Return to Sender: E-invoicing is Paying Off in the Nordics

Electronic invoicing (e-invoicing) has been around in the Nordic countries for around 10 years. However, it is during the past two years that the growth has really taken off. UPM and Kone are impressive examples of large corporations that have publicly announced that they will no longer accept paper from their suppliers. And they are accompanied by Kingdom of Denmark, State of Finland and municipalities in Sweden. The volume of received B2C e-invoices in Nordea Bank Finland grew 1000% in 2008. In 2009, the total volume of e-invoices in Nordea grew 140%. So far in 2010, we can see intensification as new parties are joining the scheme every day. At national level, the increase is now between 10-20 % every month in Finland. So it is easy to agree with the results of the gtnews Cash Management Survey 2009 – accounts receivable are also in the limelight in the Nordic region. The challenging process restructuring efforts are starting to pay off for our corporate customers: better usage of working capital, process efficiency improvements, cost savings and improved carbon footprint are becoming visible and are appreciated by both customers and shareholders.

Text Message Alerts Make it Easier for Customers

The general acceptance of e-invoicing is also higher than ever, in both business-to-business (B2B) and business-to-consumer (B2C) business. Financial institutions have been improving the usability of e-invoices, especially for consumers. For example, in some cases it is now possible to approve an e-invoice by replying to a SMS. The financial community is talking about acceptance for the single euro payments area (SEPA) Direct Debit (SDD) – but e-invoicing is easier for many consumers to accept as it improves the feeling of control.

Environmental and sustainability aspects are becoming more important to a large number of corporations and consumers. All means to reduce the carbon footprint are becoming more popular and e-invoicing is a benefit here as it significantly reduces paper consumption .

Streamlined Processes on the Rise

The birth of SEPA has created a base for new global standards that are being implemented by both corporations and financial institutions. The new standards have made it possible to streamline the entire procure-to-pay (P2P) and collection processes because global messages contain necessary information for payment, taxation, book-keeping and reconciliation purposes in commonly supported format. This creates opportunities to automate the whole financial value chain throughout the world – and it is starting from northern Europe. Imagine a life without reconciliation tasks: either being fully automated or being covered by your service provider. Financial institutions and other service providers are expanding knowledge they have gained in handling manual transactions to enhance the entire process. This is what large corporations have been looking for all along and are now also expecting from their financial services providers.

Automation: Also for Small Corporates

The benefits of automation are too important to be left only for the large corporations to harvest and enjoy. The theme of a ‘real-time economy’ is a hot topic in the Nordic countries. Helsinki School of Economics has, together with key service providers, the state treasury and financial institutions, created a community to enhance automation of all accounting processes. Unlike the previous wave, this one starts with SMEs and benefits everyone. The core idea is simple: automating the sending and approval of e-invoices and attaching them to an electronic account statement with relevant information. This is essentially real-time accounting and serves most of the daily business needs of the average small company.

Solutions built around e-invoicing enable immediate cash flow forecasting, which is a burdensome task for most SMEs. No major investment is required to free up time, to reduce risk and to gain better control and connect the financial and business processes. The Real Time Economy Community, an online community, is now focusing on fully integrated accounting and has proposed changes to VAT reporting. Imagine that you could pay your VAT after you have actually been paid yourself, and that you could skip the reporting as there is basically only one simple way to do it and hence it can be automated. Why should anyone spend time with something that really does not add value to the core business?

Collaboration Needed to Make Full Use of SEPA

The Real Time Economy Community is an example of how large scale change requires co-operation throughout the industry: corporations, financial institutions, cross industries and with universities, authorities and other interest groups. None of us can do this alone. A holistic view to a topic can generate solutions which would not stem up within one industry, like automating and postponing VAT payments and reporting. This kind of focus on really value-adding services instead of the basic payment and collections services enables to take the full benefit of SEPA infrastructural investments.

The Market for Mobile Financial Services is Maturing

Finally, the mobile financial services area is picking up as well. There are several sector-wide initiatives in the Nordic countries aiming at creating value-adding mobile services. Over the years, many solutions have been tried, but none have actually been successful. However, the thinking around mobility has matured. Many new services are being built upon e-invoicing – such as the aforementioned additionin Finland of relevant alerts. The general acceptance of mobile functionalities has increased. Ten years ago it was out of the question for corporations to allow payment confirmation by mobile phone. Today, many managers work remotely and it is simply not possible to travel to the office to approve an invoice, or the opportunity cost would be too high to bear. The best mobile financial services are also built in cooperation with the key players. The door is open for everyone – for large-scale benefits and improved business.


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