Is 29% growth in e-invoicing enough for Europe?
1.6 billion e-invoices. The figure from EESPA confirms that e-invoicing continues to make headway in Europe, showing an increase of 29% on previous year’s volumes. But is it enough?
1.6 billion electronic invoices – this fresh figure from EESPA (The European E-invoicing Service Providers Association) confirms that e-invoicing continues to make headway in Europe. The 2016 numbers show a considerable increase of 29% on the previous year’s B2B, B2G, and B2C e-invoice volumes in total. If we take a look further back, at EESPA’s statistics from the four previous years, we can see that e-invoicing adoption has been lately surging especially in the B2B and B2G sectors.
Hard work for effortless e-invoicing
What I read into this is that the work the EU, the European governments, organizations such as EESPA and OpenPeppol, and also us at OpusCapita along with other electronic invoicing service providers have been doing is finally paying off. Standardization and increased interoperability are paving the way for the growth in B2B electronic invoicing.
I have said it before: common interoperability is the key for smooth e-invoicing, taking away the cumbersomeness related to different formats and transfer methods. It can – and it should – make e-invoice exchange between two companies as effortless as a mobile call between the CEO’s of those companies already is.
Unfortunately, the reality of electronic invoicing in Europe can be far from smooth and effortless for an international company with cross-border business. Companies are still faced with the complexity of diverse operational and legal requirements of different networks and markets, which can hinder electronic exchange with their business partners, or at least prevent them from achieving the critical mass. We, the e-invoicing service providers, put a lot of effort into removing this complexity from the end-users.
So, to answer the question, we are on the right track, but we are definitely not there yet.
A stop to revenue leaks
Previously, another market study, the annual Billentis report estimated that the volume of electronic invoices will reach at least 36 billion worldwide in 2017. According to the report, more than 90% of all invoices worldwide are still processed manually.
Compared to manual and paper-based processes, electronic and automated invoice processes can easily result in cost savings of 60–80%. Considering the tens of billions of invoices that are sent and received in total in Europe each year, European businesses are missing out on enormous cost savings and process efficiency.
The public sector sees e-invoicing as an opportunity to seal revenue leaks. VAT is usually the most important source of income for the public sector, and invoices hold relevant information. With e-invoicing, the authorities could receive VAT information in real time. Especially Latin American countries have already been fighting black economy with real-time reporting, and in European governments, there is a rising interest. Currently countries are adopting varying legislations concerning VAT reporting in e-invoicing, which may cause cracks in the uniformity if not addressed at an EU level.
The significant growth is not yet enough
Looking at all the benefits to be gained, the growth rate of e-invoicing, although very impressive, is not enough. The average e-invoicing penetration in Europe is currently 20–25%. To make everybody aware of what electronic invoicing actually is, we need to double this pace. I am pretty confident that in a couple of years’ time, the growth curves will skyrocket. You don’t even need a crystal ball to make that prediction.
It has to do with PEPPOL, the rapidly growing network that facilitates cross-border electronic procurement and invoicing between European buyers and suppliers, and EESPA, who actively promotes interoperability. It also has to do with the new EU legislation that mandates public sector to migrate into more electronic processes in procurement and invoicing, and with the new European norm that standardizes electronic invoicing on an EU level further. It all adds up to the simplicity of electronic invoicing that companies are demanding.
Most of all, it has to do with the digital transformation of businesses. Companies are more than aware of the competitive advantage that comes from high, end-to-end invoice automation, fast reconciliation, improved purchase-to-pay, transparent buyer-supplier relationships, and optimized cash management. E-invoicing can for its part help to unlock all of these. Can you afford not to turn the key?
Ahti Allikas has been active in the e-invoicing industry since the year 2000. A large part of his work lies in developing the e-invoicing ecosystem in Europe, for which he is a member of the executive committee of the European E-invoicing Service Providers Association (EESPA) and serves as the OpusCapita representative towards the OpenPEPPOL Association.
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