Business leadership increasingly require support from IT if they are to meet their strategic objectives. CFOs and CIO’s should work especially closely together now electronic invoicing is becoming a mainstream financial activity and global invoice volumes have seen an increase of 20 per cent in the last year alone.
As e-invoicing gains ever greater importance for businesses to maintain an efficient supply chain, CFOs are being increasingly called upon to manage information and technology that would normally have been reserved for the CIO.
As these responsibilities collide, how can CFOs work with CIOs and IT to ensure that Finance has the right electronic invoicing system in place for the benefit of the entire business?
Electronic invoicing offers multiple cost savings and process efficiencies for Payables, Receivables and Treasury teams and is firmly on the Finance team’s agenda. But in many cases, the Finance department is unaware of other electronic transactions elsewhere within the business. Electronic Data Interchange (EDI) has been a staple of business-to-business (B2B) transactions for over 30 years, but when it comes to electronic invoicing, this proven model seems to be overlooked by Finance.
Successful CIOs are embracing the opportunity and working closely with their CFOs. EDI is a popular method for companies to manage electronic business transactions with suppliers and customers. Many companies have conducted e-invoicing via EDI for years, however, now they have the opportunity to include country-specific tax compliance rules and work with more of their customers and suppliers who have had little exposure to the same transactional technology.
A common misconception, that somehow e-Invoicing is different, has seen many invoicing initiatives circumvent supply chain and IT teams. With the continued burden of processing paper invoices, Finance teams have recently been taking matters into their own hands and driving their own electronic invoicing initiatives.
However, since 2001, VAT rules for e-invoicing have mapped out how paper can be removed from the invoicing process. In 2006, more EU rules were set out for validation, authenticity, integrity and archiving, meaning that EDI can provide a completely compliant framework for the invoicing process. The question of whether Finance teams need a separate e-invoicing framework is a valid one to ask. And, it would appear they don’t.
IT must continue to innovate in supply chain management and it is up to the CIO to ensure their CFO is fully aware of their company’s B2B capabilities. Modern EDI mirrors what is thought of as ‘e-Invoicing’, providing similar functionality through web-forms and community portals while retaining its core integration strengths.
It is cost-effective and can be scaled starting with just suppliers submitting invoices online via to enterprise-level integration. Most B2B e-commerce initiatives reflect the truly global nature of companies today, working across multiple geographic and legislative boundaries. Why would the CFO engage in an introspective initiative if they were made aware of the capabilities of its own supply chain team?
B2B e-commerce (and EDI) is a mature, secure data processing concept and is an inexpensive method of B2B communication that can handle large volumes of automated information. More importantly, many finance teams are already involved in electronic purchase requests and purchase order processes so why not e-invoices in the same way?
CIOs and CFOs need to start talking to discuss the true benefits of existing B2B capabilities and transaction management. The IT department especially, can take the opportunity to demonstrate its own value within the business and be more vocal in conveying how CFOs can harness an e-invoicing programme. B2B and EDI are already flourishing in other areas of the supply chain and collaboration now needs to start between the two so that these benefits can be realised where they are needed and fast.