The Evolution of E-invoicing

In the last two years, a lot of effort has been put into standardisation initiatives, such as launching electronic invoicing (e-invoicing) solutions to the mass market and creating awareness. Governments (in individual countries as well as at the European level) are strongly promoting e-invoicing and in the case of the Netherlands, the development of an inter-banking standard for e-invoicing to consumers. This standard, known as Digitale Nota, has been fully operational since October 2008 and the adoption rate is promising. Of course, it will develop much faster if Dutch banks heavily promote this new service, which will be the next step.

Half of the 30 billion invoices sent in Europe alone are business-to-business (B2B), half are business-to-consumer (B2C). In the B2C sector, high volume and low legal barriers in most European countries have allowed organisations to send consumer invoices electronically, either through their own website or through Internet banking channels, such as Standaard Digitale Nota, ZoomIT and PayNet, since 2001.

In the B2B market, large firms have started pushing their bigger suppliers to deliver e-invoices, and we are now in the phase of addressing the small and medium enterprise (SME) market. It is a large, high volume market, although currently fragmented. Standardisation is a big issue – and a key enabler – in this market segment. To address the SME market effectively, it is important for service providers or consolidators to have connections with the accounting software, such as Exact, used in these markets. Organisations in Europe, including in the Netherlands, are working on developing a standard for exchanging invoice information. In Europe as a whole, the standard for exchanging invoice information is UN/CEFACT, while the proposed Netherlands standard is UBL 2.0. These standards will converge in the future. European standardisation is also a main driver for cross-border e-invoicing together with the alignment of rules and regulations in the various countries. This is mainly related to the guarantee of integrity and authenticity of the e-invoice.

Removing the Barriers to Introducing E-invoicing

Governments are starting to take the lead in their countries to bring in e-invoicing and encourage other sectors to come on board. The Danish government is leading the way. In Denmark the phrase is ‘e-invoice or no invoice at all’: organisations doing business with the Danish government are forced to send their invoices electronically. This, of course, has had a big impact on the adoption of e-invoicing. In the Netherlands, almost all the barriers relating to compliance and tax were removed by the Ministry of Finance in February 2009, something that is sure to help the process there gather momentum. This domino effect is key to the eventual mass adoption of e-invoicing. But organisations should also take the lead in adopting this new technology. By dematerialising the purchase-to-pay (P2P) or order-to-cash (O2C) cycle, crucial information will be available more quickly and accessibly. This will lead to improvements in reporting, cash forecasting, working capital management and better pricing when concepts like dynamic discounting are applied.

And change in the industry is gathering pace. Last year, the European Commission asked PricewaterhouseCoopers (PwC) to investigate the removal of barriers to e-invoicing. Currently, you still need proof of the authenticity and integrity of the invoice, and it has to comply with all the tax and legal regulations in all European countries. PwC’s recommendations, still under discussion, would allow invoice senders to send invoices without any digital signature, and via Word, e-mail and other formats. This would, of course, make life easier and simpler for both invoice senders and recipients.

Naturally, the development of e-invoicing has seen some negative impacts of the global financial crisis. In banking, the current low-level inflation has had a negative impact on organisations’ investment in new initiatives. This lack of investment has inevitably slowed down the take-up of e-invoicing.

Benefits to Corporates and Their Clients

As well as reducing cost, e-invoicing is vital for improving process quality and speed. Currently, although the whole order process is automated, at the end the invoice is printed out and sent by mail to the other organisations where it is typed again into the administrative system. Straight-through processing (STP) with e-invoicing ensures there is no potential for human error.

E-invoicing is also a useful marketing tool. Because an invoice is one of the few documents that is read thoroughly by the recipient, the e-invoice is ideal for one-to-one marketing, a function that is currently undervalued. An invoice can be presented on the corporate website alongside specific, customer-targeted information. Electronic archiving, which is cheaper and more accessible than traditional archiving, is also a benefit, as is faster payment as a result of human error being eliminated.

Clients can also benefit from the increased efficiency to their invoicing process. When invoice information is loaded on their administrative system, as long as invoice and delivery are correct, payment can happen immediately. Electronic archiving is cheaper and more accessible then the traditional way of archiving. Once clients are aware of the new technology and the benefits it can bring, switching to the new system is quick and efficient.

Optimising the Financial Supply Chain

E-invoicing is a key way to achieve cost reduction at a time when companies are working hard to optimise their financial supply chain. This is especially true for organisations sending a large number of documents, who now have to examine their internal processes to unlock trapped cash in an organisation due to the scarcity and high price of credit. One of the key elements to optimising the financial supply chain is making data available electronically and, to do that, you need e-invoicing. So for firms, any cost or inconvenience of changing their process is outweighed by the benefits of cost reduction.

Looking to the Future

Consolidators and billing service providers are going to play a vital role in the development of e-invoicing technology in the near future. They are the organisations that will convert the different invoice format while there is still no European standard (which will probably be developed in the next seven years).

New players, such as card companies, are also likely to become dominant players. In optimising the financial supply chain, e-invoicing is all about getting information from A to B within a chain of different processes. Those processes are, in most cases, between two companies rather than within a single firm. Retaining data integrity is easier within card networks than in the traditional payment networks using automated clearing house (ACH) payments because it is not dependent on the capabilities of the ACH and the bank. One bank may have only 100 positions for comments and another may support perhaps 200, but with card networks, you can send a lot of data, such as PDF files. As this is also possible with e-invoicing, it wouldn’t be at all surprising if the two were combined at some point in the future.

The banks have invested a lot in the single euro payments area (SEPA) in order to comply with the European rules and regulations, without realising reduced costs in the payment market. These investments can be returned by offering value-added services based on SEPA implementation such as e-invoicing or supply chain finance for which the SEPA business model is very suitable.


E-invoicing is just one vital part of optimising the financial supply chain. If it is easily accessible and available in a timely manner, e-invoicing opens the door to the availability of relevant information in the P2P and O2C process. This allows financial instruments to be used in different stages of the P2P and O2C process, as well as methodologies such as dynamic discounting. At ING, therefore, we have an integrated approach to payment processes. We aim to find solutions that optimise all financial instruments and products that can be applied within the financial supply chain.

ING’s Role in E-invoicing

Helping our clients worldwide with some of the billions of invoices sent every year is part of ING’s vision for the future. With our knowledge of payment processes and innovation in e-invoicing, reflected in our range of products from invoicing to payments, participating in this expected market growth is a priority for us.

In line with this strategy, two and a half years ago we started looking at providing solutions for the B2C and B2B e-invoicing markets in the Netherlands. ING is one of the few biller service providers in the Netherlands providing Digitale Nota services. With our connections to the two other major banks (ABN Amro and Rabobank), we are able to deliver electronic invoices to consumers (B2C) in the Netherlands in their internet banking environment. On the B2B side, ING works with e-invoicing specialist Anachron, offering services such as our biller direct solutions for corporates and biller consolidator solutions aimed at SMEs.

We did a lot of ‘missionary marketing’ in our first two years in the e-invoicing market. Initially, a lot of organisations were interested, but a little uncertain as to the consequences of introducing e-invoicing. However, this strategy has proven successful and ING has seen a definite rise in uptake in the past six months. More and more organisations are now starting projects and signing contracts with us. We expect this to continue in the coming years.