Bank e-invoicing business case lies in the bigger picture

E-invoicing has been a firm fixture on the banking conference agenda for at least the last five years and the recent EBA Day was no exception. Banks have been rather territorial over e-invoicing, which - until recently – many perceived to be a potentially lucrative opportunity. But, with the exception of banks in the Nordics and the EBA e-invoicing working group, there’s been little progress made and no real consensus on the commercial way forward. It’s therefore no surprise that while most of the banks have been sitting on the fence, many non-bank service providers have set-up e-invoicing services for corporates.

E-invoicing as a standalone proposition cannot be an attractive business proposition for most banks. They’re too late. Instead, they would be better off incorporating e-invoicing into the heart of their core corporate services (e.g. cash management, management information and financing) – boosting the overall offering. And what about the banks using e-invoicing themselves to drive down the cost of service provision?

The biggest barrier to adoption is ensuring a compelling business case for corporates. Simply being able to receive an invoice electronically will not magically deliver huge cost savings. For a compelling business case, a bank will need to provide e-invoicing with scanning and optical character recognition (paper won’t disappear overnight), matching engines, workflow, archiving etc. It’s about helping the corporate achieve efficiencies through a single stream of data and a single, optimised process – for all invoices, paper and electronic.

Banks are well-placed to drive SME adoption of e-invoicing. This was one area that the e-invoicing panel agreed on at EBA Day – that solving the SME challenge is critical to its widespread adoption. This will rely on focusing on what really matters to this group – getting paid faster, achieving quicker VAT recovery, easier access to new financing, reducing DSO etc. Banks talk to SMEs daily, so why not bring the benefits of this to life from the very first meeting or include it in the standard banking packages?

However banks decide to address the e-invoicing market, they would be best advised not to build new infrastructures. It makes much more sense to invest scarce resources in sales and to take advantage of white labelling, SaaS and cloud. Non-bank service providers can provide comprehensive invoice optimisation capabilities more efficiently and cost effectively.

For e-invoicing to be a success, we also need to move beyond the old-hat buyer/vendor relationships by building an ecosystem that realises the bigger service picture. Yes, this means sorting out interoperability, but also recognising the advantage of push-pull models, i.e. banks and non-bank service providers speaking to each other’s customers to drive sales. Moreover, rather than procrastinating further while waiting for new standards, we need to focus on determining a compelling business case to make this attractive for both corporates and SMEs. There are approximately 20 billion invoices in Europe each year, less than 10% of which are e-invoices. The commercial opportunities are there, it’s just a question of getting the proposition right for all parties.