Understanding the trend toward e-invoicing networks.(selected topic)

As electronic invoicing grows both in sophistication and customer adoption, credit managers need to be aware of the technological advancements taking place and better understand what e-invoicing is becoming, compared to what it has been in the recent past.

E-invoicing is not a new technology. It has been around in some form for more than two decades. Electronic Data Interchange (EDI) was the first real e-invoicing technology, and is still around, used primarily between major trading partners. But since the advent of fax machines, scanners and email, customers and suppliers have been trying to find a better method of invoice submission.

Many suppliers and customers considered themselves to be using e-invoicing if they used email to send invoices, or if the customer scanned a paper invoice upon receipt for internal processing. But evolving technology has brought a change in the way electronic invoicing is defined. IOMA, the Institute of Management Accountants, uses this definition:

 
   Sending and receiving invoices electronically, not 
   fax, not email, not scanned images, but in a 
   machine-readable format, created by an accounts 
   receivable system and accepted by an accounts 
   payable system. The transmission of the e-invoice 
   could occur through a variety of methods, 
   including EDI or a hosted network service. 

The point of true e-invoicing today is that the invoice never sees paper, from the supplier's submission all the way through to payment. Customers who make their payments to suppliers electronically complete the paperless process, since even the final step, the paper check, is eliminated.

The Customer's Benefits

The objectives from the customer's perspective are streamlined accounts payable processes for greater efficiency, cost savings, cash flow control and often an integration of the AP department with other corporate departments, such as procurement and treasury. Customers, from Fortune 500 companies down to mid-market organizations and government agencies, are quickly embracing e-invoicing. In the process, they are encouraging--and often insisting or demanding--that suppliers participate.