The dematerialization of the supplier invoice allows companies to optimize and automate their inbound supplier invoice processing (or e-invoicing). It is part of a broader accounting process, the “Purchase to Pay” or “P2P”(as opposed to the process “Order to Cash” – “O2C” for outbound billing or “e-billing”).

This type of process involves several departments in a company. It follows the evolution of the law – especially what is called “LME” (the Law on the Modernization of the Economy – Act No. 2008-776 of 4 August 2008).

Issues – The outsourcing of electronic invoicing, beyond the gain in productivity

Thanks to the latest European directives, we are seeing the democratization of electronic invoicing. An approach that makes use of technical solutions that however remains quite complex. This is why, despite the legal pressure, namely the obligation to send electronic invoices to the public sector by 2020 for all businesses, they are struggling to switch to electronic invoices on a large scale.

Companies can reap many benefits from outsourcing vendor invoice dematerialization and from the optimization of its processes. The first benefits are obviously financial, but this varies across organizations.

DIAGRAM OF SUPPLIER INVOICES DIGITALIZATION
The first way of dematerialization, that we could call ‘simple’ (where invoices are scanned without workflow) reduces the cost of paper invoice processing by 20 to 30%. In some cases, the transition to digital (outsourcing, workflow and reconciliations) enables the further reduction of costs; we measured reductions of 50% to 60%. Other advantages were observed and measured during the implementation of projects such as:

  • The reduction of the administrative burden of the company that will centralize its solution (reductions of up to 50%),
  • The acceleration of the approval cycle by automating the reconciliation of purchase order/invoice (up to 30 to 40% optimization),
  • Reducing delays, in response to the requirements of French law, reducing late payment and process reliability (to meet payment requirements within 40 days).

The process, from supplier selection, purchase order to payment

In trying to describe the routing process of the vendor invoice, we’ll find the following main steps:

  • The process starts with the suppliers selection,
  • It follows a purchase request to the selected supplier, who for more and more companies uses a validation through a workflow tool that we find in several steps of the overall process,
  • Following the purchase approval, a purchase order is created, called “PO – Purchase Order”, where it is important to materialize by sending the order to the supplier in paper and/or digital,
  • The supplier provides the service and sends its invoice,
  • Reconciliation of the couple “order/invoice” is done with a number of business rules.
  • The update of the client ERP (enterprise management tool) can be done either synchronously or asynchronously.

As for French law (called LME), it imposes exchange mechanisms to streamline the relationship between the customer and the supplier. The dematerialization of the supplier invoice (e-invoicing) is one of the consequences.