The European Union E-invoicing Expert Group has garnered a lot of attention with its efforts to harmonize e-invoicing practices amongst the industry’s most prominent players. Now the group has published the final report for its Phase 2 activities. It’s a lengthy report, a full 111 pages of dense formulations.   Having spent a considerable amount of time reading it, I thought I’d save you the trouble by writing a summary.

The report tried to touch on just about every e-invoicing issue, leaving the focal message rather unclear for the reader.  Indeed, skimming the table of contents brought to mind that Fats Waller song that says “all that meat and no potatoes, just ain’t right.” So let’s add the potatoes.

The report lists several recommendations / issues for its future work.  They are:

1. The need to focus on making e-invoicing a mass-market application for the small-to-medium sized enterprise market.
2. The need to provide clarity with respect to national legislation regarding e-invoicing.
3. The call for an interconnected “e-invoicing ecosystem” where multiple e-invoice operators and other service providers are to interoperate and route traffic between each other – similar to how it’s done in mobile phone communications
4. The suggestion to begin the adoption of a single e-invoice content standard (UNCEFACT Cross-industry invoice) to provide a level playing field for all parties relying on the so-called e-invoice data file for automated invoice generation and processing.
5. The call for an EU-level organization or “organizational process” to implement the suggested changes, and the call for a set of campaigns to disseminate those key messages in order to enable a transition from the current e-invoicing landscape into the level playing field mentioned above.

One additional nugget in the report is the call to abandon the current practice of having e-invoices signed with a qualified digital signature in favor of an “equal treatment of e-invoices with respect to the handling of paper invoices”.  (See R 2.1 and R 2.2 in the report and Page 30.)

At Basware we welcome these recommendations.  Already, today our offering is compatible with the statements in the TOC report. 

However convergence to a single e-invoice data file format remains a long-term dream.  Basware takes a more realistic stance in the sense that we are accommodating both the senders’ as well as the recipients’ demands by providing a controlled conversion process enabling each customer to use their preferred format. 
 
Digital signing of e-invoices can be perceived as a nuisance or as a blessing for proving that files have not been manipulated. At Basware we take a neutral stance. We have both experience in countries where digital signing is a must and in others where there is a preference for reliance on other IT-controls to ensure authentication and e-invoice integrity.

Overall, the report leaves me feeling that all the ingredients are on the table and just waiting for the right cook to come along and make a tasty and balanced meal out of it all.

If you feel like giving it a go, try these:
http://ec.europa.eu/enterprise/newsroom/cf/document.cfm?action=display&doc_id=5544 (Final report)
http://www.e-invoice-gateway.net/start/  (Portal page)
http://www.e-invoice-gateway.net/knowledgebase/countryrelated/ (Country-by-country comparison)
http://e-invoice.basware.com/

And have a look at their E-invoice Gateway website that enables you to do a brief country-by-country comparison of e-invoicing-related legislation.  Though not yet comprehensive and clear enough for individual e-invoice sending or receiving parties, it is still a commendable effort.  Go ahead and try it out.

Juha Hakamies ebusiness, market trends

Today, we at Basware are announcing our research, The Cost of Control study in which we, in conjunction with leading academics in this space, reveal how well businesses across the globe are utilising their finance and procurement departments to navigate unprecedented economic times. Supply chains form the backbone of many businesses today, and many of the high profile business failures in recent months can be, at least in part, attributed to financial fractures within the supply chain. An unrelenting focus on cost cutting and uneasy relationships between finance and procurement professionals further combine to create an environment where supply chain risks, if left unchecked can threaten company stability.

This survey, commissioned by Basware in association with IESE Business School (Europe) and the Kelley School of Business (USA), explores how the relationship between finance and procurement functions is symptomatic of wider operational strengths and weaknesses and evaluates how the management of financial and procurement processes affects wider business performance.

The key findings of the Cost of Control survey, based on the views of 550 financial directors and CFOs from large enterprises around the world, can be summarised as follows:

Despite a high-risk economic climate, CFOs in organisations struggle to recognise the importance of closely managing supply chains through procurement

• Only 28% of respondents believe that procurement has a significant impact on financial risk exposure
• Risk analysis (39%), margins growth (39%) and other strategic goals are all sacrificed in place of bottom line cost reduction (64%) as a strategic priority

Finance underestimates the strategic value of purchasing and the supply chain to business performance

• 52% of financial decision makers consider purchasing is becoming a more strategic function, although 36% believe it is still largely administrative
• Only 27% of respondents describe procurement as a function that has a positive impact on enterprise growth

Businesses are experiencing efficiency gaps in data capture, automation and integration across purchasing and finance functions

• On average, only 42% of indirect spending is captured
• Only 50% of the processes supporting purchasing are automated
• Under half (46%) of CFOs consider that purchasing and finance functions are integrated effectively

Satisfaction with cost saving strategy is influenced by levels of process automation within businesses

• Businesses with highly automated* purchasing processes are more likely to consider that purchasing and finance have maximised savings in the past 12 months (68%) than those with lower levels of process automation [58%]
• Satisfaction of ‘delivering on cost saving targets’ increases from 37% in low automation businesses to 55% wit high automation businesses

* High automation – Businesses that stated the percentage of purchasing processes that are automated is above 50%. Low automation – Business that stated the percentage of purchasing processes that are automated is below 40%

Figure 1: Levels of data capture, automation and integration show room for improvement

We will be posting further updates on this research here on the blog, so please check back for more details. Alternatively, if you would like the full report, please click here to download the Cost of Control report.

Juha Hakamies market trends