The huge-savings curse. Part II (e-invoicing)

Like in e- and mobile banking the e-invoicing as an interconnecting-customers service was not started off as a good-for-society at large program – but for customer convenience. 

I still remember how customers complained that we had outsourced the keying in on ever-growing lengths of reference numbers and other payment data from branch and back-office staff to them. And then we charged a monthly fee for e-banking from the outset in the 80s (lifesaver for e-banking upgrade investments). The cost savings from not having to use time on travels to branches or mail invoices was not in the calculations. Direct debit never became – despite much pushing – a popular alternative. 

So – after some pondering in the mid-90s (sorry about the bragging) – we introduced e-invoicing where the payment proposal could be approved with one click in home- and SME-banking. It was also possible to make a standing order – that routine invoices where paid automatically – and also set €-limits for automated bill payments.

Fine – but a huge eye-opener arrived when the State Treasury presented a calculation that cost savings for incoming invoices. Paper or PDF was estimated to cost 30€ (costs much higher in eg Electrolux and Nokia) and eInvoice 11€ giving a saving potential of150m€/year. 

The Municipal Association arrived at the same 150m€/year. On European level 21,6 bn€ tax payer’s money could be saved. And this was only for purchase invoices -and in the pre-automation stage. 

The next target was to get down to an estimated 1€/invoice with full automation. 

Then the Finnish Federation of Industries came up with their own estimate for purchase invoices – 2,8 bn€/year… So a total 3bn equalling 220 EU-billions… Add to that time saved at home, CO2 effects, lower fraud rates, less grey economy effects and so many opportunities to automate all sorts of processes with rich structured data.

 Made us feel really important and the EU commission invited me to become chairman for the EU Expert Group and eInvoicing. 

The first reactions here as well – it cannot be true! As if the savings would not be big enough… Slowish uptake during the first 5 years - even if banks had ready simple e-banking-integrated solutions for sending and receiving e-invoices (also as files).  

How could this be? Of course, a saving near 1% of turnover is small in a small enterprise. And accounting firms did not – oddly enough – start to promote e-invoicing properly.  And the cost of old manual paper and PDF-practises was not shown – while e-invoicing operators naturally had to charge for their services. Invoice receivers should have used their rights and upfront have set deadlines for or at least charge for incoming papers and pictures.  

What did we learn? That these kinds of productivity leaps cannot wait for slowly fading change resistance. If enterprise organisations cannot drive the change with information about the big picture and demanding more and better digital – then it is up to the politicians. Even if some loud voters will not like it.