The Evolution of Invoicing: from Envelopes to Email, to EDI
There’s no doubt about it, we live in changing times.
Unarguably, the biggest driver for change, in recent years, has been the need to meet the isolation and social distancing requirements relating to the coronavirus (COVID-19) pandemic.
Businesses have been forced to rapidly accept decentralized working spaces, unmanned offices, and staff availability challenges, against the backdrop of diminished demand, market uncertainty, and broken supply chains.
But life goes on, and businesses adapt and find a way. Technological solutions are deployed to meet the new demands and quickly become the new norm.
Cash flow is the lifeblood of any business, and invoicing (both AR and AP sides of the equation) is the pump that keeps it moving. Businesses need to adapt fast to the new capabilities of technology. Electronic invoicing has proved to be a major enabler for this change.
The business case for both sending and receiving invoices electronically is already well established. Savings of €6.60 for every invoice delivered and €11.20 for every invoice received are not unrealistic (see the Billentis Business Case for e-Invoicing / e-Billing for more detail). This has driven increasing numbers of businesses to adopt e-invoicing and convert customers to this technology as the default choice.
The majority of invoices sent electronically are either emails with PDF attachments, or emails with links to view invoices online. PDF attachments are often little more than an electronic version of what previously would have been printed and posted. An evolution of sorts, but still short on many of the benefits of full-blown e-invoicing.
When invoices are emailed as PDF attachments, they often need to be rekeyed into AP platforms. Frequently, the onus is passed to the supplier for this task, in order to be paid in good time.
Any manual copy-paste or rekeying comes with the concomitant risk of human error. There’s also a time component to consider.
This is perhaps why many businesses, and indeed government agencies, look to the paradigm of EDI, electronic data interchange, to facilitate invoice delivery and processing.
Electronic data interchange (EDI) is pure machine-to-machine communication. Documents, such as invoices, sent this way can be parsed and processed automatically, electronically, with no fear of data-entry error or lost delivery.
As is the case from many early technology developments, EDI’s routes can be traced back to military data exchanges just after the close of the Second World War. Specifically, logistical challenges in the 1948 Berlin airlift. These developments later shaped the first TDCC (Transportation Data Coordinating Committee) standards in the US, leading to the development of EDI for Freight Control Systems. An early example can be found in the London Airport Cargo EDP Scheme (LACES) at Heathrow Airport, London, UK, in 1971.
EDI really started to grow in use in the 1980s, resolving problems pertaining to maritime traffic and associated Customs processes. With the growth in industry and business logistics, around this time, it wasn’t long before the larger, computer-equipped, businesses of the day saw the value in its commercial application.
Today, EDI solutions exist for all sizes of companies, from large multinationals to small and medium-sized enterprises (SMEs). With the explosion in business data, EDI solutions are well suited to facilitating the high-volume, high-speed, computer-to-computer transactions and information flow prevalent in today’s business arena.
Traditional solutions have been complex, expensive, and limited, with few output format options. As demand for and acceptance of EDI has grown, associated solutions have become broader.
Print and Post Invoice Workflow
Email Invoice Workflow
EDI Invoice Workflow
Mandatory EDI for B2G Transactions
EDI is so effective for e-invoicing, it is fast becoming best practice. Since 2014, EDI invoicing has been mandatory for all business-to-government (B2G) transactions in Italy. Germany is set to follow, with plans to require all B2G invoices to be placed via a PEPPOL gateway from November 2020.
The Italian B2G e-invoicing system requires invoices to be delivered in the FatturaPA XML format and delivered through connection with the SdI (Sistema di Interscambio) system. International businesses, without a base in Italy and wanting to do business with Italian government agencies, need to work through third parties to make this connection.
Belgium, Portugal, the Netherlands, and France all have mandatory B2G e-invoicing requirements in place now, too. You can find more details of these here.
How Can Corcentric Help Support your EDI Needs?
Electronic data interchange is at the heart of the Corcentric platform. Even invoices sent as PDFs or printed and posted invoices via require data to be pulled from ERP and associated client-side platforms, transformed into invoices, and then delivered according to the specific requirements set for each account.
Consequently, it’s not a great leap to ensure each invoice is formatted to a specific EDI requirement and delivered accordingly. Indeed, the Corcentric platform connects with a broad range of value-added networks in such a manner – including Tungsten, Ariba, and Tradeshift.
In the case of meeting the requirements for B2G invoicing delivery in Italy, Corcentric connects through a local partner interface (ticking the box of being an Italian-based business) and then into the SdI system. This is all done at the speed of electronic data transfer – securely encrypted and error-checked for assured delivery.