Potential E-Invoicing Barriers and How to Overcome Them

26 December 2019

While the global e-invoicing market is on a growth path, the adoption of e-invoices isn’t without challenges.

This post takes a closer look at possible reasons organizations and businesses are reluctant to adopt e-invoicing and how to inspire them to implement and use e-invoices.

Even though many businesses and organizations know the benefits of ditching paper invoices, some still struggle to determine the best strategy to transition out of the practice. In fact, as many as 61 percent of invoices are still paper-based.

The Misguided Perception That E-invoicing is Complex

Most businesses and companies believe paper invoices are easy and straightforward to use. Still, invoicing has several elements that can make do with automation to increase the speed of transactions.

A study on payments and remittances established that delayed payment is a common problem for suppliers using paper invoices.

Contrary to the notion that paper invoices are easy to use, they’re tedious to process and are prone to human errors, leading to delayed payments.

On the other hand, E-invoices can be sent, reviewed, and approved relatively fast, resulting in faster payments and fewer errors. These benefits far outweigh the perceived complexity of adoption and implementation of an electronic invoicing solution.

Businesses Failure to Fully Embrace the Idea of e-Invoicing

To deliver a paper invoice, all a business has to do is send the payment request either by email or postal service.

But, to send an e-invoice, the supplier and the customer must use compatible ERP systems. In essence, this means that both trading partners must take steps to ensure their accounting systems’ compatibility.

Sure, onboarding for either side can be tiring, but with an e-invoicing solution provider by your side, the integration process can be a lot easier and quicker.

Besides, businesses processing a small number of invoices can leverage an invoice generator to enter relevant information without complex implementation.

If businesses can take time to learn what it takes to integrate an e-invoicing solution into their ERP systems, they’d realize that onboarding isn’t tedious or time-consuming.

The View that e-Invoicing is an Added Expense

Indeed, businesses can quickly send paper invoices via the postal service or email. Placing a supplier invoice in an envelope and adding postage can easily pass for a non-expense.

But, what happens when you send hundreds or thousands of paper invoices per year? Of course, that translates to real money.

While you’ll incur some cost to submit an electronic invoice, you’ll save substantial amounts of money in the long run. Plus, most third-party solutions allow you to send a low volume of invoices for free.

Moreover, the payment speed with e-invoicing allows you to nurture a healthier relationship with your trading partners.

When you put all of that into consideration, implementing e-invoicing in your business doesn’t translate into an extra cost. If anything, sending e-invoices allows your business to save money.

Lack of Incentives for Businesses to Adopt e-Invoicing

Countries such as Singapore have successfully implemented nationwide e-invoicing initiatives thanks to the $200 e-invoicing registration grant.

Other nations like the United Kingdom have made it mandatory for suppliers to send government payment requests via e-invoicing.

In most countries, however, there are zero incentives for organizations to adopt electronic invoices. The ripple effect is that companies and businesses in these nations have no urge to implement e-invoicing. In fact, many enterprises are not even aware of the benefits of partnering with an e-invoice solution.

Ambiguous Legal Requirements

While many countries are encouraging the use of e-invoices, the entire e-invoicing phenomenon is still at its infant stage.

As a result, most nations still have unclear or confusing legal frameworks to control the implementation of e-invoices.

Even in countries where the law is clear, most business owners aren’t fully conversant with what they should do to ensure they comply with regulations when sending or receiving e-invoices.

On top of that, there’s a lack of transparency about the e-invoicing solutions available in the market. As a result, organizations aren’t sure of the best electronic invoicing offering for their business model;

Trading Partners not Supporting Electronic Invoicing

Your trading partner’s accounting system must support electronic invoicing for you to send them e-invoices.

In other words, you must deal with a business or organization that supports e-invoicing to exchange e-invoices.

While there’s a high chance that your trading partner already supports e-invoicing, there’s always a likelihood of encountering one that doesn’t, forcing you to go the paper-based invoice way.

And then there’s the possibility of trading partners not using the same e-invoice formats.

Lack of Budget

Sure, the upfront cost of integrating an e-invoicing solution into an ERP can be too high for small businesses on a tight budget.

Even though some small and medium-sized businesses would want to implement electronic invoicing, the high initial and follow-up costs lock them out.

Some organizations don’t even have an ERP system, while others find the investment required to upgrade their accounting systems to way beyond their budgetary allocations.

Possible Ways to Overcome

these e-Invoicing Barriers

Reduce the Complexity of
Adopting e-Invoices

Authorities and vendors should introduce faster onboarding methods to deal with the “complexity” associated with implementing electronic invoicing. The supplier or business that wants to adopt e-invoices should be able to do so in a few clicks without going through a lengthy bureaucratic process.

On top of that, solution providers should avoid sharing confusing or conflicting information about onboarding and the functionality of electronic invoicing.

That way, businesses can shift to e-invoices without feeling they’re making their accounting processes more complicated.

Provide Information to the Mass Market

There’s still a lot of misinformation about e-invoicing out there, and it’s not surprising that many businesses still believe that paper invoices are easier and faster to use.

Industry players and authorities can change this, though. Some ways to ensure that the correct information and benefits of using electronic invoices get to the public include events and roadshows.

Further, countries such as the United Kingdom, Australia, and Canada can leverage their information portals to deliver the message. That would also increase transparency about the various solutions available on the market.

Besides, market analysts can help increase transparency with their publications. Solution providers can embark on vigorous marketing campaigns to create public e-invoicing awareness.

Create Incentives to Encourage Business
to Adopt e-Invoicing

Implementing new policies works better with incentives. One way authorities can encourage organizations to take up e-invoices is to offer a tax credit. Or, promise faster payments if a supplier submits an invoice electronically.

Governments can also issue a grant to help businesses cater to the initial high cost of implementing e-invoicing – the Singaporean way.

Standardize to Cut Costs

Since sending e-invoices is cheaper than other methods, it makes perfect sense to standardize electronic invoicing and improve interoperability to reduce resistance.

Even so, providers and authorities need to understand that capabilities and e-invoicing requirements differ from one business to another. If the invoice recipients or providers can support several invoice formats and any-to-any data formatting, acceptance by companies could increase significantly.

Use Third-Party Providers to Cut Costs

Sure, developing an in-house e-invoicing framework can be costly. But, businesses and organizations can opt for certified access point providers to connect them to e-invoicing networks such as PEPPOL.

E-invoicing software is affordable and easy to manage. Besides, most providers will upgrade your ERP system to support e-invoices without leaving a hole in your budget.

Sensitive Businesses About the ROI

Most businesses believe investing in an e-invoicing system will not bring in a positive ROI. Again, authorities and providers can change this perception by providing publicly available tools and ROI calculators.

The idea is to show business owners who want to implement electronic invoicing that there will be a good ROI in a couple of minutes.

The bottom line

E-invoicing is the future of payments.

Despite the barriers highlighted above, businesses are implementing the use of e-invoices already and reaping the benefits.

With the mandatory introduction of e-invoicing in many countries worldwide, it is only a matter of time before everybody follows suit and adopts e-invoices.

Meanwhile, governments and providers can find ways to address e-invoicing barriers once and for all. That way, global adoption of electronic invoicing can happen sooner.

If you want to implement e-invoicing for your business, contact Unimaze support today to book a free consultation session with one of our e-invoicing experts.

Related content

19 April 2023 | Article

Electronic Invoicing in Belgium

28 March 2023 | Article

E-Invoicing in Iceland

6 August 2023 | Article

Electronic Invoice Approval Software