To maximize the ROI of your e-invoicing investment, you ideally want as many vendors as possible to get on board with your e-invoicing platform and submit invoices electronically. However, as we’ve seen over the years and explored in more detail in the sharespace hub, there are a number of factors that will influence the success of your e-invoicing onboarding rates. A crucial consideration is whether or not you require electronic invoicing and how you communicate your policy to your providers.
What are the risks of having a mandatory electronic billing message?
Some organizations may feel they have no choice but to mandate e-invoicing if they want to move forward with their e-invoicing project and see ROI as quickly as possible. But could this jeopardize the business relationship with your suppliers?
It will be more difficult to require e-invoicing from providers in a stronger bargaining position unless they can see the benefits to their business. So before you send your messages, think about how you can personalize communications to emphasize the benefits of electronic invoicing in particular for your business. For example, if you’re a major supermarket, you might want to emphasize that e-invoicing means faster processing of invoices, which means stock can be on shelves faster and ready to sell sooner.
Considering benefits beyond cost savings remains a key factor in e-invoicing negotiations with your providers, especially given the large financial investment they must make to implement the necessary technology.
What is the cost of not having a mandatory message?
Some organizations vary their electronic billing policies by provider. For providers without the technological or financial resources to immediately get on board with an electronic invoicing platform, some organizations may offer the option of submitting invoices via non-electronic formats. But at least you want to encourage e-invoicing as the preferred method, again emphasizing how it will be beneficial to your particular operations. If you don’t encourage e-invoicing with your vendors, you could slow down the ROI on investment and make processes less efficient and effective.
With which providers can you afford to have a mandatory message?
Following the 20/80 rule (meaning where 20% of your suppliers provide 80% of your invoices), there are a few spend categories where it makes the most sense to use e-invoicing.
By strategically segmenting your supplier base and implementing your mandated approach in stages, you can break a big hurdle down into small pieces. With this approach, it is possible to implement electronic invoicing in a relatively short space of time, establishing realistic deadlines when dealing with specific problems of the type of provider in each segment.
Your high-volume vendors will be the most obvious category of vendors to approach first with an e-invoicing project, as the business case for them will offset any financial investment they have to make in implementation. The more they depend on your company for business, the less likely they are to want to take chances.
