To maximize ROI on your e-invoicing investment, ideally, you want as many suppliers as possible onboarding to your e-invoicing platform and sending invoices electronically. However, as we’ve seen over the years and explore in further detail at the “sharepace” hub, there are a number of factors that will influence the success of your e-invoicing onboarding rates. A crucial consideration is whether or not to mandate e-invoicing and how you communicate your policy to your suppliers.
What are the risks of having a mandatory e-invoicing message?
Some organizations may feel they have no choice but to mandate e-invoicing if they want to make progress on their e-invoicing project and see ROI as quickly as possible. But could this put the business relationship with your suppliers in jeopardy?
It will be more difficult to mandate e-invoicing for suppliers with a more powerful bargaining position unless they can see the benefits for their business. So before you send your messages think about how you can tailor communications to emphasize the benefits of e-invoicing particular to their business. For instance, if you’re dealing with a major supermarket, you might want to emphasize that e-invoicing means faster processing of invoices, meaning stock can be on shelves quicker and ready to be sold sooner.
Considering benefits beyond cost savings are still a key factor in e-invoicing negotiations with your suppliers, especially given the large financial investment they may have to make to implement the necessary technology.
What is the cost of not having a mandatory message?
Some organizations vary their e-invoicing policies depending on the supplier. For suppliers without the technological or economic resources to immediately onboard to an e-invoicing platform, some organizations might offer the option to send invoices via non-electronic formats. But at the very least you want to encourage e-invoicing as the preferred method, again emphasizing how it will be beneficial to their particular operations. Failure to encourage e-invoicing with your suppliers could slow down ROI on the investment and make processes less efficient and effective.
Which suppliers can you afford to have a mandatory message with?
Following the 20/80 rule (i.e. where 20% of your suppliers provide 80% of your invoices), there are some categories of spend where it just makes more sense to use e-invoicing.
By strategically segmenting your supplier base and rolling out your mandated approach in stages, you can slice up a large obstacle into bite-size chunks. Using this approach, it’s possible to roll out e-invoicing within a relatively short space of time, setting realistic deadlines by dealing with issues specific to the type of supplier in each segment.
Your high-volume suppliers will be the most obvious category of suppliers to first approach with an e-invoicing project, as the business case for them will level out any financial investment they have to make in implementation. The more they are reliant on your company for business, the less likely they will want to risk this.