Governments and organizations across the globe have begun shifting to electronic invoicing, driven by mandates coming from the European Commission, the US Federal Reserve Bank (of Minneapolis), and many over governing bodies.
E-invoicing automates and digitalizes invoicing processes for B2B transactions, from invoice generation to transmission and payment, and seeks to eliminate the need for paper and manual invoicing processes.
Alongside e-invoicing, accounts payable has been another area of focus for digitalization. Electronic payments have helped spawn the digital era of payments invoicing and processing, and is now the widely accepted standard across organizations in the US, EU, Asia and many other places.
One key hesitation many organizations (both private and public) keep asking is whether e-invoicing is a merely a nice-to-have, or more a necessity as the tides turn increasingly in it’s favor. E-invoicing benefits businesses both from a compliance and operational standpoint, by increasing transparency into invoicing processes through automation and improved reporting methods.
As more countries including the US and the EU mandate the move to e-invoicing, organizations are hard-pressed to make the shift in a timely manner. The Federal Reserve Bank in the US has issued guidance that all government agencies are to implement e-invoicing by 2018, which will undoubtedly trickle down into private corporations and other entities as well.
With so many benefits, why aren’t all organizations making the plunge into e-invoicing? In surveys conducted across both public and private sector organizations, the largest barriers cited include difficulty of systems migration, lack of standardization of system platforms, concern of integration with supplier/customer systems, and inadequate budget available for migration.
What most organizations fail to understand is that e-invoicing systems are actually quite easy to implement, and offer easy methods to support client systems and translate file types between transactions solutions. E-invoice solutions are widely supported across many types of platforms, and are available as web and SaaS solutions, eliminating the need for complicated systems installation and integration.
Having a web-based system enables customers and suppliers to access e-invoicing solutions without having to integrate systems or enable plug-ins for complicated file types.
In fact, many e-invoices can be securely distributed in pdf or XML files which are supported across any system in use today.
As governmental agencies and other organizations adopt e-invoicing, financial services organizations are having to stay one step ahead to provide clarity for financial transactions and enhanced capital efficiency. Large banks and other financial services firms are working heavily with clients to innovate the financial supply chain to create an expedited, streamlined process that can enable e-invoicing within the bank and for their customers.
A drawback that financial services and smaller businesses must cross is the lack of support for small to medium sized businesses (SMBs), many of which cannot support the large scale adoption of end-to-end procurement systems. Unlike checks, e-payment systems are not ubiquitous among businesses, especially in SMBs which run a variety of smaller, independent systems and are frequently outdated.
With the rise of e-invoicing, regulatory bodies in many counties have begun issuing requirements for digital signatures to add a layer of protection for data integrity.
Qualified electronic signatures have become the recommended industry standard, being an advanced method of providing signatures using a secure signature creation tool.
eIDAS is the European regulation for electronic identification and trust services for all digital transactions. eIDAS has provided governance and (through ETSI and CEN) standards for digital signatures, and defines the conditions by which member states are to recognize digital identification from users. Some requirements for qualified trust service providers include carrying liability insurance, measures to prevent forgery of signatures and keys, and archiving requirements that comply with legal standards across the EU.
eIDAS has provided very stringent requirements where it concerns e-invoicing, dramatically changing the security requirements of platforms where controls previously weren’t required in the past.
How does this compare to the US standards? The US has not issued federal regulations for digital signatures in e-procurement and e-invoicing systems, though guidance has been issued by independent security firms and the federal reserve bank. However, global organizations with a presence in both the EU and the US must follow the more stringent guidance of eIDAS to meet requirements when transactions span across the Atlantic.
At the end of the day, both the EU and the US are increasingly adopting e-invoicing solutions. Currently, approximately 25% of organizations in both the EU and US have adopted these platforms, though that number is expected to grow exponentially as mandates are released and barriers to adoption are removed.
With the integration of qualified electronic signature tools in platforms, B2B and B2G payments processing is assured to be more secure, as it represents a legally binding signature that provides an added layer of protection for data integrity. E-invoicing brings in numerous benefits, especially for larger organizations, and will increasingly change the landscape of payments process as we drive deeper into the digital era.