E-Invoicing and E-Payments in Modern Procurement

E-invoicing and e-payments have become crucial components of modern procurement, revolutionising the way businesses handle financial transactions and manage their supply chains. These digital solutions offer numerous benefits that streamline processes, reduce costs and improve overall efficiency.

E-invoicing, or electronic invoicing, is the process of creating, sending and receiving invoices in a digital format. This method has gained significant traction in recent years due to its ability to enhance the traditional invoicing process.

Key Advantages of E-Invoicing

• Cost Reduction: By eliminating the need for paper, printing and postage, e-invoicing significantly reduces the costs associated with traditional invoicing methods. This cost-saving extends to both suppliers and buyers, making it a win-win solution.
• Increased Accuracy: E-invoicing eliminates the risk of human error associated with manual data entry. Invoices are created using specialised software, ensuring accuracy and reducing the likelihood of disputes or rejected invoices.
• Faster Processing and Payments: Electronic invoices are sent instantly to the buyer, accelerating the entire payment process. This speed not only improves cash flow for suppliers but also allows buyers to take advantage of early payment discounts.
• Enhanced Visibility and Control: E-invoicing provides real-time visibility into the status of invoices, allowing both suppliers and buyers to track transactions more effectively. This transparency leads to better cash flow management and more accurate financial forecasting.
• Improved Supplier Relationships: The streamlined process and faster payments facilitated by e-invoicing contribute to stronger supplier relationships. Suppliers appreciate the prompt payments and efficient communication, leading to increased loyalty and better collaboration.

Partnerships powering e-invoicing

The demand for e-invoicing is ever increasing, as seen with some prominent partnerships over the last 12 months. One such example is the collaboration between Deloitte and Basware, as both organisations look to enhance touchless invoice processing for their global customers.

The alliance combines accounts payable (AP) expertise to accelerate automation and financial transformation.

The duo are focused on tackling key challenges, opportunities and regulatory requirements in the finance domain. By combining Basware's strengths in AP automation and Deloitte's access to its network of finance, procurement and tax experts, both organisations aim to bring value to their customers.

Jason Kurtz, CEO at Basware, says: “This is a significant milestone for Basware and Deloitte to accelerate touchless invoice processing. CFOs are constantly grappling with manual AP processes that slow down teams and impact bottom-line profits.

“It's been exciting to collaborate with Deloitte over recent months and work towards a joint vision that helps companies save time and money when sending and receiving invoices while reducing compliance risk. Together, our technology and leadership in the AP space will unlock new levels of touchless invoice processing.”

CFO departments are seeing e-invoicing increasingly take priority, along with e-reporting requirements from local governments and tax authorities. Accounting teams must comply with specific legislation when sending and receiving electronic invoices. The new legislation will replace paper processes and reporting, as the EU and other regions trend towards a harmonised approach and centralised government databases to compare reported data.

Large enterprise finance teams process and pay thousands of invoices every week and they often face challenges relating to late payments to suppliers, duplicate invoices and even fraudulent payments.

Through the partnership, AP teams will have the potential to process invoices 80% faster, reducing the average invoice processing time from 10 days to less than one day.

Arian Kaandorp, Director at Deloitte Consulting, added: “Our clients are moving from automating task-specific processes to running autonomous finance operations.

“Partnering with Basware to combine our expertise in touchless invoice processing is an important step in increasing the adoption of e-invoicing. Through our alliance, we aim to support our clients with the technology-enabled transformation of their AP process while meeting the rising legislative e-invoicing requirements.”

Another prominent firm is GEP which has shown how vital a tool it is with its acquisition of OpusCapita, a leading provider of e-invoicing and procurement solutions. The move coombines GEP’s industry-leading procurement and supply chain software with the foremost e-invoicing and accounts payable automation solutions.

Subhash Makhija, CEO and co-founder, GEP, said: "OpusCapita is a perfect fit for GEP and vice versa, because it unites the foremost e-invoicing and AP automation solutions in the Nordic region with GEP SMART, the industry's leading AI-driven global procurement and supply chain platform and combines deep regional expertise and relationships into a robust customer base of global enterprises."

The Power of E-Payments

E-payments, or electronic payments, complement e-invoicing by providing a digital method for transferring funds. This system further enhances the efficiency of the procurement process.

Benefits of E-Payments

• Speed and Convenience: E-payments allow for near-instantaneous transfer of funds, eliminating delays associated with traditional payment methods like checks.
• Reduced Processing Costs: By automating the payment process, businesses can significantly reduce the costs associated with manual payment processing, including labour and materials.
• Enhanced Security: E-payment systems often incorporate advanced security measures, reducing the risk of fraud and unauthorised access to sensitive financial information.
• Improved Cash Flow Management: The speed and accuracy of e-payments allow businesses to manage their cash flow more effectively, making more informed financial decisions.

The growing demand

Finastra, a financial software company, reported Gen AI has catalysed a new wave of innovation in payments technology. Its State of the Nation survey found the number of decision-makers at financial institutions who had improved or deployed AI capabilities over the last 12 months has increased from 30% in 2022 to 37% in 2023 at a global level.

The potential use cases for Gen AI in payments are only growing. Finastra's EVP of Payments, Barry Rodrigues told FinTech Magazine how it also automates and improves processes: "For example, automating invoice-based payment initiation.

"Paper invoices and email attachments are still widely used by billers to get paid by their customers which typically involves typing bank transfer details from scratch, causing payment delays and errors.

"Powered by advanced Gen AI, solutions can automatically extract payment information from invoices, eliminating the need for manual data entry. Advanced machine learning algorithms are used to identify and correct errors in payment data.

"The solution automates many of the manual tasks involved in payment processing, such as matching invoices to payments and reconciling accounts."

Integration of E-Invoicing and E-Payments in Modern Procurement

The combination of e-invoicing and e-payments creates a powerful ecosystem that transforms the procurement process from end to end.

Streamlined Procure-to-Pay Cycle

By integrating e-invoicing and e-payments, businesses can create a seamless procure-to-pay cycle. This integration eliminates manual touchpoints, reduces errors and accelerates the entire process from purchase order to payment.

Data-Driven Decision Making

The digital nature of e-invoicing and e-payments generates a wealth of data that can be analysed to gain insights into spending patterns, supplier performance and overall procurement efficiency. This data-driven approach enables businesses to make more informed decisions and optimise their procurement strategies.

Improved Compliance and Auditability

E-invoicing and e-payments create a clear digital trail of all transactions, making it easier for businesses to comply with regulatory requirements and conduct audits. This transparency is particularly valuable in industries with strict compliance standards.

Enhanced Supplier Onboarding and Management

The adoption of e-invoicing and e-payments can simplify the process of onboarding new suppliers and managing existing relationships. These digital solutions often come with supplier portals that facilitate communication and document exchange, leading to more efficient supplier management.

The Sustainability of Using E-invoices

As payments technology moves into the future (as discussed with the emergence of blockchain technology), one need that payments providers will have to meet is the end-users' growing desire to adopt sustainable practices in their purchases.

According to Worldpay's recent Future Shoppers report, almost three-quarters (73%) of all consumers said they would likely be influenced by sustainability and the environment when deciding where to shop in the coming years.

Tracking the environmental impact of spend could, therefore, become a key consideration for payments providers in the future.

Gabriel de Montessus, Head of Global Enterprise at Worldpay, told FinTech Magazine: "Sustainable protocols in eco-friendly payments involve minimising the environmental impact of payment processes.

"This includes transitioning to renewable energy sources for transaction validation, reducing paper usage, promoting carbon offset initiatives and alternatives to first-use PVC plastic payment cards.

"The increased adoption of biodegradable cards, as well as digital and contactless payments, will ultimately lower resource consumption in comparison to cash and plastic cards."

What's more, payment software providers can also look to implement digital receipt options to drive down the use of paper by retailers.

"This is something acquirers like Worldpay can offer merchants – solutions for e-invoicing," Gabriel adds.

He concludes: "Collaboration across the industry to establish standardised eco-friendly practices and raising awareness among consumers about the environmental impact of their payment choices are crucial for fostering a sustainable payments ecosystem."

So, by adopting the latest technologies in payments and offering leading fraud prevention services, payments providers can work towards a consumer-friendly, sustainable future for payments.

The Future of E-Invoicing and E-Payments in Procurement

As technology continues to evolve, the future of e-invoicing and e-payments in procurement looks promising:

• Artificial Intelligence and Machine Learning: These technologies are expected to play a larger role in automating invoice processing, fraud detection and payment optimisation.
• Blockchain Technology: The use of blockchain in e-invoicing and e-payments could further enhance security and transparency, potentially revolutionising the way financial transactions are conducted in procurement.
• Global Standardisation: As more countries mandate e-invoicing, we can expect to see greater standardisation of formats and processes, facilitating cross-border transactions and global trade.

E-invoicing and e-payments are transforming modern procurement by offering significant benefits in terms of cost reduction, efficiency, accuracy and transparency. As these technologies continue to evolve and become more widespread, they will play an increasingly crucial role in shaping the future of procurement and supply chain management. Businesses that embrace these digital solutions will be well-positioned to gain a competitive edge in the rapidly changing landscape of global commerce.

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