To maximize the ROI on your investment in electronic invoicing, ideally, you want as many vendors as possible to join your electronic invoicing platform and submit invoices electronically. However, as we have seen over the years and explored in more detail in the “sharepace” hub, there are a number of factors that will influence the success of your electronic invoicing onboarding fees. A crucial consideration is whether or not to require electronic invoicing and how you communicate your policy to your suppliers.
What are the risks of having a mandatory electronic billing message?
Some organizations may feel they have no choice but to impose electronic invoicing if they want to move forward with their electronic invoicing project and see ROI as quickly as possible. But could this jeopardize your business relationship with your suppliers?
It will be more difficult to impose electronic invoicing on suppliers with a more powerful bargaining position unless they can see the benefits for your business. So before you send your messages, think about how you can tailor the communications to emphasize the benefits of electronic invoicing in particular for your business. For example, if you are dealing with a major supermarket, you may want to emphasize that electronic invoicing means faster invoice processing, which means that stocks can be on the shelves faster and ready to be sold sooner.
Considering benefits beyond cost savings remains a key factor in electronic invoicing negotiations with your vendors, especially given the large financial investment they may have to make to implement the necessary technology.
What is the cost of not having a mandatory message?
Some organizations vary their electronic billing policies depending on the provider. For providers without the technological or financial resources to immediately join an electronic invoicing platform, some organizations may offer the option of submitting invoices through non-electronic formats. But at the very least, you want to encourage electronic invoicing as the preferred method, again emphasizing how it will benefit your particular operations. Not encouraging electronic invoicing with your suppliers could slow down your ROI on investment and make processes less efficient and effective.
With which providers can you afford to have a mandatory message?
Following the 20/80 rule (that is, where 20% of your suppliers provide 80% of your invoices), there are some expense categories where it makes more sense to use electronic invoicing.
By strategically segmenting your supplier base and rolling out your mandatory approach in stages, you can cut a huge roadblock into small pieces. With this approach, it is possible to implement electronic invoicing in a relatively short space of time, setting realistic deadlines by addressing specific problems of the type of provider in each segment.
Your high-volume vendors will be the most obvious vendor category to address first with an electronic invoicing project, as the business case for them will level out any financial investment they have to make in implementation. The more they depend on your company for their business, the less likely they will want to risk this.
