May 10, 2021 - This article was originally published by Profource.
Why E-Invoicing Pays Off (& You Can’t Really Avoid It)
Everyone who runs a business knows this: A healthy cash flow is the most important indicator of how your company is doing. In fact, you can be a profitable company and still go bankrupt if your cash flow is negative. Crucial to a healthy cash flow is prompt payment of invoices.
That’s Where E-Invoicing Can Help
E-invoicing has been mandatory for government agencies in the Netherlands since April 2019, and many large companies have already made the switch. “But e-invoicing is also interesting for smaller companies, especially if you have many customers who are already working with it,” says Jean-Marc de Jonge, Manager of Finance & Control at Profource.
Profource has guided the implementation of e-invoicing for various customers, but until recently, we had only sent e-invoices via an invoice portal and not from our own ERP system. It was time to practice what we preach. We have many government customers, so the business case was made quickly. Moreover, we work with Oracle Cloud and had not previously linked e-invoicing to the system. It was an opportunity to gain our own experience from which our clients will subsequently benefit.
Faster Payment Is the Biggest Benefit of E-Invoicing
“This is where the real profit lies,” says Jean-Marc. “Since implementing e-invoicing, we have noticed that our invoices are paid faster by our customers. We have more time for other things because routine work has been eliminated. We have chosen not to use the extra time to save [full-time equivalents] FTEs, but to look at how we as a finance department can add value to the organization in other ways.”
For the Layman: How Exactly Does E-Invoicing Work?
Rense de Jong, Team Manager of Finance & Control at Profource and Project Leader for the e-invoicing implementation project explains: “Every company that wants to work with e-invoicing [in Europe] must connect to the PEPPOL network. This network enables connected organizations to send electronic documents to each other, including [but not limited to] e-invoices, and ensures that every e-invoice that is sent is available in the customer’s system.”
Connecting your own ERP system directly to the PEPPOL network is usually not possible. You need an intermediary (a PEPPOL Access Point), and there are providers all over the world that have this capability. One of the best known PEPPOL Access Point providers in the Netherlands is TIE Kinetix, a company with a great deal of experience and an excellent reputation.
Once the link between your system and the PEPPOL network has been made at the back end, it is very easy to work with: First, the financial department enters the invoice data into the company’s own ERP system. Then, the system sends the invoice to the TIE Kinetix server, which in turn sends it to the PEPPOL network. From there, the match is made. The invoice then automatically enters the ERP system of the recipient. Rense: “There is no human hand involved.”
TIE Kinetix and Profource have been working together for some time. Arjan Sloot, Country Manager Benelux at TIE Kinetix says: “Profource and TIE Kinetix complement each other perfectly. Profource is very strong in guiding the onboarding process, and we offer the platform and solutions to realize the e-invoicing itself.”
Is It Safe?
Rense says: “I'm a real control freak myself, so I like to see with my own eyes that things are going well. TIE Kinetix has developed a portal so that you can see the status and any changes at any time. That works super.”
The error margin with e-invoicing is much lower than with manual invoicing and it is, overall, less susceptible to fraud. Moreover, if the process stalls for any reason, you can always fall back on the traditional process. And until 100% of your customers are working with e-invoicing, that will continue to be the case.
You're Convinced. You Want to Switch to E-Invoicing. How Do You Do It?
It starts with mapping out the requirements by determining which requirements the invoice must meet to be accepted by the PEPPOL network.
“It's nice to have an experienced party involved, someone who can ask the right questions,” says Rense. “It is an ongoing process. The better the match, the better it works. With every new customer you connect, you have to check whether it's a good match.”
Arjan also confirms this: “You have to deal with legal and fiscal requirements for an invoice, as well as the possibilities of the ERP system. On top of that, you have to find the space to match the customer’s wishes as closely as possible. Sometimes that’s quite a puzzle.”
Technology and Content: Both Essential for Successful E-Invoicing
Therefore, you need both technical people and people from operations on your implementation team. E-invoicing is best approached with business goals in mind and should not be thought of as a purely technical IT project. “Especially if you want to set it up structurally,” says Arjan.
“Once the link is made, determine the onboarding strategy. Always start with the customers who are already connected to PEPPOL and with customers who receive many invoices from you. That's the low-hanging fruit,” says Rense. “Then, step by step, you connect more customers and continue to optimize the process.”
After the initial optimization, Profource ensures that those involved are trained and that the process is secured. Then, we take a step back, but we still stay involved in the background.
Who Is E-Invoicing Interesting For?
In the long run, e-invoicing is interesting for everyone. But the greatest gains can be made when a significant portion of your customers are already working with e-invoicing. “At the moment, 40% of our turnover is connected to the system,” says Jean-Marc, “But ultimately, it's not a question of if, but when you switch to e-invoicing. When everyone is connected, we will really start reaping the benefits.”