Published: August 01, 2010
In 2009, IDB made the decision to replace its manual invoicing processes with an automated, cross-border e-Invoicing solution in order to improve cash management efficiency internally, and enhance the interaction with its customers. This article looks at the background to this project and the outcomes that IDB has experienced so far.
Like many organisations, the IDB produced invoices manually before implementing its e-Invoicing solution. Every day, one of our finance team printed customer orders from our ERP (Lawson) and produced an invoicing batch. These were then printed, hand-folded and posted to customers. From Dublin, we invoiced all of our EU customers, with typically 60-70 invoices produced daily.
We recognised that long-term this was not a feasible arrangement, and could not be scaled to facilitate future growth. The catalyst for reviewing a more automated solution was the challenge of tax compliance requirements in the countries into which we sell. For example, in Spain there is now an obligation to include a digital signature on invoices, which clearly could not be achieved through manual invoice processes. With customers rejecting invoices without a digital signature, we clearly needed to make changes.
In addition, our Accounts Receivable department handled a large volume of customer queries, including lost or delayed invoices, which made it difficult to manage accounts efficiently and professionally, and resulted in slower collection and an increase in debtor days.
Although these challenges made it easy to justify the project internally, our decision to prioritise this area was corroborated by an external consultant who reviewed our financial processes and identified invoicing and customer statements as a target area for improvement. While reviewing our invoicing processes and considering a potential solution, we identified a variety of aims. In particular, we wanted to reduce the cost and increase the speed of invoice production, guarantee delivery to customers, whilst ensuring compliance with relevant tax regulations and enhancing the service we provide.
We reviewed a variety of market-leading e-Invoicing solutions. A key requirement for IDB, which excluded a number of potential solutions, was the ability to produce invoices in both PDF and EDI formats. This was one of the factors that led us to select Sterling e-Invoicing from Sterling Commerce. In addition, Sterling e-Invoicing offered a convenient and intuitive front-end portal that gave both finance and audit users full visibility over invoice processes and documentation, and enabled invoices to be re-signed when necessary. We had an existing relationship with Sterling Commerce which had proved very successful, and we were particularly positive about the high quality of customer service we had received. By implementing Sterling e-Invoicing therefore, we were confident that we could achieve our internal objectives and satisfy our stated goal of exceeding customers’ expectations.[[[PAGE]]]
We began to implement the solution in September 2009, and went live on March 31 2010. Although we had planned to go live sooner, it was important to the IDB to obtain an independent audit signoff, an in-depth process which had not been anticipated in our original project plan.
We have now integrated Sterling e-Invoicing into our business processes and systems environment. We use StreamServe across the business for document management, producing both PDF and XML files for each invoice. These are picked up in Sterling e-Invoicing from a central location and sent to TrustWeaver in Sweden for digital signature and verification. Once authorised and checked for compliance, invoices are then passed to the customer through Sterling e-Invoicing in PDF format including a digital signature. The XML file is stored in our archive for future reference. A copy of the invoice is also sent automatically to an email account for Accounts Receivable, so that customer queries can be handled efficiently based on the same view of information.
The e-Invoicing project has proved very successful in automating our invoicing processes, with a variety of advantages. The number of invoice and account management account queries has reduced dramatically, with very positive feedback from the team. In parallel, we automated our customers’ statement production, now sent twice a month. As a consequence, our cash flow has improved significantly and we have seen a major decline in debtor days. As a business, we pride ourselves in our environmental credentials, and reducing the amount of paper we produce as part of our financial processes has been received positively by our stakeholders.
Addressing project challenges
While the e-Invoicing project has been successful and received considerable internal support, we inevitably experienced some challenges during its implementation. The independent audit review was unplanned and resulted in a delay to our live date, as well as requiring considerable resource. Without this, we would have gone live in December 2009.
However, this compliance review was ultimately very valuable to our project. One issue we had not expected was the reluctance of some customers to accept electronic invoices and continue to insist on delivery of hard copy invoices. Our finance team therefore needed to go through a process of education with customers to convince them of the benefits. While this has met with some success, some customers have not yet transferred to e-Invoicing.
Throughout the project, we have enjoyed a very high level of support from Sterling Commerce. A consultant spent three days with us at the start to help with the system set-up. We then embarked on the technical testing phase before undergoing user acceptance tests, which included a range of scenarios for different countries, and testing the solution alongside TrustWeaver. Once this testing had been completed, we underwent a tax compliance audit.
We have now implemented e-Invoicing successfully across 13 countries with 78 customers fully engaged. Looking ahead, we intend to roll out Sterling e-Invoicing initially across our European subsidiary, and subsequently in the US. Along with our supplier Sterling Commerce, we have implemented a very successful solution that supports our current and future objectives.
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