The Time has Come to Embrace e-Invoicing in the US
Industry in the United States has a long history of being at the forefront of technological innovation due to its tireless endeavor to boost business efficiency and productivity while reducing critical operational costs. That is why it comes as a surprise that, across all industries, the US is lagging behind in the implementation of electronic invoicing. One would expect that a software that streamlines and automates invoicing processes, making document exchange more efficient and cost effective, would be quickly adopted in the world’s most established and competitive market. Unfortunately, this has not been the case. In fact, other markets around the world continue to outpace the US in their adoption of e-Invoicing platforms. With signs of a slowing global economy, as well as an increasing number of countries mandating the use of electronic invoices, it is only a matter of time before companies in the US will embrace this technology, or risk falling further behind.
Although many companies in the United States recognize the benefits of e-Invoicing, including reduced errors, increased data security, and 50-60% cost reductions, the greatest obstacle to wider United States adoption is the lack of a universal framework with the common standards and protocols necessary to enable universal document transfer. As this landscape continues to change, efforts to make e-Invoicing implementations more seamless have grown in the US over the past few years. As a result, there are now more groups dedicated to exploring the feasibility of building a standardized electronic invoicing model similar to PEPPOL in Europe. A group of volunteer organizations and individuals, collectively known as the Business Payments Coalition (BPC), have one thing in common: they want to see increased nationwide adoption of B2B e-Invoicing and are leading the effort to standardization in the US.
Related: COMARCH Consulting Director Tomasz Spłuszka is participating at a Knowledge Group event about how e-Invoicing can help organizations ensure business continuity in uncertain times. Click here to register.
According to the BPC, 75% of invoices sent to buyers in the United States are still paper based. This is extraordinary considering the substantially higher processing time of paper invoices. The Association for Financial Professionals estimates that it takes an average of 12-15 days to process paper invoices. In comparison, e-Invoices are processed in a matter of hours and ready to be paid in an average of 3 days, providing critical automation, business efficiencies, and access to strategic funds which can be put towards other revenue-generating ventures.
Another advantage electronic invoices offer is increased security. This is essential given that fraud and cybercrime is an inevitable part of doing business in the modern digital era. It is no secret that criminals are becoming increasingly sophisticated in their efforts to defraud companies. One of many recent examples involved an individual who managed to defraud over $100 million from Google and Facebook by posing as one of their suppliers and sending them fake invoices. By encrypting invoices using secure communication protocols and ensuring only authorized suppliers have access to communication channels, companies utilizing e-Invoicing software are at lower risk of theft than companies who continue to send or receive invoices by mail or email.
Currently, countries in Scandinavia as well as Latin America are leading the world in B2B electronic invoice volume. Most recently, Italy has mandated the use of invoicing in both the public and private sectors. Evidently, global acceptance of e-Invoicing is rising at a rapid rate and companies in the United States need to remain competitive with their counterparts around the world. This is not the only challenge, however, as it seems that for the foreseeable future, businesses and other organizations are going to have to tighten their belts and weather the coronavirus and its subsequent economic downturn. With operational costs increasing, automating the document exchange process is an effective cost-saving measure that is long overdue in the United States. Ultimately, companies that want to reduce their operational costs and better position themselves to survive the present and thrive in the future need to embrace e-Invoicing.