Dublin Institute of Technology

DT 168 MSc in Construction Informatics

RECE 9405 Business in Construction

Electronic Invoicing E-Invoicing is a real opportunity for companies to save a

significant amount of their time, resources and money for dealing with sales and purchase invoices.

It is very likely that e-Invoicing can give a quick return on investment for companies which decide to implement e-invoicing in their business and within their supply chain. Often the investments in e-invoicing can be gained back within 6 months.

Some sources predicted that the optimisation of the invoicing processing in Europe alone, especially implementation of e-invoicing is likely to achieve the saving of several dozens billion euro annually [4].

Business case Construction contractor company was chosen for research related to

possible implementation of e-invoicing and overall improvements of existing invoicing processes.

Company sales construction service offers different types of construction machinery for hire (with and without company personnel) and occasionally sells the crushed stone from former quarry owned by company.

Research of existing invoicing processing was based on my personal four year work experience within this company.

Information for analysis was collected during visits to the company office by checking company records, analyzing company electronic and other types of correspondence as well as by personal interviews with company staff.

Information for one calendar month was collected for analysis. The number of invoices dealt for this period was 58 (42 – purchase invoices and 16 – sales invoices). This number is seriously down from period of 2008 – 2010 years, when monthly number of invoice could be reached above 2000 invoices during the most productive months. Purchase invoices always have a vast share in entire invoicing turnover of company.

Analysis of existing processes

Analysis of existing processes of purchase and sales invoice management was completed. This analysis includes a detailed mapping of both purchase and sales invoice management. At initial stage of invoice processing for both types of invoices, the company has a several different input streams for invoices. By the end of invoices processing, all streams are forming the one possible output, namely:

for purchase invoice: approval of invoice and remittance advice by CEO and paying the invoice

for sale invoice: putting invoice into a PC database and sending invoice to client

Estimation of time and cost spent on existing invoice processing

Estimation was completed for one month period (March – April 2012). The results are as follows:

PURCHASE INVOICESNumber of invoices - 42

Average time of processing - 2 days 4 hoursAverage cost of processing - €15.7

SALES INVOICESNumber of invoices - 16

Average time of processing - 1 day 5 hoursAverage cost of processing - €12.8

Practical difficulties with moving from paper-based to electronic invoicing in this business

case Absence of full-time working personnel in charge of

entire invoice management process (three members of staff are involved from time to time in dealing with

invoices in main office)

Nature of business (too many occasional business partners in supply chain, who are not

interested in integrating their invoice processing with company processing)

Types of customers & suppliers dealt with (some customers still rely on old fashion approaches in their business

activity. They use fax, post, handwriting documents for invoice processing)

Business situation on construction market (situation on major company market is pessimistic, that does not help the

management make a decision on implementation of new approaches and make additional investments of human and financial resources into invoice processing)

Recommendations for electronic enhancement of invoice processing

Electronic Document Management (EDM) system may be successfully implemented within company [8]. This new approach shall allow:

Scan and OCR (Optical Character Recognition) of printed documents Register of documents Storage of documents Easy retrieving of documents Simple and quick way to make the changes into documents

The software packages for invoice management will improve the invoice processing significantly. The following software package can be used:

Invoice Management tool offered by Apptricity [1] Intelligent WorkFlow tool offered by SmartMedia [7] SliQ Invoice Application tool [6]

Recommended software applications

The software applications for invoice management may include the following features and benefits:

On-promise and SaaS Affordable, one-off cost, no monthly or yearly subscriptions Accept input from multiple sources: OCR, spreadsheet, manual entry, e-mail Advanced workflow and tracking Automatic invoice & quote numbering Use of own logo on invoices and quotes Converting quotes into invoices automatically Product invoices and service invoices E-mail invoices to customers Export invoices reports to Excel Control customer accounts and cash flows Direct electronic payment capability Etc.

Other recommendations Adoption of electronic signature procedures

for CEO and Financial Director Use of separate e-mail address for dealing

with invoices (e.g. sales@.....com) Wider use of electronic payment options

instead of existing bank counter approach Use of main office mail address only for

correspondence related to invoicing Improvement of communication between main

office and site offices for fast-tracking of invoicing processes (OCR, placing invoices into cloud computer facilities)

PURCHASE INVOICESNumber of invoices - 42

Average time of existing processing - 2 days 4 hoursProspective time of processing - 4 hours

Average cost of processing - €15.7Prospective cost of processing - €4

SALES INVOICESNumber of invoices - 16

Average time of processing - 1 day 5 hoursProspective time of processing - 4 hours

Average cost of processing - €12.8Prospective cost of processing - €4.8

Estimation of operational and financial benefits from implementation of proposed

improvements

Operational and financial benefits

Estimation of proposed operational and financial benefits from implementation of proposed improvements can achieve the significant achievements for both time and cost involved in invoice process management within company

78% - time saving

72% - cost saving

These results taken from different publications show that in comparison with paper-based processes, electronic invoices handling processes make it possible to reduce time spending and cost by 50-80% [3,4,5]

Summary e-Commerce (e-Tendering, e-Procurement,

e-Invoicing, e-Auctions) is the fastest and the most realistic approach for improving the current economical situation in EU.

New advanced EU and national regulations and initiatives are required for wider implementation of e-Commerce in Ireland and beyond.

Such initiatives must target the entire supply chain of construction industry. In this case the results received from e-Commerce can be enormous for all stakeholders of construction industry and society.

References & Bibliography

[1] Apptricity www.apptricity.com

[2] Billentis (2012). Available from: http://www.billentis.com/EBPP_EIPP_e.htm [Accessed 15/04/2012]

[3] CITA (2008). CITAX Project. Module 2 – Electronic Trading. Prepared by: Finbarr McCarthy. Available from: www.cita.ie

[4] European Commission Informal Task Force on E-Invoicing. (2007).

European Electronic Invoicing Final Report. Available from: http://www.facturae.es/es-ES/IniciativasInternacionales/EC%20Expert%20 Group/EEI_3_2_eInvoicingFinalReport.pdf [Accessed 16/04/2012]

[5] Koch, B. (2012). E-Invoicing/E-Billing. Opportunities in a Challenging Market Environment. 2012 Report

[6] SliQ www.sliqtools.co.uk

[7] SmartMedia www.smartmedia.com

[8] Sun, M., Howard, R. (2004). Understanding IT in Construction. London, Spon Press.