Secrets to Driving Supplier E-Invoicing Adoption

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Thursday, July 26, 2012

Secrets to Driving Supplier E-Invoicing Adoption

From hotel chains to construction companies to auto parts distributors, all organizations can benefit from e-invoicing.

While most Account Payable (AP) departments recognize the benefits of automation, and plan to increase their use of e-invoicing, many are stymied by resistance from suppliers to the technology. To date, the majority of companies have only automated less than 20 percent of their incoming invoices.

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But there are strategies for overcoming supplier resistance and driving the rate of e-invoicing automation.

Ranked No. 30 on the list of Fortune Global 500 companies, Siemens Shared Services partnered with Direct Insite and set forth several strategies that led to a significant increase in electronic invoice submission and vouchering. As a result, Siemens Shared Services was able to reduce costs and improve AP quality.

In 2010, Siemens Shared Services was processing more than 2 million invoices a year for over 50 business units. Siemens Shared Services wanted to convert 80 percent of those paper invoices to electronic.

In order to drive adoption, Siemens first lined up internal support. As a shared services center, it is very important to gain executive sponsorship at the business unit-level. Siemens established a vendor adoption committee representing all divisions involved. The organization defined clear objectives as well as mechanisms for measuring results and reporting them back to executives.

The organization also educated internal stakeholders on e-invoicing long before it deployed the technology. Siemens Shared Services recognized that internal education is just as important as external communication as it helps develop a strong internal support system.

When it was time to roll-out e-invoicing, Siemens Shared Services offered the service at no charge to suppliers; this made it much easier to “sell” the idea. To get the greatest impact, Siemens targeted its e-invoicing efforts to three types of suppliers — high-volume, high-dollar value and “problematic” suppliers. In the case of Siemens Shared Services, a small number of vendors represented the lion’s share of its invoices. Siemens Shared Services also set up a dedicated help desk for suppliers.

Siemens Shared Services also did not shy away from mandating e-invoicing. All new vendors were contractually bound to submit invoices electronically; the combination of an easy-to-use service and dedicated help desk support made the vendors less apprehensive about the mandated technology.

Through the use of these strategies, Siemens Shared Services was able to increase the percentage of electronically submitted invoices from 33 percent in 2008 to 75 percent in 2011, while also decreasing the number of calls about invoice inquiries from more than 7,000 to less than 4,000.

Most organizations aren’t as large as Siemens Shared Services. But the strategies employed by Siemens Shared Services can help any accounts payable department drive e-invoicing adoption and eliminate paper, reduce costs, and improve accuracy.

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