to ask:
- What is the forecasted/guaranteed conversion and over what period?
- What cost will the network remove from the business and what opportunity will using this solution open up?
- What is the cost of change to you as a business when setting up with this network? i.e. how many man days will it cost you to go live?
- What is the total cost of ownership for the supplier?
- Talk through the supplier technical set up (large supplier, mid-sized supplier, low volume supplier) -what is involved?
- Can you talk to the supplier directly about their experience?
- How much will the network charge you and what is the charging model?
- What is the commitment you need to make? Can you opt out at any time? Is there a large upfront fee? What is your risk?
- What happens if you follow all the best practice guarantees and your network fails to deliver?
- How long is the contract and can you get a better rate if you extend the contract?
- How much will you be charged to take invoices out of the archive?
- Are there any extras? What are they? What will they cost?
- What are the terms of the supplier’s contract?
- What other services exist (like supply chain financing or dynamic discounting) that will mushroom your business case and increase the value for suppliers?
4. Project management
Invoicing is a change management programme, so you need to make sure that you are working with a programme manager from the network that can drive through change.
The best way to ensure you get the best candidate is by meeting them. The programme manager will be responsible for driving through the change – both internally and externally – so it is important to make sure they have all the qualities needed to do so elegantly and effectively.
When you find a project manager that you feel you can work well with, lock them into a contract before you sign it. Project management is also about more than just the set-up. You will also need to discover what support looks like once you are operational. You want to make sure that, even when you have reached 70% or 80% conversion, you are still being looked after and suppliers are still being on-boarded.
5. Resource planning
A service provider sees clients at every corner – existing, mature, recently signed, at contract stage, in sales. Once you sign as a client, how can you be sure that as you move through the implementation cycle your project and your suppliers will be prioritised?
It is important to ensure that your programme is not de-prioritised as new, fresh, larger accounts come on board with bigger suppliers that can yield more for the network than your harder-to-convert mid-volume suppliers.
As you run your campaign, it’s in your interest that mid volume suppliers come on board. But how motivated is your network to on-board these suppliers over and above larger suppliers? This is a key area that requires full investigation.
Here are some of the questions to ask:
- How many accounts does the service provider win each month?
- How will they manage all accounts won? What resource do you have ready and trained?
- Where will you come in the list of accounts won?
- How many people will be working on your account?
- What will happen when more accounts come on board?
- How can you make sure they will put as much effort into getting hard to on-board suppliers as the easy-wins?
- What will happen if 5 accounts come on board in one month instead of the forecasted 3?
- How are they incentivising their supplier on-boarding team to on-board mid volume suppliers? What does their
- commission plan look like? Are they the same people that on-board larger suppliers? If so why?
The answers to these questions will assist you in deciding whether or not you are going to receive the right amount of attention the whole way through the process. Ask your chosen service provider to add KPIs to the contract, so they have targets to meet on your account all the way through the process.
These areas are the less obvious to explore when looking at e-invoicing. However, getting answers to these types of questions can mean the difference between a 30% conversion programme and a 70% programme. Make sure they feature in your buying process.
This article was published in the E-invoicing Market Guide 2012.