Corporate E Invoicing & Opportunities For Banks - E Invoicing Resource

As one of the most established and respected analysts on e-invoicing, we were keen to catch up with Bruno Koch of Billentis to find out his current thoughts on the European E-invoicing marketplace. We asked him two sets of questions; the first on corporate e-invoicing in Europe and the second on e-invoicing opportunities for banks. Bruno was interviewed exclusively for our e-newsletter EIPP Insights.  Read this article as a PDF.


Part One: Corporate E-Invoicing in Europe

Question 1: E-invoicing adoption is experiencing rapid growth all over Europe. Why?

Bruno: The market has become quite mature. Enterprises better understand the benefits they can have with e-invoicing.  Government initiatives on an EU level and in national markets have improved the confidence in this innovative channel.  In addition, an increasing number of trading parties do expect that paper invoices will be replaced by electronic and automated methods. The recent economic crisis was also an enabler for all projects with the potential to reduce costs and to improve working capital in businesses. This development is in line with a rich solution offering for any kind of user demand, regardless of size or technical ability. As a market analyst for 11 years, it is a pleasure seeing numerous new user-friendly and efficient market offerings especially for SMEs. The combination of all these components is strongly accelerating the market growth.

Question 2: Greece has just mandated the use e-invoicing nationally. Do you see other EU member states following?

Bruno: I see two groups of countries pushing or mandating the use of e-invoicing. One group has the aim to reduce their own administrative cost for all inbound and outbound invoices to and from the public sector. Their countrywide initiative also has a very positive impact on increasing awareness and adoption of electronic exchange among the private sector. The objective of the other group is to increase the transparency around money streams and their own tax revenues. In this group are countries with very high external debt, increasing accumulated deficits and insufficient transparency around the money streams. Greece is a forerunner. Others in this group are Portugal, Italy, Ireland and Spain. The e-invoicing projects for the public sector in Italy and Spain were launched some years ago and are already very advanced in the implementation process. These countries do it mainly for reducing their own administrative costs. There are currently no indications that they would also oblige businesses to exchange invoices electronically outside the public sector, like Greece. Governments in some countries would like to supervise businesses in much more detail and near real-time. Electronic invoices are just one small instrument to achieve this objective. Other instruments are more efficient for them. In Greece, the pressure is high enough to use all instruments, including e-invoicing.

Question 3: Why do you think businesses should adopt e-invoicing?

Bruno: Cost savings are still the main driver for adopting e-invoicing. But there are many other good reasons.  Quality improvement through direct communication and elimination of errors caused by manual handling is one.  Another is efficiency gains through optimized and automated processes.  Businesses can also benefit from better transparency about working capital and improved cash management

Question 4: What are the specific benefits for SMEs?

Bruno: There are many benefits for SMEs, these include customer retention – being able to fulfill the expectations of your trading parties; traceability, safety and certainty about delivery, and faster payment of invoices to reduce days sales outstanding.

Question 5: If you could give one piece of advice for a corporate starting an e-invoicing project, what would it be?

Bruno: Do it proactively and immediately! If corporate starts their own project, they can do it in a controlled manner. It is their decision when/how and which appropriate solution fits best with their requirements. If corporates just wait, they have an increased risk of being pushed into supporting an e-invoicing service defined by a trading partner.

Question 6: How do you think the e-invoicing landscape will develop over the next 2 years? 

Bruno: The market is developing very dynamically with strong annual growth rates around 40%. This will very likely also be the situation for the next 2 years. Half of all enterprises should be somehow affected by e-invoicing within this period.



Part Two: E-Invoicing Opportunities for Banks

Question 1: Do you think there is an opportunity for banks to provide e-invoicing services to their clients?

Bruno: Yes. The e-invoicing market is developing Top-Down. Large invoice issuers and recipients are increasingly pushing their mid-sized and smaller trading parties to send and receive invoices just in electronic format. Large businesses have more individual and complex requirements regarding ERP integration.  That’s why they are typically using service providers outside the banking community. The 23 million European SMEs represent the mass-market with demand for standardized and easy-to-use services. Banks are in an excellent position to address the SMEs as clients. They can offer an excellent Financial Value Chain for them.

Question 2: Are you seeing increasing volumes of e-invoices transacted through banks? If so, can you give some examples?

Bruno: In Europe, banks or service providers controlled by banks, process only 12-15% of total volume of e-invoices. I see mainly two reasons that they are lagging behind: a) Banks provide services mainly to the SME market but this segment is not mature in many countries at the moment, b) Banks have a tendency to over-investigate and discuss too much - instead of just doing it.  Nordic banks however are different and they have impressive growth rates in the consumer segment as well as for SMEs. Forerunners in the consumer segment are the banks in Norway followed by Sweden. Finnish banks are also ahead in their services to SMEs.

Question 3: All banks interoperate for payments transactions and banks also provide interfaces to every SME in Europe.  How can this infrastructure be leveraged to support e-invoicing?

Bruno: Banks have their own mechanisms to guarantee the integrity and authenticity of electronic messages. The schemes to ensure that this grew over decades. Unfortunately, today’s bank infrastructure and the used methods are not yet compliant with most national e-invoicing tax legislations in Europe. The new EU Directive amendments for equal treatment of paper and electronic invoices will significantly help the banks. It will allow service providers to process electronic invoices similar to payment transactions. But these amendments will be implemented into most national legislation not before end of 2012 (valid from January 1st 2013). Until then, banks should prepare the field and bring themselves into a good position. One part of it is to collaborate with operators and service providers such as Fundtech.


Biography

Bruno Koch Ing. HTL, EMBA HSG
CEO of BILLENTIS http://www.billentis.com

Bruno Koch was active as Management Consultant with PricewaterhouseCoopers for 8 years. Afterwards, he was in a management position during 4 years for Credit Suisse. From 1997 to 1999, he established the e-Invoicing service PayNet in the Swiss market. In 1999 he founded his own company BILLENTIS. In his main activity, he is an independent consultant. Among the more than 130 customers in 30 countries are several banks, service providers and large issuers and recipients of invoices. Bruno Koch is also a member in international working groups, market analyst, author of several publications, issuer of a market report and newsletter and organizer of the EXPP Summit – the leading European event for E-Invoicing.