Ken Clark, Director, Product Marketing, Business Network Cloud at OpenText

Invoicing is one of those business processes that has proved oddly resistant to the march of digitisation. Or, at least, partly. While many businesses have been moving towards some form of electronic invoicing for a while, studies have found that 80% of finance and IT leaders at medium and large-size enterprises are still frustrated by the need to manage paper records. ^[1]

Perhaps part of the reason for the slow transition lies in e-invoicing being seen as a ‘nice to have’, as opposed to an essential process.

This is not helped by the fact that many countries, the UK included, have no overarching e-invoice mandate. At this time, it is only mandatory for UK companies to use e-Invoicing with the NHS. All other public sector bodies introduced what’s effectively a “soft mandate” where the government agency is obliged to accept e-Invoices if they meet the published specification but suppliers are not mandated to issue e-Invoices.

This has seen the slow creep of a patchwork quilt of invoice processes and approaches. But more and more mandates are being introduced. In a December 2022 publication, the European Commission proposed to make e-invoicing mandatory for intra-Community flows as early as 2028, and more than 80 countries worldwide already have some form of e-invoice mandate in place. Around 50 have announced their intentions to do so.

So, organisations must get ready for mandatory e-invoicing or face being on the back foot when those mandates come in. But this should be viewed as an opportunity rather than a burdensome obligation.

3 reasons to convert to e-invoicing by default

Simplicity

As tax authorities seek to focus more on VAT/GST compliance and tax reporting, they are harnessing advances in digital technologies to improve visibility and control. One of the key methods is mandating real-time or near real-time e-Invoicing.

Unfortunately, there has been very little standardisation of models, platforms or technologies used in national governments’ e-Invoicing compliance regimes. This has led to huge complexity for businesses to manage when it comes to e-invoicing. But a robust, global electronic invoicing solution can offer greater traceability than paper invoicing and can be secured to guarantee the integrity and authenticity of invoices. These usually include a secure electronic backup, accessible online to the tax auditor from an intuitive web interface. This makes the process of recording, tracing, verifying and submitting accounts much simpler and more reliable.

Cost

Return on investment for any new tech solution is top of mind for CFOs right now. Luckily, e-invoicing has a proven significant impact in reducing costs through automation, improving human resource productivity, and reducing commercial and administrative costs^[2].

The cost savings offered by e-invoicing can only be achieved with a fully automated invoicing approach. Electronic invoicing on PDF eliminates very few costs on the supplier side; and while this format is accepted for tax purposes, it offers few advantages to companies compared to adopting e-invoicing via end-to-end processing automation.

Speed

The automation inherent within modern e-invoicing solutions enables companies to process much larger volumes of invoices, with little need for error-prone human intervention. Some studies out there show that the average error rate for manual data entry is about 2%. That might seem small, but it compounds over time, with the potential to lead to significant financial losses. When it comes to regulatory obligations as well, total accuracy is vital.

Companies with fully automated electronic invoicing processes are able to get paid sooner and pay their suppliers more quickly. These indirect benefits can be crucial, sometimes outweighing direct savings on operational costs.

Overcoming the technical obstacles to e-invoicing

According to the IDG survey cited above, the main obstacles to adopting full automation of billing processes are data security (54%), integration with internal systems, e-procurement (45%), perceived complexity of the technology (36%), lack of expertise (32%) and integration with customers and suppliers (30%). In addition, 42% of professionals have billing processes that are compartmentalised by geographical area, department or information system. So, the main obstacle for companies is the integration of electronic invoicing into existing IT infrastructures.

In light of this, perhaps the best approach for companies looking to get ahead of the game on e-invoicing is to find a robust solution provided by a vendor offering greater technical support and expertise, in order to speed up and streamline that integration.

Get ready for global mandates

The regulatory landscape around e-invoicing may be patchwork at the moment, but all signs point to more global mandates ahead. Regardless, the direct and indirect benefits of e-invoicing mean that companies shouldn’t wait until they’re made to adopt it – indeed, there’s a real opportunity to grasp by making the move now.

Companies lagging behind in adopting e-invoicing will miss out on the opportunities offered by streamlining and eliminating operational costs, as well as improving cash flow. The risk is that they will lose their competitive edge to companies that are already benefiting.

 [1] IDG MarketPulse, E-Invoicing’s Time Has Come, 2022

[2] 2022 Gartner report

By Graham Self, business architect at Axiologik

As a business architect at digital delivery firm Axiologik with 21 years of experience in the Financial Services industry, Graham Self, is often asked, “What is the true value of business architecture?” In today’s climate of providing hyper-personalised financial services in a heavily regulated environment, business architecture is a role that has never been more vital to the industry. Here, Graham explores why that is.

In the UK, many financial organisations are currently operating under the Operational Resilience regulations, with a deadline of March 2025 for complete compliance for important business services. And Europe is following fast with the Digital Operational Resilience Act (DORA) regulations, as are many other markets with their own set of legislation.

The intention of these regulations is not simply to ensure that financial institutions perform the minimum criteria for regulatory deadlines, but to make sure that an operational resilience practice and mindset is embedded within organisations for the future. This requires full transparency across the business, from processes and people to technology and data. But who in the organisation has this level and breadth of knowledge?

Change in a traditional industry

Adding to these challenges with compliance, the financial services (FS) industry is also going through a time of significant change, with continued investment in digital transformation. Decisions about technology are being made against a strategy to reach more customers digitally, more personally, and through “banking as a service” partnerships.

Graham Self

But all of this change is happening within a hugely regulated environment that sensibly mandates operational resiliency in many markets of the most important business services to customers. All changes must, therefore, be relevant and validated against robust business continuity controls.

Those who operate in the industry have an obligation to customers – and the market – to provide a trusted, resilient and reliable service at all times. To deliver on that commitment requires financial organisations to not only know what services to deliver to their customers but how to provide them – not only that but to provide them well, on an ongoing basis, and in all circumstances.

Managing the strong – potentially competing – forces that exist between strategy, technology investment, customer experience, operational efficiency and resiliency requires a discipline that has never before been so important; business architecture.

Connecting the  ‘what’ and  ‘how’

Business Architects have the unique advantage of collaborating between business units, technology and operations teams. These groups of stakeholders historically have their own visions and perspectives of what needs to change within an organisation. They often have their own language or taxonomy and don’t always see each other’s perspective; a world of service vs. capability.

But business architecture provides the tools, techniques, accountability and ways of working to facilitate the efficient, fast flow and compliant change sought by financial institutions. It ensures that in an environment of ongoing transformation, operational resilience is maintained, by ensuring financial institutions have a complete understanding of their processes, their associated risks and controls, and how they are fulfilled through technology and people.

Customer outcome mentality

The business architect is the person in an organisation who can directly correlate customers’ needs and the service outcomes they require, aligned to strategy, with technical and operational solutions, validated through value streams. They put the customer at the heart of every part of the business, and this is a unique and much-needed aspect of today’s change programmes.

I like to think of a “shop window” when describing the relationship between any financial organisation and its customers. The shop window conveys a business’s brand, identity and purpose. It enables the customer to peer inside the organisation, and see the services on offer and products provided. From this, customers make instant decisions on whether it meets their needs.

Just like a traditional shop window, financial organisations are also able to see out. By doing so they can validate everything they do operationally and technically through the lens of the services provided to customers.

The window sheds a critical light onto operational and technical solutions, helping evaluate these by the value they provide to customers. If FS organisations don’t pay attention to that window, they will find themselves in the dark making assumptions about where to invest. This is dangerous territory when budgets and timelines are tight.

Therefore, business architecture helps financial organisations look through the shop window – both ways – empowering organisations on their digital transformation journey.

Business Architecture helps put FS companies in the shoes of their customers, and understand what their needs are, what services should be offered and where they should be accessed. Business architects inform and interpret strategies to ensure these needs, and the services provided to address them, are clearly and consistently articulated. It enables the early identification of capability gaps, that will fail to meet business strategy before problems arise.

Customer-centred design

During this shift towards a more customer-centric future, my advice to any financial organisation – big or small – is to ensure there is complete transparency through their own shop window. Without it, there runs the risk of making strategic decisions in the dark about new products and services powered by technology.

In a highly regulated and incumbent sector, the only way to successfully address customers’ needs is to actively engage business architecture from the outset.