Nov. 7, 2006

Many B2B companies that actively participate in EDI (electronic data interchange) might look at e-Invoicing and wonder, "So what?" But the fact of the matter is, there is a considerably large number of B2B trading partners that could potentially become very good prospects for e-Invoicing.

We spoke with nuBridges' Tiyash Bandyopadhyay, the company's director for its truExchange eBusiness Solutions about what e-Invoicing can bring for both B2B customers and their suppliers.

Actually, eInvoicing can fit in with existing EDI systems on both sides of the trading relationship, and can reduce the overall costs of doing business.

Q. What is the difference between eInvoicing and an EDI invoice?

A. Functionally, the 810 and the e-Invoice are the same thing. The big difference is in the implementation and integration that can be accomplished for smaller B2B trading partners.

Q. If an organization is already using EDI, why would it want to add yet another transaction type or another layer to their system?

A. That's the great thing of eInvoicing: it can be easily integrated on either side of the transaction, and then converted into an EDI transaction on the other side. For example, a large company that already has EDI in place can add trading partners to their system by accepting their e-Invoices. The e-Invoices arrive through the company's existing EDI system and can be processed along with the rest of the company's transactions, meaning there's no additional configuration steps or setup to worry about.

Q. What is the incentive for B2B organizations to implement eInvoicing?

A. For the end customer, the benefits are significant. First, we assume the customer has an EDI system that handles 80 percent of the business. But the remaining 20 arrives arrives as paper invoices, and that smaller volume requires much more time and energy to manage than the 80 percent that comes electronically. We estimate that processing costs for paper invoices are in the range of $15 to $20, and that only accounts for the initial processing. The final costs can go much higher when problems arise because of things like duplicate invoices, data entry errors, invoice/PO matching problems, and any number of other similar issues.

Q. And what about the suppliers?

A. Cost savings to suppliers can be even more significant, particularly because the vendor has a more urgent interest in getting paid. The initial cost of sending a paper invoice is not too bad, at between $2 and $6. But we estimate the total cost of handling the invoice to the point of payment is closer to $60 or $70 when follow up calls to the customer are factored in. These are necessary for resolving or sending duplicate invoices, resolving order discrepancies, and a variety of other issues. We expect that eInvoicing can reduce the cost to both customer and suppler by about 70 to 72 percent.

Q. What is involved in implementing eInvoices?

A. Overall implementation is probably the best part of eInvoicing. Unlike an EDI initiative, the customer can offer its vendors the option to send eInvoices at any time, and without a big deployment effort. As a whole, eInvoices can be generated directly from the supplier's existing accounting system and transmitted to the customer as an EDI transaction. We can supply the application interface for all the most popular accounting applications in use today. We are finding that customer organizations can offer the eInvoice option to their suppliers as an easy option. The suppliers don't have the same kind of technology investment requirement, learning curve, or maintenance requirements as they would to set up an EDI system. That makes it much more attractive to them.

Q. How are eInvoices delivered to the customer?

A. eInvoice transactions can be delivered using almost any electronic delivery method including FTP, AS2 or a VAN connection. The options are really the same as they are for EDI transactions.

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