How E-Invoicing Can Help You Keep and Grow Customer Accounts
James Tucker, Global Director, Ariba Network and Finance Solutions Marketing
When it comes to seller priorities, cementing and expanding customer relationships tops the list. And replacing paper billing with e-invoicing is one of the best—and easiest—ways to do it. Why? Because e-invoicing not only saves your customers (and you) time and money by eliminating errors and streamlining the approval process, it also opens the door to a host of other mutual benefits, enabling real-time visibility into invoice and payment status, faster settlement, control over early payment discounts, improved liquidity and cash flow management, and detailed remittance advice to simplify payment reconciliation.
Better yet, you can begin e-invoicing by following just a few simple steps, so you can reap these benefits right away. Here are some FAQs to help you get started.
Q: What kind of seller should use e-invoicing?
A: Every kind. Even if you’re a small company with limited IT resources, you can take advantage of basic e-invoicing solutions with just a computer and access to the internet through a web browser. Ariba offers multiple e-invoicing options that can meet the needs of any seller, whether you only want to dip your toe in the water or put an advanced solution in place.
Q: What types of e-invoicing are available, and how do I choose?
A: While your customers will likely weigh in on the approach you use, the following overview can help inform your decisions. (Note that these are guidelines rather than rules, and you may opt to use a mix of methods depending on your business needs.)
- Direct entry. If you don’t receive online POs from your customers or if you send fewer than 50 invoices per year, creating direct entry invoices may work well for you. You can do this by logging into your Ariba® Network account and clicking “create non-PO invoice.” (If you’re strictly an Ariba Discovery™ user, you can easily activate your Ariba Network account by logging into Ariba Discovery and clicking the “Orders & Invoices” tab.) By accepting your invoice the customer establishes an active trading relationship with you, enabling you to take advantage of other Ariba Network resources as well.
- CSV upload.
If you send fewer than 100 invoices annually, CSV upload offers another simple yet efficient e-invoicing option. For this method, you enter invoice data in a CSV (comma-separated value) file format such as Excel following a predefined template. You then import the file to the Ariba Network, which converts it to cXML and immediately lets you know if it is accepted. If not, you receive a message detailing the reason for the rejection, so you can fix the problem and resubmit the invoice right away.
- “Flipping” a PO, contract, or catalog. PO-Flip® offers a more advanced, yet still easy-to-use option that’s ideal if you receive orders through the Ariba Network and send 50 to 250 invoices monthly. With this method, you “flip” data directly from an online PO to an invoice, which eliminates the need to manually enter data and helps ensure that your invoice is error-free. New contract invoicing features introduced in Ariba Network Release 12s3 will expand this capability to non-PO-based invoices as well, allowing you to flip terms and pricing from pre-approved contracts and catalogs into e-invoices.
- Integrated. If you’re a higher-volume seller with hundreds of transactions annually, integrating your back-end system to your customers through the Ariba Network via EDI or cXML makes the most sense and offers the highest degree of e-invoicing efficiency. Once this method is set up, e-invoicing becomes truly touchless—creating straight-through electronic processing that enables your and your customers’ systems to interact
automatically without any manual handling (unless exceptions arise). Sellers at the Enterprise and Enterprise Plus level can take advantage of an Ariba Integration Connector, powered by Dell Boomi¹, to make integration faster and easier.
Q: Paper invoices are working fine for me. Why should I switch?
A: Seventy percent of companies recently surveyed by PayStream Advisors² either have adopted or are currently evaluating e-invoicing, and a steadily increasing number of buying organizations require it. By taking advantage of e-invoicing now, you’ll put yourself in a better position to capture market share from competitors who fail to act. And by saving your customers time and money, you’ll establish yourself as a seller partner who cares about their best interests, resulting in longer-lasting relationships and higher sales.
Q: What advantages does e-invoicing offer over paper invoices?
A: The manual data entry and handling required to create, mail, and route hard-copy invoices for approval consumes significant amounts of time while opening a Pandora’s box of errors and problems. If your invoice is rejected or misplaced, you often don’t know until terms have been reached and you call to find out why payment hasn’t arrived. Then it takes several more weeks before a corrected invoice can be sent and approved, delaying payment even longer. As GlaxoSmithKline buyer Al Barbee describes in this brief video, these problems disappear with e-invoicing, which automates and accelerates the entire process so you can:
- Say goodbye to manual data entry. E-invoice creation and submission take minutes instead of days, eliminating mistakes and saving time and money that can be spent on more strategic activities instead. The chart below illustrates the gains you can expect:
- Instantly correct invoice problems at the point of submission. The Ariba Network contains over 85 business rules to validate e-invoices—including all header fields, line item details, quantity, unit amounts, and VAT rules—and automates activities such as account coding and contract matching. As seller John D’Aquila of SHI International explains in this video clip (beginning at 1:20), this means that instead of waiting days or weeks to discover whether your invoice meets customer requirements, you can instantly identify and correct any problems. As a result, your invoices are approved and paid much faster.
- Share visibility with customers into invoice and payment status. Through the Ariba Network, you and your customer can both clearly see when your e-invoice has been received, accepted, routed for approval, approved, and scheduled for payment. You receive email alerts when actions occur, and there’s no disagreement about what needs to happen next. This makes for more collaborative, stress-free relationships—enhancing customer satisfaction so you can continue to grow existing business.
- Manage cash flow better. Visibility into when e-invoices will be paid makes it far easier for you to manage cash flow, and detailed remittances sent with payments enable quick reconciliation within your general ledger. E-invoicing also gives you access to other valuable automated cash management resources, such as dynamic discounting, which lets you negotiate faster payment in exchange for a discount; Ariba Receivables Financing, which gives you immediate access to cash by auctioning payables to third parties at discounted rates; a handy cash optimizer to help you choose the best invoices for payment acceleration; and much more. These tools enable you to obtain needed funds at lower rates than traditional resources offer without incurring debt.
Q: Won’t I get the same benefits if I scan my paper invoices and submit them over the Ariba Network?
A: No. While this practice does offer some advantages—for example, giving you visibility into invoice and payment status along with access to early payment discounts—a scanned paper document is still a static file, which means the information in it can’t be consumed electronically. That means you’ll miss out on the instant validation, error correction at the point of invoice submission, fast reconciliation, and significantly shorter cycle times true e-invoicing provides.
Q: How do I know where to start?
A: The best starting point depends on your current situation and goals. For example:
- If you’re not yet receiving POs through the Ariba Network or want to begin transacting with non-Ariba customers online, creating a non-PO-based invoice via direct entry is a good place to begin.
- If you don’t have an Ariba Network account—or don’t know whether you have one—you’ll need to create one or accept your existing account. You can contact Ariba Customer Support if you need assistance.
- If you’re already receiving orders on the Ariba Network and your customers have enabled invoice automation, you can simply start using it. If they haven’t, you can proactively request that they activate it by telling them you’d like to submit invoices electronically—and educating them about the extensive benefits you’ll both realize by doing so.
² “Electronic Invoice Management: Going with the (Work)flow,” PayStream Advisors, Inc., 2012.
³ “Benchmarks: Invoice Exception Processing and Error Rates,” The Accounts Payable Network, 2010.
This article is part of the current issue of Ariba Supply Lines. Ariba Supply Lines is a quarterly newsletter that provides valuable tips, best practices, and the latest thinking to take your online business relationships with your buying customers to the next level.
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