Executive Interview – The Dawn of elnvoicing

Published: June 15, 2009

Job van Luyken
Managing Director, Billington

An Interview with Job van Luyken, Managing Director, Billington

Two and a half years ago, Billington was formed as a joint venture between Getronics (now part of KPN) and ING, focusing initially on providing eInvoicing capabilities to the business-to-consumer (B2C) market. Since then, the company has expanded its range of services to support business-to-business (B2B) eInvoicing and supports clients across Europe. In November 2008, ING took full ownership of Billington and a substantial stakeholding in technology partner Anachron. In this interview, Helen Sanders talks to Job van Luyken, Managing Director of Billington.

Electronic invoicing is still in relatively early stages of development. What led to the formation of Billington?

In 2006, major banks in the Netherlands, ABN AMRO, ING and Rabobank made the decision to adopt a standard for B2C digital invoicing. This would allow companies to send invoices to the internet banking environment of their clients through which they could view invoices and relevant documentation, such as insurance documents, and/or make payments, including both direct debits and credit transfers. In addition to developments in eInvoicing in the Netherlands, we have seen growing interest across Europe in improving operational efficiency and reducing costs. Reducing paper from financial processes saves on paper, printing and mailing costs and enables the invoicing process to be better integrated with broader financial processes, such as payments and reconciliation. In general, it contributes to a more efficient financial supply chain.

Whilst not very efficient, current invoicing processes are deeply embedded within the company.

ING recognised early on that eInvoicing would become more important in the future, and wanted to play a part in it. Business partner Getronics was an ideal choice due to their experience in the print and mail business.

What progress have you seen in eInvoicing since Billington was first founded?

eInvoicing has undoubtedly grown substantially, with around 8% of invoices across Europe now presented electronically, although there are of course significant variances between countries. In the B2C market, electronic invoices for utilities, telecoms and other household payments are becoming increasingly acceptable and convenient, and in the B2B market too, companies see the advantages on both sides of the eInvoicing process.

However, although there is a great deal of talk about eInvoicing, and the business case for every type of company is compelling, eInvoicing still remains the “big promise” and we envisage substantial developments still to come in the future. [[[PAGE]]]

Bearing in mind the strength of the business case for eInvoicing, why do so many projects not progress from business case to implementation?

There are a variety of reasons, but these fall into two main categories: industry issues and challenges within the company itself. Firstly, different countries are at varying stages of development in terms of their appetite for eInvoicing, depending on the level of automation of associated processes, such as payments and reconciliation, and the acceptability to customers. For companies which operate in multiple countries, this can make it difficult to roll out a consistent eInvoicing strategy across all regions. Furthermore, and perhaps more significantly, while there is a strong commitment to eInvoicing in some parts of Europe, such as the Nordics and the Netherlands, there are still many local standards which exist and a lack of interoperability between systems which process invoice data.

Within individual companies, each department looks at invoicing from a different perspective. For example, one of treasury’s objectives is to increase the predictability of cash flow which is one of the benefits of eInvoicing. Customer credit/collections are seeking to limit and accelerate invoice queries, reduce days payables outstanding (DPO) and automate reconciliation. However, although both departments would gain significant advantage from eInvoicing, there is frequently insufficient communication between the two, so it becomes difficult to initiate a cross-department project such as eInvoicing.

How do you suggest companies go about resolving this, bearing in mind the clear benefits of eInvoicing?

When we go and see a potential customer, we ask them to bring together representatives from all of the different stakeholder departments, such as sales, finance, treasury, customer credit and collections. We also find it advantageous to involve marketing, as eInvoicing presents a new channel for communicating with customers. By drawing together these different departments and encouraging discussion about eInvoicing and the way in which it would improve not only interaction with customers, the automation of data as it moves between each department, the mutual benefits of eInvoicing become more apparent whereas organisational and technical obstacles become less compelling. Whilst not very efficient, current invoicing processes are deeply embedded within the company. An invoice is the lifeblood that fuels any company, since it is the trigger for the payment and the final reward for all other processes within a company. To address these processes requires surgical precision by reputable partners that know what they are doing.

How do you see some of the industry challenges being resolved to encourage the development of eInvoicing?

Banks are experienced at helping companies to establish shared service centres with bank communication tools which would allow payments in different currencies with different formats to be transmitted through a single channel. What is required now is a similar commitment to supporting eInvoicing in multiple jurisdictions.

Do you think SEPA (the Single Euro Payments Area) will help in this?

Yes, absolutely, SEPA will help significantly in promoting standards for financial messaging, which will support eInvoicing initiatives. However, SEPA has different implications in each country, and the opportunities for eInvoicing will also differ. For example, in the Netherlands, the direct debit is a commonly used payment product, which is highly consistent with eInvoicing today. However, the new SEPA Direct Debit will be less attractive for companies than it is at present, as the potential reversal period will double, from 4 to 8 weeks. Consequently, while we expect to see direct debits becoming more popular in countries which do not have a well-defined or sophisticated product today, companies with an existing culture of direct debits are likely to postpone the adoption of SEPA Direct Debits for as long as possible.

...SEPA will help significantly in promoting standards for financial messaging.

In the meantime, we see invoice issuers seeking an alternative to direct debits without compromising convenience for customers. eInvoicing can play an important role in this respect, such as sending invoices electronically and facilitating payment by credit transfer (which is final once received) therefore giving greater assurance to suppliers whilst providing convenience and control to customers.

A decisive factor in the way that SEPA impacts on eInvoicing will be the decisions made by banks. An important element of SEPA is interoperability. Banks already have vast, sophisticated networks for sending information of different types. If these could be widened to play a bigger role and an eInvoicing function, the potential for eInvoicing and its integration with other financial processes will be significantly greater.

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How do you envisage eInvoicing will develop over the next 1-2 years?

eInvoicing will continue to develop steadily rather than exponentially. To accelerate this gradual adoption, there needs to be greater co-operation between banks and government bodies to structure the landscape more fully to alleviate the problems of numerous standards and processes across different parties. eInvoicing is almost unique amongst financial initiatives as it benefits both issuers and receivers of invoices, whether B2B or B2C, and a clear, demonstrable business case. As the invoice is the vital document which allows a company to be paid, companies cannot afford to get the invoicing process wrong. Greater collaboration between different parties will be a catalyst and enabler for companies to achieve the potential benefits of eInvoicing.

Why has ING made the investment in Billington and Anachron?

ING has been committed to eInvoicing since its first introduction and recognises its potential to transform financial processing in both the B2C and B2B marketplaces. ING’s complete acquisition of Billington and its investment in Anachron is a further indication of this commitment, particularly during a period when other banks are reducing their technology investment. By bridging both the cash management process which derives from it, ING can facilitate greater transparency and automation across the financial supply chain, both order-to-cash and purchase-to-pay, enabling significant benefits for corporate customers.

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Article Last Updated: May 07, 2024

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