The Missing Link for e-Invoicing Success: The Global Process Owner

Electronic invoicing (e-invoicing) seems straightforward at first glance—transforming a paper process into an electronic one. However, its benefits extend far beyond mere digitization. Over the past 20 years, it has evolved from an accounts payable project to a procure-to-pay (P2P) endeavor. Yet, its true essence lies in creating a closed, compliant audit trail for every transaction.

Given its broad impact on people both inside and outside of the organization, e-invoicing isn’t something you should do just because it’s logical or because finance wants it. It must be based on a detailed assessment of the current situation and clear value metrics. Are you trying to cut down on people who are opening envelopes? Increase the accuracy of inbound invoices? Improve cash management? Articulating the reasons for e-invoicing and quantifying its benefits (across the organization) beforehand is extremely important.

The role of a global process owner in e-invoicing

Now that we’ve defined this global view of e-invoicing, it’s clear that in order to succeed a dedicated global process owner is needed to lead the charge—someone who has the endorsement of executive leadership to get stakeholders across the organization to spend time and share information. This person should have a thorough understanding of the P2P process and be capable of posing pertinent questions.

But why the emphasis on a global process owner? Implementing such transformative changes demands justification and a robust business case, one that AP alone cannot formulate due to its limited visibility into end-to-end (receipt to payment) invoice processing costs.

Unveiling the true cost of processing invoices

To be fair, no company has the option to ignore invoice processing, so most companies don’t delve into its costs. When considering e-invoicing, they often apply standard cost estimates issued by consultants in the market. According to different sources, it costs between $12 and $75 per invoice to process. Not only is this a large range, but this range typically only applies when everything goes right.

It completely ignores additional costs, such as when a supplier calls to inquire about an invoice status, the expenses related to finding lost invoices, or resolving mistakes and disputes. It is not unusual for 20 percent or more of inbound invoices to encounter issues that prevent efficient, timely processing – and that’s likely a conservative estimate.

To truly grasp the cost, you would need to study the calls coming into your AP department. A few years ago, I worked with another large global organization that received six million invoices annually. The AP department reported calls for about 42% of their inbound invoices, amounting to over 2.5 million calls!

When you factor in each employee’s time and salaries into the total cost, each invoice can easily push to three digits. Furthermore, this calculation doesn’t even consider additional costs such as lost early pay discounts, fraud, borrowing costs due to poor cash flow management, audit expenses, and supplier price hikes to offset the cost of doing business with you.

The importance of understanding the entire process

All these costs live in little siloes throughout the organization, with no one seeing the whole picture. This is where the global process owner starts—by delving into the entire P2P process to understand all its costs. Then, a much stronger business case for the value of e-invoicing can be made.

In the example above of the 2.5 million calls, a key value driver of the business case was reducing inbound calls to AP. A clear measure of success would be a drastic reduction in calls.

Characteristics of an effective global process owner

Who should this global process owner be? Ideally, a new hire with experience managing shared services organizations. These individuals excel in this role because they bring fresh perspectives and expertise in process design.

I’ve observed organizations hire experts in procurement or AP, but they often struggle to see the big picture, especially if they’ve been internal employees who have been challenged with this for many years. It's difficult for them to step out and take a fresh approach to the situation.

Other organizations I’ve worked with believed it was a quick and easy win to bring in an external consultant, perhaps an expert in e-invoicing or P2P, but I’ve rarely seen that approach succeed. The global process owner needs to be internal because they must work with procurement, AP, legal, and all parties involved in the organization’s business relationships.

To effectively carry out the role, the global process owner must be deputized by various department heads—the CEO, CFO, CPO, and perhaps the chief risk officer—to assess their processes and associated costs. This typically takes between four weeks and three months, depending on the size of the organization.

Now the journey begins

Once this assessment is completed, the real work of the global process owner begins. This underscores the importance of an internal candidate, as the understanding gained and the relationships built during the business case process are invaluable to both the global process owner and the organization as the process moves forward.

Key takeaways:

  • E-invoicing is more than just taking a paper process and making it electronic. It's a project that involves the entire procure-to-pay (P2P) process and creates a closed, compliant audit trail for every transaction. It's important to have a clear understanding of the benefits and value metrics before starting.
  • A global process owner is needed to lead the project. This person should have a thorough understanding of the P2P process and receive support from executive leadership. They should be capable of justifying the change and presenting a strong business case.
  • The cost of processing invoices is often overlooked, but it's important to understand the true cost, including when things go wrong. A global process owner can dig into the entire P2P process to understand all the costs and make a stronger business case for e-invoicing.
  • The global process owner should ideally be a new hire with experience running shared services organizations. They should be internal and have the support of each department head to effectively understand the process infrastructure and costs associated.

Optimize your processes today

Looking to enhance your e-invoicing, invoicing, or networked AP processes? Tap into our 40 years of expertise. Contact us today to explore innovative solutions to drive your business forward.

SVP Global Compliance, Basware  Markus is a seasoned global compliance expert with 25 years of hands-on experience in product, trade, and tax compliance. Serving as a trusted advisor to both governments and the private sector worldwide, he spearheads crucial digitization initiatives. Trained as an applied linguist, Markus excels in change management, emphasizing the human aspect often overlooked in IT projects. His mission is to empower individuals to embrace innovative and efficient approaches for ultimate success.
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