“Wood for Thoughts” – Let’s waste paper! August 22, 2007
Posted by Jari Tavi in : eBusiness , trackback
In my role as a board member of BasWare Einvoices Ltd., I did a drill down to market details and was a little bit surprised of how difficult it was to find reliable numbers on the Electronic Invoices market. Well, according to one, probably reliable enough a source, the invoice volume in Europe alone is something like 28 billion (yes, 28,000,000,000) invoices a year. The same estimate claims that the split between Business-to-Business (“B2B”) and Business-to-Consumer (“B2C”) invoices is roughly 50/50 so I will use this as a basis for my later estimates, so this equals 14 billion B2B invoices a year.
According to business intelligence information available, the largest e-Invoice providers deliver 6 to 10 million invoices a year each and are growing pretty fast, but I will use the lower number, 6M invoices a year in my estimates.
So what kind of conclusions can we draw from this?
• 1st: Despite the EU directive 2001/115/EC being introduced already almost three years ago, the volume of e-Invoices is still marginal despite the demonstrated business value.
• 2nd: Some of the European countries have worked hard to prevent the e-Invoicing to happen in practice, but I will comment that claim further in another “soon to be available” blog-entry.
Now, when lots of the companies are touting green values, I just got curious about the facts behind the e-Invoices and I did some “elementary school mathematics” around the topic – how must do we consume natural resources by delivering the paper invoices in “snail mail” instead of using electronic transactions? Or how much and what do we save with e-Invoices?
It was surprisingly hard to find further details about tree-to-paper ratio, but after using search engines and placing couple of calls I think that we might now be in the right ball park with these numbers so I am confident enough to play with the numbers.
I make the following assumptions:
• B2B invoice is typically 2–3 sheets of paper, I assume average two (2) pages
• An envelope is the equivalent of one (1) sheet of paper
• One “average tree” produces cellulose worth of 12,000 sheets of copier quality paper (density: 80g/m2)
• Largish e-Invoice operator delivers 6–10M annual e-Invoices today, I assume 6M
Based on these numbers, these e-Invoice operators (each) are saving:
• 12M sheets of paper (invoices themselves) (only about 0,04% of the total volume)
• This equals to 4,800 boxes of print/copy quality paper, each box 5×500 sheets = 2,500 sheets
• 6M envelopes (equaling to 6M sheets of paper)
• This equals to additional 2,400 “boxes” of paper (totaling 7,200 “boxes”)
• These together equal to 90 metric tons of paper!
• This equals to 1,500 trees
Well, saving 1,500 trees, or rather preventing the unnecessary production and transportation of the 90 tons of paper including the recycling effort etc is more important. Pulp and paper manufacturers who are responsible for making sure that they plant more than use and thus the number of trees (1,500) is not huge, but the side effects of manufacturing and transportation are more important. On the other hand, maybe we should take a look at the opportunity instead of only the current situation?
Let’s think about 14 billion B2B invoices a year. Based on the same assumptions that would mean 1.17M trees in total – this starts to sound like a bit more interesting number. This would mean production, transportation and recycling, not forgetting chemical processing, printer supplies for:
• 28 billion invoice pages + 14 billion envelopes = 42 billion sheets of paper
• Almost 17 million boxes of paper
• Making 210 million metric tons in weight (210,000,000,000 kg aka about 461,000,000,000 pounds)
Now we’re talking! This would be the amount of unnecessary weight we are transporting around Europe just to get the invoices to flow. Somebody from logistics side could help us calculate the economical impact of all this.
And that is not all: Each invoice includes creating and sending or filing at least one, typically 1–3 other paper based documents including documents like the Purchase Order and Shipment Documentation. So, in practice, the amount of paper needed can be more than two times the amount of the paper needed only for the invoices.
My conclusion is that in addition to process savings and rationalization, it is highly reasonable to promote electronic transactions in trade whenever possible! That is one of the reasons why standards like UBL 2.0 create really a significant new opportunity.
By the way: The total cost of the paper alone for invoices, considering transaction numbers based on street prices in Europe, is close to €1 Billion – and that is only the tip of an iceberg.
Be reasonable – “Paper – waste it – whenever you can”!