Over the past several years companies in Asia, as well as other regions, have come under increasing pressure to reduce costs and increase efficiency. Companies have used everything from better cash management to automation
One of the large costs in the accounts receivable (A/R) area for many companies is sending invoices. The cost of people, paper, postage, etc builds up quickly. Both billers and payers can benefit if invoices become electronic, since the supplier spends less sending the invoices and often gets paid faster, while the purchaser can take advantage of discounts for early payments and can also reduce costs, since fewer staff may be needed to make payments.
Research by Paystream showed that approvals went from 23 days to five days when companies started using electronic invoicing (e-invoicing), for example, so they could more easily take advantage of early payment discounts. Earlier this year, ING estimated on gtnews that moving from paper to e-invoices in Europe could generate savings of around €240bn over a six-year period, resulting in shorter payment delays and fewer errors, as well as reduced printing and postage costs, and Asia too could realise significant savings from e-invoicing.
What’s somewhat surprising, then, is how few companies in the Asia-Pacific region use e-invoicing.
As e-documents developer Striata said recently, “adoption rates for going paperless are still very low and [bankers] place the blame on low internet penetration.” The low adoption rate also means that “some banks are postponing electronic billing (e-billing) implementation until there is a clear shift in the market towards paperless initiatives.”
Several trends could gradually speed up the adoption of e-invoicing in Asia.
First, further cost pressure in the wake of an increasingly uncertain economy could compel companies to look again at opportunities to reduce costs further. With the multitude of benefits from e-invoicing, automation of invoices is a natural target.
Second, companies need more control over their financial supply chain. E-invoicing can improve efficiency and obtain better information about their invoices as well as payments. The increasing need for better data could be a catalyst.
And finally, government initiatives may push it along in some countries. Automation software company Basware says that there are four stages of e-invoicing: from offering the service and then recognising it’s not widely used, to larger corporates pushing e-invoicing as soon as legislation permits it and then the public sector initiating a breakthrough. “E-invoicing in B2B [business-to-business] is not legally permitted in most markets,” it says, so markets other than Hong Kong, Singapore, South Korea and Taiwan are still just in the stage of offering bills on the website.
What’s happening in a market like Singapore could be an example for other markets. The government’s electronic payments (e-payments) initiative means that an increasing number of companies are moving towards electronic invoices. And if they have to do it for government, they might as well do it for their corporate customers too. E-invoicing could also increase in other markets as more governments follow the lead of these early adopters.
While it may still take significant time for large numbers of companies in Asia to move to e-invoicing, more seem to be recognising the benefits of e-invoicing and new vendor product launches to support e-invoicing seem to have become more frequent. While the tipping point to start a flood towards e-invoicing does not seem to have happened in Asia yet, a confluence of factors could move e-invoicing forward faster before long.
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