Supplier onboarding E-Ordering & E-Invoicing: Apple egg or not?
It was Thursday 10 September 2015. The first day at my very first assignment for a large semi government organization. Although this was my first day, the project for which I was hired was already started a year ago. The organization was in the middle of a large E-Procurement implementation process consisting of various elements (E-Ordering, E-Invoicing, Catalog Buying, Master Data Management, Declaration processes et cetera). In summary, the entire P2P process was automated through E-Procurement systems.
As you might imagine, this is a huge job. Anyway, many people are (have been) involved in and / or connected to the implementation of E-Procurement. Within the P2P project I was responsible for the connection of suppliers to one of the systems to enable E-Ordering and E-Invoicing. This means that I helped the buyers to make clear to suppliers what the benefits of E-Ordering are and what E-Ordering can mean for their organization and ultimately to convince them to switch to E-Ordering / E-Invoicing . You can finally have such a nice system that works technically perfect, but if you do not have suppliers who want to receive E-orders and send E-invoices, then of course you do not really have that much.
In this article you will read more about my experiences with the onboarding of suppliers and in particular what I encountered.
E-Ordering and E-Invoicing
In the P2P project I focused on the elements E-Ordering and E-Invoicing.
E-Ordering has been developed to optimize existing communication flows related to orders. On the one hand, E-Invoicing is very interesting for organizations that receive many invoices, but E-Ordering is interesting and useful for the supplier who receives many orders. Normally a customer places an order by means of a telephone call or via email as a PDF file. The supplier must then manually convert the data into their own system. When you receive a lot of orders as an organization, this can be a big job. By means of E-Ordering the order is electronically converted to the suppliers.
This is a form of electronic invoicing. E-Invoicing consists of a number of different technologies and input options and is used as a collective name to describe methods whereby an invoice is submitted electronically to a customer for payment afterwards. An E-invoice can be defined as structured data in EDI or XML formats, possibly using Internet-based web forms. These documents can be exchanged in multiple ways such as EDI, XML or CSV documents.
How do you get suppliers?
Okay so you have a technically good working system, then it is of course nice if your suppliers actually want to send you E-invoices. How can you best achieve this?
- Determine your position in the market in relation to your suppliers. Are you a big player in the market? If the answer is yes, it is useful to get your suppliers on board, because it will provide you with the right means to persuade your suppliers to switch to E-Invoicing.
- Determine which suppliers you want to focus on and that you would like to switch to E-Invoicing. These are the suppliers who send most invoices. The more E-invoices you receive, the better this is for the organization. Analyze the invoices of the past two years to determine which suppliers you should focus on. At the organization where I worked, we drew the limit at 100 invoices per year. This means that all suppliers who send more than 100 invoices per year, in any way, should switch to E-Invoicing. This limit is arbitrary and subjective, of course: if a supplier sends 99 invoices, this does not mean that E-Invoicing is not convenient for this supplier and if a supplier sends 101 invoices, this does not mean that this supplier must necessarily switch. Always keep a close eye on the type of suppliers and the expectations for the future, especially for suppliers who are around the base figure (in this case 100).
- The reason why it is best to carry out a pre-selection has to do with demarcation and money. Some organizations have more than a thousand suppliers. When you start the project, first try to focus on suppliers that can make an impact on the result. Suppliers that send 10 invoices per year will not contribute to your efficiency goals. In addition, switching to E-Ordering / E-Invoicing requires an investment from your suppliers. The size of this investment depends on the option / degree of integration chosen by the supplier. Nevertheless, it is unlikely that suppliers can make a positive business case when it comes to a few invoices. The investments and costs compared with the benefits are probably not big enough to justify the investment.
- Determine which buyer is responsible for each selected supplier. The buyer can tell you whether or not the supplier is a suitable candidate for E-Invoicing. For example, it may be that the contract will expire soon or that the supplier will send far fewer invoices in recent years. Moreover, when you approach the supplier, this is best done by someone who already knows the supplier. The buyer has a relationship with the supplier and can ask the supplier to switch to E-Invoicing, or at least find the right person in the organization to discuss this subject.
- Ultimately, you want to make it as easy as possible for both buyers and suppliers, so be sure to provide them with the correct information. Organize an information meeting for your buyers to explain what it means, what is needed and what is expected of them. This is also new to them. Help your buyers by providing email templates, brochures and flyers that they can send to their suppliers. This information material explains why the organization does this, what it is, what options there are, what the costs are and very important, what the advantages are for the supplier. In addition, when you ask them to make an investment, you have to make it very clear what is 'in place' for them and why you think this investment is justified.
And how is it really?
So, you have made a plan, you have made a list of the suppliers you want to focus on, you have informed the buyers about what you expect from them and you have made information material so that they are ready to take their suppliers on board to get. I will now tell you: it is not as easy as it seems. Do not expect it to go this way:
Organization X: "Dear suppliers, we from organization X are switching to E-Ordering / E-Invoicing. We kindly ask you to also switch and send E-invoices instead of paper or PDF invoices. Here you will find some information with the various options and costs. So .. Which option do you prefer? "
Supplier X: "But of course, what a good idea, I would like option X and I will immediately start this process so that we can quickly start implementing E-Invoicing."
Unfortunately, it will not be that easy, I can tell you in advance. A few examples that illustrate what you can expect during the whole onboarding process:
1. People do not respond. Never. You send continuous reminders, but they do not react yet or very slowly. They just ignore you and think that if they maintain that the problem, namely your application for E-Invoicing, goes away automatically (of course this will not work, because you simply will not give up).
2. Some people are curiously always on vacation. Or they just left the office. Or they do not work on Monday. Or just not on the day you call them to discuss the subject.
3. Large organizations know what E-Invoicing is. And several of those organizations are already working with it and are more than willing to switch to E-Invoicing. But most organizations have no idea what E-Ordering or E-Invoicing is and what it can do for them. They still send paper invoices or invoices in PDF via email. This is already very digital for these suppliers and they do not feel the need to change anything because the current way works well for them. If you ask them to send an E-invoice, they almost always respond that they already do so, because they send invoices in PDF. They do not understand what it is. So for many suppliers, this subject is unknown and is not at the top of their list of priorities.
4. They only see the € sign. They will ask why it is necessary that they have to pay for something you want. They do not see the benefits of the system or do not realize that this is the future and that this will be the standard within a few years. In a few years, many other customers will also ask if they want to switch to E-Invoicing and they will wisely choose a system that they can also use for other customers. But for now they do not yet see the benefits to invest.
5. People do not read / badly. They do not read the information you send. When they finally decide to switch to E-Invoicing, they come back to you once they have invented that this is an investment and they blame you for not telling you yet.
6. When they agree to switch to E-Invoicing, and the E-procurement system sends them a contract, they can find it or no longer in their e-mail or they can not be reached anymore. It looks as if they have disappeared from the face of the earth (see point 1).
7. Another bottleneck has to do with the fact that the right people are not immediately hooked up with the supplier. An account manager can agree on the switch to E-Invoicing, but if the IT department is not included, chances are that there will be issues that delay the implementation (not the right tools, other priorities, etc.)
8. The last point has to do with the buyers. As described in the previous section, the buyer intends to contact the supplier and ensure that the supplier switches to E-Invoicing. As project leader you are coordinating this entire process and this means that you want to know the status of each supplier. But in many cases the buyer does not do what he / she is asked, he / she ignores all the questions you ask. Convincing suppliers to switch to E-Invoicing is not on their priority list, which causes a lot of delays and no concrete steps are taken.
There is no magic answer to the question of how to solve the above problems. However, there are a few things you can do that make it easier for yourself and that prevent the onboard process from becoming 'stuck in the middle' without any progress.
- Make very clear what you expect from certain people. You need the help of buyers so it is important that they cooperate. It is therefore necessary that their managers can help you at the moment they do not do what they are asked to do with regard to the onboarding process. Think of including KPIs in the field of connecting suppliers and monthly reporting / steering on the progress.
- Ensure a good escalation structure. What do you do if a supplier does not want to switch? What do you do if a buyer does not want to cooperate? You need to know who can make which decisions about how to proceed with a specific buyer or supplier.
- Organize an information meeting for suppliers and explain what E-Invoicing and E-Ordering is and what you expect from them. Invite your E-Procurement system to give a presentation and a demonstration that shows how everything works. Explain why you want to do this and what the benefits are. This makes it easier to communicate with your suppliers because they do not immediately know what you are talking about. They also feel appreciated when you take the time to organize such an event.
- Be sure that you and your colleagues remain motivated. Implementing an E-procurement system remains a difficult process. What we did at the organization where I worked was to create a large calendar where we kept track of how many days it took before the E-procurement system went live. Every day it was the intention that someone involved in the process made a selfie and this was placed on the intranet. He / she could then nominate another person.
E-Ordering and E-Invoicing is the future. This will be the new standard in a few years. Getting your suppliers on board can be a long and difficult process and this does not make it any easier. Sometimes it takes some time before you see the results of your hard work, but more suppliers will board very slowly. It just takes time.
Carmen van Kruisbergen
Consultant - Supply Value
This article has previously appeared in online magazine consultancy.uk