Enabling open commerceA Basware guidebook to the new world of open commerce

CONTENTS:

06 ........... Open Commerce: Why now?

10 ........... Challenges to open commerce

14 ........... An open and shut case?

18 ........... A circle of benefits

22 ........... State of the nation

26 ........... A best practice approach

30 ........... Good reviews

Consider that in recent years, most finance leaders have been firsthand witnesses to the dramatic impact

on their organizations of globalization and open trade, which have combined to simultaneously expand their supply chains and tighten the economic linkage to their trading partners. Companies in all regions and of all sizes are increasingly global and the need to support business relationships with global trading partners has become a priority of the first order.

And, while globalization, innovation, and the resulting increase in competition have helped to streamline and improve business performance, they have also helped to increase business volatility and supply management complexity.

Against the backdrop of rapidly evolving supply chains (and customer bases), how organizations communicate, collaborate, and transact with their trading partners and the enabling platforms that they

Introduction

ENABLING GLOBAL COMMERCE

As the Chief Research Officer of a firm that is focused on defining, advancing, and promoting the purchase-to-pay strategies, processes, and technologies that drive business value and accelerate organizational transformation within the finance and procurement departments of an enterprise, I believe that the timing of Basware’s Enabling Global Commerce Guidebook could not be better.

utilize take on increasing importance to business operations and business results. As this book highlights, Toshiba is a great example of a company that is leveraging technology to connect with more customers and suppliers in a way that improves the relationships and drives efficiencies. But, Toshiba is far from the only company leveraging technologies to drive efficiencies, increase effectiveness and expand operations to drive significant and lasting value from its purchase-to-pay operations. Finance leaders must not only focus on this area, they must take a leadership role or risk losing ground to the competition.

In the twenty-first century, the only constant in business will be change.

Above all else, managing change at an ever-increasing pace requires agility. Agile finance leaders and the purchase-to-pay organizations that they oversee have shown the value and importance of getting these strategies correct. Basware’s Enabling Global Commerce Guidebook is an excellent resource for business executives seeking to understand and tackle these issues for the first time and for those seeking to extend the value they gain from their P2P operations today.

ANDREW BARTOLINIChief Research Officer Ardent Partners

“ In the twenty-first century, the only constant in business will be change. Above all else, managing change at an ever-increasing pace, requires agility.”

06/07

Open Commerce:

A BASWARE GUIDEBOOKOpen Commerce: Why now?

Why now?

Like many elements of today’s business world, international trade is something that we tend to believe only became a reality with the invention of the internet. In an age in which millions of transactions are made every minute from nation to nation, global commerce is something that for many of us has only been possible thanks to major developments in financial and commercial technology.

The reality, of course, is very different indeed, and the colourful, dramatic and well-documented 3,000-year history of recognized trade routes such as the Silk Road and the King’s Highway attest to this. Global commerce, international business, world trade; call it what you will, it has been with us as long as we have been able to cross borders with goods for sale. Although the modern business landscape is very different to the historical, the principles remain the same: gain competitive edge by plying your unique trade in a range of territories. Developments throughout history have refined the process of doing business across borders, but never more dramatically than in the past few decades. From the signing of free trade agreements between European powers to the ultimate foundation of the

Rate of world trade growth estimated by the World Trade Organisation in 2010, the fastest year on year expansion ever recorded

World Trade Organization in 1995, major milestones in the latter half of the 20th Century have forever changed our approach to global commerce.

Recently, however, the pace of this development has quickened. Just a few decades ago, the prospect of doing business overseas was an uncommon one for the majority of finance and procurement managers. Likely confined to their home territory, and with a relatively small but well-known circle of potential suppliers and vendors, international trade would have sat very much on the “nice to have” list for the majority.

13.5%

Developments throughout history have

refined the process of doing business

across borders, never more dramatically

than in the past few decades.

Innovation is key to the renewed vigor with which we view world commerce. In a market in which product or service differentiation and fresh ideas can be key to gaining dominance, the opportunity to draw from a vastly wider set of experiences, thought processes and market approaches can be invaluable.

In any market in which product or service differentiation and fresh ideas can be key to gaining dominance, the opportunity to draw from a vastly wider set of experiences, thought processes and market approaches can be invaluable. Without opening our horizons to the developments and innovations that are taking place in other territories, it is difficult to grow.

In these uncertain times, risk too plays a part. There is undoubted danger in doing business in a microcosm, particularly in terms of the supply chain. When suppliers in one market stumble, either economically or in production, buyers who rely solely on that select group will find their own business impacted. Conversely, those who have

For even the smallest of companies, doing business with the rest of the world has never been logistically easier. New trade routes, much like their historical predecessors, have been opened up by new technology from simple collaborative communications tools to the most sophisticated CRM and finance platforms. But technology is only one element of a much wider story and, in terms of cause and effect, arguably an enabler rather than a driver. In essence, doing business overseas is now possible for almost everyone, but the will to do so needs to exist in the heart of the trader.

Innovation, too, is key to the renewed vigor with which we view world commerce.

08/09

A BASWARE GUIDEBOOKOpen Commerce: Why now?

!

spread the risk across multiple territories are likely to find that not only can they switch focus more easily to a more stable market, but that they can gain a competitive advantage by doing so.

And, to turn that point on its head, major strategic gains can be made by businesses willing to expand into overseas markets. With a wider and more diverse supplier base comes the opportunity to strengthen those relationships, to access new customers, new partners and new ways of working that can have a lasting impact on the way a business grows and develops.

More than anything else however, the sense is that in a growth-ready world, the cost of not participating in this new era of open commerce is too great. With a wider market available to so many, failing to implement supporting platforms and processes can impact on everything from topline growth to bottom line profits. In a world made ever smaller by technology that breaks down borders both physical and electronic, market dominance can be won and lost in a comparative instant, and only those who

start and remain ahead of the curve will reap the true rewards.

The new economic reality has forced companies to re-think many of the processes related to acquiring goods or services. Coming out of the downturn to a post-recessionary world means that companies are ready to invest in growth, but with a newly adopted caution. Supplier relationships are inevitably affected by this, especially in the case of trading globally, everything from currency volatility to cash-to-cash cycles can have an impact on said relationship.

Market leadership necessitates not just the vision and drive to participate, but also the requisite process excellence to help create a lower risk, more efficient operating environment. And it’s with that sentiment that our story really begins.

With a wider market available to so many,

there is too much to be lost in terms of the

experience, innovation and relationships

open to those who participate.

$3.2 trillion

In 2009, exports and imports in the European Union alone totalled some

10/11

Challenges to open commerce

A BASWARE GUIDEBOOKChallenges to open commerce

For many businesses, open commerce presents vast potential for growth. It can facilitate finding the best suppliers for any given product or service, both in terms of price as well as quality, and help further optimize working capital through integrating procurement and finance processes and negotiating better terms with suppliers.

But it is not without its challenges. While political and trade barriers continue to fall, helping to establish routes of entry to new markets for businesses worldwide, other fundamental issues remain. Success isn’t just about doing business internationally, but efficiently too, and there are plenty of obstacles standing in the way of any business attempting to achieve that.

So what are some of the biggest issues currently facing any business looking to capitalize on the opportunities of trading internationally? Here are our top five challenges to successful open commerce.

various jurisdictions who stay up-to-date on local VAT regulations. This approach delivers two major benefits: it outsources all the complexity of VAT compliance to a reliable partner, and it saves significant time and money in accounts receivable and accounts payable operations.

CURRENCY AND COMMODITY VOLATILITY

While international markets may now feel relatively stable in comparison with the past couple of years, volatility continues to be a watchword across the globe. Regular fluctuations in both currency and commodities continue to play a dramatic role in any business’ bottom line, especially when set against a global market in which political, social and even environmental upheaval can dramatically alter a territory almost overnight.

For those trading internationally, this volatility is not so much a barrier as it is a vital consideration. Even at a domestic

TAX COMPLIANCE For any company purchasing goods or services, complying with Value Added Tax (VAT) requirements is essential. Local government legislation defines how VAT is collected, what information must be included on every invoice, and what kind of audit trail every business must provide for tax inspectors. Since every country has slightly different rules, complying with VAT regulations around the world is a complex challenge. Yet failing to comply has serious financial consequences.

The European Union has issued a directive that will harmonize VAT rules in 2013, meaning that electronic invoices will be considered equal to paper invoices across Europe. However, some differences between member states will still remain, not to forget that every non-EU country will continue to maintain its own distinct rules.

One way for any company with operations in multiple countries to deal with VAT regulations is to join an open e-invoicing network. Such networks include service providers from

1

2

12/13

A BASWARE GUIDEBOOKChallenges to open commerce

While e-invoicing in isolation might not nullify some of these barriers to open global commerce, with the right approach and the right partners to deliver it, it can be a vitally important tool for anyone wanting to trade efficiently and effectively overseas.

level, market uncertainty can make it much harder for a business to plan and forecast effectively making it all too easy to find that stock and cash flow quickly become unbalanced. Scale this to an inter-continental or global level however, and that imbalance can quickly reduce trading opportunities and lead to diminishing capital flows.

TRADE REGULATIONS Just like tax legislation, trade regulations can shift and alter dramatically on a near-daily basis. And, in this new world of open commerce, businesses trading overseas are under greater scrutiny than ever to ensure that they are complying with the laws and legislations laid down both in their own territories and those in which they are importing and exporting goods.

Trading internationally tends not only to grow a buyer’s supplier base, but also to lengthen their overall supply chain. As they move into new territories and do business

with new contacts, so too are they adding more and more links into their overall supply chain. Without careful management, that can open the ‘home’ party up to greater risk as their international trading picture becomes increasingly complex.

The same is true for suppliers themselves who – in many countries – are duty bound to know both the end use and, indeed, end user of the goods that they are supplying. While both supplier and buyer-screening services exist, it can often be easier to work with a pre-approved network, members of which have been through a comprehensive due diligence process.

ENABLING SUPPLIERS TO TRADE ELECTRONICALLY

Effective open commerce depends not only on being able to find the customers and suppliers that will enable you to grow, but being able to access and transact with them as efficiently and easily as possible. In unknown, untested territories, this can be far from simple.

4

3

Navigating the challengesManaging these issues successfully in a fast moving and competitive landscape can require the support of technology, expert partners or both. While it may be a seemingly small piece of a very large puzzle, e-invoicing is key in unlocking these challenges. For any company, no matter what size, e-invoicing helps lower costs and reduce errors in invoicing and processing. But not just this, it also helps to break down some of the barriers to international trade.

These assertions are supported by a piece of worldwide research conducted by Basware in early 2011 (discussed in more depth later in this guide). In a survey of more than 1,300 people working in finance, AP or procurement roles globally, excellence in e-invoicing was cited by:• 91 per cent as a way of mitigating compliance

or auditing risk• 85 per cent as key to better forecasting• 98 per cent as a route to slicker operational

efficiency• 92 per cent as a tactic for improved supplier

and buyer relationships• 93 per cent as a way of improving cash flow

and working capital management

In this growth ready world, markets are constantly shifting and achieving sufficient traction can depend on having the agility to quickly and efficiently enable suppliers to switch transacting electronically – all at the lowest possible cost. Ensuring that you are gaining access to both the most innovative and impactful supply base whilst ensuring that transactional relationships with suppliers don’t impact on your own cash position can be a fine balancing act.

CASH FLOW VISIBILITY While we’ve already touched on cash flow management in the context of stock and currency volatility, working capital on its own can also very quickly become a barrier to open commerce if not managed in the right way. Overseas expansion can require significant capital investment, with spend on everything from product validation to distribution fast mounting up.

Because of that, cash flow must be treated with much greater scrutiny than ever, even in a situation where it has potentially never been more difficult to do so.

5

An open and shut case?Open commerce would not exist without the freedom to trade and work with the organizations that you choose. While many political and legal trade restrictions prevent 100 per cent free reign, businesses are – for the most part – unrestricted to choose which suppliers they buy goods and services from and, of course, who they in turn supply. Indeed, free trade is one of the founding principles of modern global business.

14/15

A BASWARE GUIDEBOOKAn open and shut case?

FINANCIALFREEDOM

In the current environment that’s a huge positive, as trading internationally can be a fast route to growth. As companies become bigger, they tend to experience a similar growth in their supplier base. With some of the world’s biggest corporations hooked to supplier networks that number in the tens of thousands, complexity tends to scale with company size.

For both large corporations and small and medium sized businesses however, managing an increasingly large supplier base can equate to an equally sizable challenge. Today’s procurement and purchasing personnel are under greater pressure than ever to react to a range of issues that vary from cost to security, responsiveness to resilience, not to mention the growing importance of the green and sustainable supplier. Factor each of those issues into rapid expansion of the supplier base, and the task becomes greater still.

E-invoicing has a big role to play in making that a smoother process. Being able to transact documents such as invoices and purchase orders electronically, manage the payment of your suppliers and, of course, the receipt of payments for your own services or products through one network can bring much needed simplicity and speed to the purchase-to-pay process. Like any business service solution however, there is no guarantee that your suppliers and customers will be using the same e-invoicing system as you.

From computers to networking equipment, cleaning services and mobile phones to office stationery, all businesses use a range of suppliers for their needs. The chances of you sharing the same mobile network, bank or IT vendor as all of your suppliers is very slim indeed, and that possibility becomes even slighter as you get bigger and trade with more partners in more markets. While that might not be an issue when it comes to the majority of business functions, it has big implications for e-invoicing, particularly when trading overseas.

Independent research company Billentis estimates that there will be around 530 e-invoicing operators in the global market by the end of 2011, and your customers and suppliers could be using any number – or indeed any combination – of those companies for sending e-invoices and purchase orders. That’s particularly true of overseas customers and suppliers, many of whom may be using a local market e-invoicing provider rather than a global operator.

Because there are so many vendors currently populating the marketplace, there is also a wide mix of e-invoicing data standards and formats. Different vendors process information in different ways, and that can complicate an already intricate situation even

we’re

OPEN

230,000companies actively trading through the Basware Open Network

A CLOSED NETWORK CAN RAISE COSTS FOR ALL INVOLVED

16/17

A BASWARE GUIDEBOOKAn open and shut case?

further. As the party in the strongest position (usually the buyer) determines the data format, the other is usually bound to obey. And since each connection between supplier and customer needs to be individually built and maintained on an ongoing basis, this ‘point-to-point’ model carries costs for both parties.

That situation becomes even more complex when you add global VAT compliance into the mix. PriceWaterhouseCoopers, which in 2010 carried out a comprehensive study of VAT regulations across 145 countries1, found that the time for an ‘average’ company to comply with those requirements varied wildly across territories. While a business trading in the EU would spend around 73 hours in establishing VAT compliance for instance, those working

with businesses in Latin American and the Caribbean could expect to spend an average of 192 hours doing so. That is a huge difference, and for anyone working across multiple territories, a major consideration to take into account if they are choosing to set up individual connections with all of their suppliers and essentially managing the process themselves.

The alternative, of course, is to use a service that can remove that complexity for you. Many global e-invoicing operators are able to alleviate that burden, offering a range of behind the scenes services to ensure that every invoice you send and receive is already tax and VAT compliant. Using a global partner can also make it easier to manage the

complexities of a globally dispersed supplier base, offering a network that can help you connect and trade with a range of suppliers across the world without needing to develop individual lines of communication with each.

Unfortunately, things still aren’t quite as simple as they sound. While, as evidenced by the reasons above, there is a very clear need for a networked solution, some vendors have opted to make that network a closed one. Whilst offering a service that handles format conversions and enables suppliers and buyers to work together, they do so by insisting that all suppliers lock into the same network as their buyer. This is bad news for suppliers. And, by proxy, it’s eventually bad news for buyers too.

Because the chances of all a supplier’s customers being part of that one closed network are negligible, they’ll find themselves needing to sign up for multiple e-invoicing networks just to continue doing business. As could be expected, these costs in having a network forced upon a supplier don’t tend to be absorbed. In fact, they have a nasty tendency to manifest themselves elsewhere in the buyer-supplier relationship, often as hidden costs attached to products and services and so – further along the road – the buyer suffers too.

A suitable metaphor for this approach is to consider what business would be like if, to work or communicate with another company, they had to be registered with the same bank or mobile phone network as yours. Expecting your suppliers to switch to your mobile phone operator so that they could call you, or to move to your bank so that they could pay you, would result in both confusion and bad feeling between the buyer and supplier.

Interoperability has become one of the most important words in the world of e-invoicing.

As the number of businesses adopting the practice grows fiercely year-on-year, more and more suppliers and customers expect to be able to transact electronically as the de facto standard, free of artificial obstacles and hurdles. But, just as open commerce is dependent on being able to trade with whomever you want to, the future success of e-invoicing hinges on being able to easily bill and pay a range of businesses without them needing to be locked into the same network service provider.

It’s this situation that gives life to the philosophy behind the Basware Open Network – a philosophy that is aware of the growing need for a unifying presence in the marketplace, one that cuts through divisive issues of data formats, multiple operators and supplier activation costs. With interoperability at its core, the Basware Open Network is the very definition of open commerce, allowing buyers and suppliers to work together even if they’re using different e-invoicing vendors in different territories. Freeing buyers and suppliers from any concerns over whether they can easily connect, it instead allows them to focus on gaining greatest advantage via increased e-invoicing volumes.

Through this greater focus on maximizing ROI from e-invoicing comes the opportunity for profitable growth. With a clearer opportunity to capitalize on its cost saving, efficiency driving potential, businesses across the globe can lay the ground for expansion, refining and refreshing their core processes to ensure an optimum level of performance.

1 http://www.pwc.com/gx/en/tax/pdf/impact-of-vat.pdf

Those working with businesses in

Latin American and the Caribbean

could expect to spend an average of

192 hours doing so.

18/19

We’re in this together:

a circle of benefits

A BASWARE GUIDEBOOKWe’re in this together: a circle of benefits

Exactly the same is true when it comes to suppliers. While, other than in extreme circumstances, suppliers are always likely to play second fiddle to the demands of the buyer, the quality and strength of that relationship is now vitally important. Although buyers – primarily CPOs – retain control of that relationship, they also find themselves with the responsibility of ensuring the health of their supply chain, both as a means of assuring a supply and also as a primary source of innovation.

In Basware’s first Cost of Control research report1, professors Adrian Done of the IESE Business School in Barcelona and Mark Frohlich of Indiana University’s Kelley School of Business affirmed that “with regard to supply chain risk, CPOs should remind themselves and educate others of the risks involved in continuing to seek cost savings through beating-up on suppliers. Such aggressive sourcing strategies have generally not weathered well, resulting in failure either via ‘tsunami’ events or a more gradual ‘soil erosion’ effect.”

“We have seen that supplier failure helps no-one,” they concluded. Indeed, stories of even

the biggest companies being hamstrung by teetering supply chains can still be found in the finance pages and procurement press. Under pressure themselves to reduce spend and support cash positions, CPOs and purchasing departments have typically transferred this stress to suppliers via reduced fees and aggressive terms. While that can be punishing enough on its own, another, more insidious form of pressure has increasingly been slipping into the buyer-supplier relationship.

For a long time, the prevalent industry attitude has been that suppliers will follow the lead of their customers when it comes to adoption of e-invoicing networks. Independent technology and market research firm Forrester Research Inc, in the July 2009 report, Enterprises Should Push Supplier Networks To Deliver Interoperability, stresses that “currently, most supplier networks base their business models on signing up a few enterprise customers that then persuade – or sometimes force – their suppliers to use their chosen service.”

“The problem for suppliers,” the report continues, “is that they have to incur fixed costs to integrate with all of their customers’ chosen networks or single-buyer portals. This

The most successful businesses are based on a firm understanding that they’re in a two-way relationship. Whether it’s consumers, corporate customers, partners or even governments, external parties place a range of pressures on business, and the ability to listen, understand and adapt to those pressures is key to thriving in any economic environment.

1 Published November 2009

isn’t a big problem for companies with a few high-volume customers, but it can create a huge overhead for small businesses and those with many low-volume accounts.” The net result can be that expected savings for buyers pushing compliance with their own network turn into hidden costs as suppliers seek to recoup the investment.

Trading internationally can intensify the importance of the supplier relationship. For a company taking tentative steps into foreign territory, strong supplier networks are key, and a standard of trust is necessary to do business with peace of mind. Having such a network in place can also be integral to growth, with the knowledge that you have a steadfast supplier base serving as an excellent foundation for growth. A diverse supplier base, one that gives you a range of options for trade, is also

an essential multi-territory strategy as it both mitigates risk and provides options for competitive sourcing.

How best then, can a buyer ensure that suppliers enjoy the mutual benefits of their working relationship? The Basware Open Network has been specifically designed to help ensure that both buyers and suppliers alike enjoy a range of benefits from working together. Some of these benefits fall solely into each user’s camp, but many also cross the buyer-supplier boundary and create a true virtuous circle, rewards and returns flowing backwards and forwards between the two parties.

On the buyer side, a number of benefits can be drawn from paying suppliers more quickly and smoothly. The Open Network doesn’t just

20/21

A BASWARE GUIDEBOOKWe’re in this together: a circle of benefits

E-invoice operatorBasware partner

E-invoice operatorBasware partner

Open Network

Suppliers Buyers

provide open access to a range of e-invoicing operators. It also helps to deliver faster, more efficient and accurate payments via straight-through-processing, eliminating the need for any manual intervention. By performing comprehensive invoice checking against stringent key criteria, as well as any custom-defined factors outlined by the buyer, invoices are processed and paid quickly no matter which data formats are being used. Any exceptions are flagged early and, as with validation criteria, rules for rejection can be comprehensively tailored for each organization’s needs.

Of course, that’s just a feature set. But in practice, it also translates to a much more efficient invoice lifecycle, driven by error reduction, faster processing and improved productivity thanks to a reduction in manual inputting. That’s good news for buyers, because a subsequent opportunity opens up for them to negotiate early payment strategies with their suppliers. It’s little wonder that around 90 per cent of Open Network users have adopted the facility to automatically process their invoices.

Suppliers, beyond the core benefits of not having to implement numerous e-invoicing network connections at a cost and the potential to get paid faster, can also benefit from the simplicity of the network’s numerous activation services. From day one, suppliers are given the support they need to begin e-invoicing in whichever format they choose: through an e-invoice sending service, a dedicated portal for submitting invoices and purchase orders, or even using PDFs and printed invoices.

For both buyers and suppliers, the Open Network also offers a true community within which they can operate. Buyers are able to enlist the services of a growing pool of qualified suppliers, thanks to the network’s global address book function, while suppliers can reach out to a range of potential customers already operating within the framework. That possibility also serves as a huge enabler when it comes to global commerce; the potential for buyers and suppliers to find each other and transact across the purchase-to-pay value chain regardless of which territory they operate in, helping to stimulate both accessibility and growth.

A system that places interoperability at its heart, the Open Network encourages suppliers and buyers to work together like never before. By strengthening that relationship through a cycle of mutual benefits, the Open Network helps to enable commerce on a truly global scale, providing a platform from which buyers and suppliers alike can operate in an environment that supports them both.

A system that places interoperability

at its heart, the Open Network

encourages suppliers and buyers to

work together like never before.

Speeding up invoicing process:

72%Benefits of an open network over traditional closed e-invoicing networks

Improving supplier relationships:

92%

22/23

State of the nation

A BASWARE GUIDEBOOKState of the nation

How businesses around the world are putting suppliers at the heart of their e-invoicing programs

Increased flexibility 66%

61%

54%

51%

46%

39%

29%

10%

Increased efficiency/ cost savings

Common standards/consistency

0% 20% 40% 60% 80%

Reduces costs to our suppliers

Reduced complexity

Environmental benefits

Better supplier relationships

Don’t know

Suppliers/customers

5%

34%

26%

35%

Major challenges 26%

Not an issue 5%

Some challenges 35%

Don’t know 34%

Interoperability between e-invoicing solutions

In early 2011, Basware conducted a detailed global investigation into how more than 1,300 businesses worldwide have been using e-invoicing as a way of achieving global growth. Surveying businesses from ten territories , the research asked them to share their thoughts on a range of subjects relating to e-invoicing. It also drilled down into their views on the Open Network approach and its potential benefits, with the findings compiled in a report entitled E-Invoicing: A Global View.

Out of the findings, we can draw two major strands of conversation that underpin some of the very challenges we have described in the earlier chapters of this guide. While the benefits of transacting invoices and purchase orders electronically are widely recognized for most (two thirds stating that it had a positive impact on their business), adoption levels are still low. Only 9 per cent of respondents stated that they have high levels of e-invoice processing. According to the research, one of the key challenges companies are facing has to do with supplier reluctance.

Indeed, concerns over the potential cost of e-invoicing to suppliers is the most frequently cited reason for not having extended e-invoicing reach within an organization, at 46 per cent. From updating contracts to enable two way e-invoicing (49 per cent) to better communicating the benefits of e-invoicing externally (40 per cent), the overriding sentiment is that the ability to rapidly enable suppliers to transact electronically is a key factor in the success or failure of an e-invoicing development program.

When looking at the compelling reasons to extend e-invoicing adoption within an organization, cost reduction is a high priority (71 per cent). So too is the need to speed up the overall invoicing process (72 per cent) and the potential to improve supplier and customer relationships (38 per cent). Importantly, 92 per cent said that e-invoicing presented a real opportunity to improve the buyer-supplier relationship.

However you decide to approach e-invoicing as a way of supporting global trade, having an understanding of the behaviors and approaches of other users can pay dividends. Useful not just as a way in which to compare and benchmark your own organization against others, deep insight into the e-invoicing practices of other businesses can also help you to develop a strategy that suits your own organization based on its ambitions and objectives.

How then, does this tie into Basware’s Open Network approach? For many, there are significant concerns over the detrimental effect that a non-interoperable e-invoicing network can have on both their own company and their customers and suppliers. 63 per cent of businesses surveyed said that lack of interoperability between operators caused problems for their company, supported by the 61 per cent who said that this was also an issue for their suppliers. Contrastingly, an open, connected approach is rated highly for improved flexibility (66 per cent), better efficiency and cost savings (61 per cent), consistency of e-invoicing data formats (54 per cent) and reduced costs to suppliers (51 per cent).

Partnership and performanceAs well as considering the specific issue of e-invoicing, the research asked respondents to outline their key financial priorities for the year. Perhaps unsurprisingly, in the context of a challenging few years, efficiency and the refinement of working practices sit at the top of the agenda. Some 73 per cent of respondents said that improving operational efficiency was a priority of the year, the most popular response by some margin.

Promisingly however, this pressing priority does not seem to be getting in the way of other strategic objectives. Optimizing cash flow and working capital management are high on the list for 48 per cent of those

surveyed, and improving relationships with customers and suppliers is important for 34 per cent of respondents. While these figures are – comparatively – low, they become very interesting when placed against the need to improve profits and top line performance, which 45 per cent of respondents cited as a priority. Against this fundamental element of business performance, the quality of external relationships and cash flow optimization are deliverables that more than hold their own.

One very important point to be taken from the survey is that, if you feel that the invoicing procedures in your organization could be improved to support wider financial objectives, you are not alone. An overwhelming 93 per cent of respondents believe their processes could be improved either somewhat or significantly. Interestingly though, around one third (40 per cent) of those surveyed said that they do not currently send invoices electronically. Of those that do, some 56 per cent send less than a fifth of their invoices electronically on a monthly basis, meaning that there is a significant scope for building on that impact.

On the flip side, just 18 per cent of respondents said that they don’t receive any invoices electronically, with more than half (56 per cent) receiving them by email as PDF or equivalent attachments. While 49 per cent of respondents said that they use an e-invoice processing system to deal with

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A BASWARE GUIDEBOOKPeer review

these invoices however, somewhat ironically, a further 28 per cent admitted to printing off the invoices in order to deal with them. 22 per cent presently opt not to use any invoice scanning services.

That absence of an end-to-end solution for so many respondents appears to manifest itself in a range of problems. Once invoices fall out of the automatic processing cycle, they cause a range of issues, with 64 per cent citing time spent entering invoice details into their systems as one of the biggest challenges. 40 per cent said that time was being spent on getting the invoices approved, and 28 per cent saw issues with matching invoices to Purchase Orders. Most worrying of all, 35 per cent said that invoices could be misplaced or lost altogether.

Contrasted with the earlier statistics highlighting the potential of e-invoicing as a strategic enabler, these numbers seem to represent risk for some businesses. Cited repeatedly as a tool that can play a big role in a company’s biggest strategic ambitions as well as its – more routine, but no less important – tactical processes, e-invoicing for many is still not being deployed to full effect. In an environment in which optimization and efficiency are key to achieving growth, a gap remains in what e-invoicing can do for businesses and what it actually is. At the heart of that sits the eminently conquerable challenge of enabling suppliers to start transacting electronically, and it is here that the greatest focus should lie for anyone.

of business surveyed said that lack of interoperability between operators caused problems for their company

said that this was also an issue for their suppliers

In contrast an open, connected approach is rated highly for improved flexibility

better efficiency and cost savings

consistency

and reduced costs to suppliers

63%

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If you’re thinking of using e-invoicing as a way of supporting growth or helping you to move towards a more open approach to commerce, then there are some vital initial steps to take. Here, we present our top five ‘first steps’ to take for anyone looking to improve their overall purchase-to-pay program in a way that will support them through global growth.

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Best practice –

an achievable goal

A BASWARE GUIDEBOOKDeveloping an approach: best practice

Knowing what other companies think about e-invoicing and how they are approaching it can be a useful way of benchmarking your own progress. But when it comes to developing a strategy for your own business, it’s important to take the very specific circumstances of your company into account.

Like many technological solutions, the more you put in, the more you get out. e-invoicing is at its most effective when dealing with the highest possible volumes.

Push the envelope on benefits realizationCost saving is a great reason to start transacting electronically, but that’s only one part of the equation. If you’re really looking to make the most out of an e-invoicing strategy, you’ll need to take a long look at what else you can gain from it, from improved customer and supplier relationships to a more streamlined and compliant business model.

Cash is king, alwaysNo matter how successful or stable your business, cash flow is always a top priority. As you grow, especially into new territories in which you might not be as confident with your supplier and customer network, being able to accurately forecast and manage your incomings and outgoings is absolutely essential. E-invoicing can help you to achieve that, so factor in how an improved cash flow process can help you to grow.

Break down the barriersAs we’ve discussed elsewhere in this guidebook, trading overseas can put a number of obstacles in your path, as well as opportunities. Consider what those obstacles are, which will cause your business the most pain, and then how you’re going to tackle them before they become an issue. Most are easily surmounted with the right technology or right partners, but it’s important to address them before they become an issue and not after.

Scale is keyLike many technological solutions, the more you put in, the more you get out. Transacting purchase-to-pay process related documents electronically is at its most effective when dealing with the highest possible volumes (though it can also make a big difference to even the smallest of operations). Ensuring that you have a long-term plan to move as much of your invoicing processes to electronic is essential, and that can depend on…

Bringing your suppliers along with youNo matter how ambitious your plans or sophisticated your e-invoicing solution, the ability to enable your suppliers to transact electronically is absolutely essential to the ongoing success of the program. Reaching that ‘critical mass’ of supplier enablement should be one of your number one priorities when outlining your e-invoicing program, as it’s there that you stand the most to gain on cost savings and efficiency .

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When it comes to e-invoicing that benefits both buyers and suppliers, Toshiba’s recent experiences stand out as a compelling example to follow.

As a major supplier to businesses globally, it was customer requests that sparked Toshiba to consider e-invoicing. Here, in a Q&A with IT Manager of Toshiba TEC Germany Imaging Systems GmbH, Klaus Dieter Leifgen, we look at how the company cut invoicing costs by 75 per cent and has developed plans to activate its entire customer base.

Q: Klaus, you’ve said already that your customers were the prompt to move onto e-invoicing. What exactly happened?

A: In early 2009, one of our biggest customers notified us that they were moving onto an e-invoicing platform and that they needed us to follow suit. The customer was using Basware, and so we became part of what you would call the ‘Supplier Activation’ program – essentially Basware project managing the set up of e-invoicing capabilities on the supplier side, in this case us.

Q: So what happened next?A: We’d been considering switching to

e-invoicing ourselves for some time, so that communication from Basware was basically the prompt that we needed. We’d already looked at the business case internally, and it was compelling. A review by our internal postmaster, for instance, had found that by the time a paper invoice had been printed, taken to the post room, put in an envelope, stamped and sent out, the cost was € 1.61 per invoice. That compared to just € 0.40 for an e-invoice. So, in many ways, the activation message from Basware was just the final link in the chain.

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A BASWARE GUIDEBOOKDeveloping an approach: best practice

A case in point:

We’ve reduced the cost of invoicing by around 75 per cent, which is a huge saving for us.

Q: Was Basware always the number one choice for you?

A: Yes and no! The fact that one of our biggest customers was already using Basware was obviously a big tick in the box for us. But of course, we have very stringent selection criteria for any vendor that we use, so we conducted an independent review of the company’s capabilities. So, “no” in the sense that we investigated other options, but “yes” in the sense that Basware came out in first place!

Q: And why was that?A: Flexibility was key. Unlike some other

businesses, we have many more customers than we do suppliers. We knew that it’s the buyer that tends to drive the format choice when it comes to e-invoicing, so we wanted to be using a vendor that would allow us

to communicate with the greatest number of e-invoicing operators, ensuring that we could satisfy as many of our customers as possible. Basware’s Open Network approach did that.

Q: What are the benefits that you have seen so far?

A: There has been a good mix of what you might term ‘hard’ and ‘soft’ benefits. We’ve reduced the cost of invoicing by around 75 per cent, which is a huge saving for us. On the ‘soft’ side, we’ve been able to develop better customer relationships, and we’ve also been able to get in touch with numerous other customers who had enquired about e-invoicing previously and say “hi, we can do that for you now”. That’s been a great experience.

” We were very satisfied with the way Basware handled the program and with the quality of work. As we continue to centralize our accounts payable operations, we expect to move closer and closer to our goal of 100 percent electronic invoicing.” Erol Engin, Manager of Accounts Payable, Cargotec Corporation

“ Basware makes it easy to manage cashflow and track due dates. Now we can see which payments we have made, and which are coming up and plan our cash accordingly.”

Marilyn Van Zant, Accounts Payable Manager, Frozen Food Industries

“ Very early on our senior management saw e-invoicing as the route to achieving world-class operational performance. We wanted to gain control of what had been a time-consuming and error-prone paper-based process, replacing this with a tool that would give us more consistency and control over invoice handling. Alongside cost-savings and significantly reduced processing times, we’ve been able to steer our business towards more goal-oriented purchasing.” Soile Hiekkasalmi-Linna, Development Manager, Metso

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A BASWARE GUIDEBOOKGood reviews

” E-invoicing is a must. There is no future for hard copy invoices.” Mervi Mäkelä, Financing Manager, Finnair

“ We’ve been able to do advanced reporting with Basware Invoice Processing, and use it to conduct budgeting top down and improve our spend visibility. It saves significant time and money, enables enhanced tracking and easy auditing, and provides the accuracy, efficiencies, visibility and control we need. We’re even using it to monitor suppliers and look for opportunities to consolidate invoices and early payment discounts.” Daniel Garuti, Vice President and Accounting Supervisor, Loomis Sayles

“ Eliminating the paperwork has significantly speeded up our processes, streamlined our operations and delivered a more rigorous accounting process. Our central accounts payable group can now enforce our corporate procedures and standards.” Chris David-Pipe, Group Vice President, Information Technology, Crown Worldwide

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