Tuesday, September 18, 2007

Banks should talk to procurement

We have all heard about the benefits of electronic invoicing - replacing manually intensive paper-based invoicing with electronic machine-readable invoices could save the industry EUR 100 billion a year. Yet, the reality is that only 2% of total invoices are transmitted electronically.

So why despite the overwhelming business case for e-invoicing are companies dragging their feet when it comes to actual implementation. At the 16th Eurofinance International Cash & Treasury Management Conference in Vienna, Kjell Gunnar Gustafasson, chief purchasing officer, E.ON Sverige AB in Sweden said that what was missing was a total end-to-end e-invoicing solution that was well integrated with companies' back-end systems.

When it comes to e-invoicing, companies like E.ON do not want to see a myriad of proprietary e-invoicing solutions. "We want to see a solution similar to roaming," said Gustafasson, drawing parallels between pan-European e-invoicing solutions and pan-European roaming in the mobile telephone market.

Gustafasson challenged the e-invoicing industry to abandon its proprietary mentality and support standardisation. He also called on the banks to play an enlarged role by developing "inter-banking" arrangements which he said had a better chance of encouraging supplier adoption of e-invoicing rather than single bank solutions.

"I would like to see the banks and bankers learn more about the purchasing process and engage in their customers' every day processes," he said.

"Banks only talk to treasurers," said Patricia Pittomvils, vice president, payments, cash management and cards, TietoEnator UK. "They should also talk to procurement people."

But it appears it is not all bad news for companies trying to establish a business case for e-invoicing. After a slow start, Pittomvils said "The good news is that banks are becoming more interested in e-invoicing." An example of this she said was the European Banking Association's Stakeholder Forum, which is looking at e-invoicing as part of SEPA. Vendors such as TietoEnator are also members of an e-invoicing Interoperability Club.

But it appears vendors and companies are waiting for the banks to fully grasp the enlarged role they can play in e-invoicing by re-using existing banking channels and leveraging banks' "credibility". I posed this question to Marilyn Spearing, global head, trade finance and corporate cash management, Deutsche Bank, who said that while it had invested in its electronic bill presentment and payment solution, it had yet to see significant traction by corporate customers. "The fact that corporates need to change their whole processing has meant slower adoption of e-invoicing," she said.

Surely then it is up to the banks working with vendors to simplify that process.

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