No PDFs, and certainly no paper. Christian van Geel of Dynatos states that CFOs should aim for a complete digital transformation, including electronic invoices. “This provides faster insight into your organization’s status.”
“It’s actually incomprehensible,” begins the Chief Revenue Officer. “On one side, a company prints a digital file or creates a PDF with a click; on the other side, that file is received with technology that can read it. While that digital file could be sent directly. Without steps like printing, sending, creating a PDF, emailing, and eventually recognizing it via Optical Character Recognition software. It can… No, it must be simpler. Invoice processing in the financial system can be fully automatic if delivered electronically.”
Matching Invoices
Interestingly, digitization doesn’t necessarily start with the invoices but at the front end. “How many of your organization’s suppliers already use digital invoices? Additionally, have you set up purchase contracts so well that you and your employees can create purchase orders based on them? Once these POs are approved within the organization, you can match incoming invoices with them and automatically prepare them for payment. After all, the PO has already been approved.”
Van Geel observes that Optical Character Recognition (OCR) software for recognizing data on PDFs has improved over the years. “But essentially, you’re converting the PDF back into a digital format. Although the technology has improved, there’s still a chance fields will be misread. With real e-invoices, you don’t have that risk. That’s fully digital communication without intermediate steps. A supplier sends an invoice via XML, EDI, or channels like Peppol or Tungsten or country-specific channels like SDI in Italy. It doesn’t matter which platform it is; a good e-invoicing platform can retrieve, recognize, and read the sent invoice. Invoices based on a PO number are automatically booked if there are no discrepancies. Systems use matching criteria such as price, PO number, and whether goods have been received.”
Conducting a Scan
You can perform an onboarding analysis to find out if your suppliers are connected to one of the mentioned networks. Van Geel: “In a short time, you can see how many of your invoices can be processed electronically. Often, it’s surprisingly many. The Routty platform that Dynatos markets has a dashboard for customers where information is shared about which suppliers can invoice digitally via Peppol or other networks. Customers are proactively informed about possible digital transformations. This can significantly speed up the process of moving away from PDFs.”
Getting Paid Faster
The scan helps, but your organization must determine a long-term digitalization onboarding strategy. How do you get suppliers to avoid the simple and widely accepted PDF? The technology is there; now, it’s up to companies to implement it. Faster payment can also be an incentive for suppliers to switch. Van Geel: “You might not need to stick to a 30-day payment term, perhaps only 14 days, because the invoice moves quickly through the systems. The question, of course, is whether you want to offer this as an organization, considering your company’s cash flow. That long-term onboarding strategy also begins with the initial contract with a supplier. Make agreements about the invoice format and enforce certain standards if possible.”
The foundation—the digital processing of invoices—must be in order to take the next step. Van Geel: “Where we are still mainly a PDF country, there is an opportunity to make the invoicing process fully digital in the coming years. We need to move away from the PDF invoice. The source-to-pay process can be fully digital; the technology is there. It’s efficient, effective, and prevents errors. Additionally, the finance department gains more space to function as a business partner based on the most current figures, which are fully digitally obtained. Why wouldn’t we digitize this process?”
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