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Supplier perspectives on the challenges of eInvoicing with the public sector

by Enrique Vich created on 01/08/2012 03:15

The PEPPOL vision is to make it easy for suppliers to deal electronically with their public sector customers throughout Europe. In an interview with PEPPOL.EU, a multinational supplier selling both to public and private sector customers sheds light on the market issues suppliers face when adopting eInvoicing and how PEPPOL can address some of their challenges.

The supplier; PerkinElmer, is a multinational technology corporation, focused in the business areas of human and environmental health. PerkinElmer is part of the S&P 500 index and operates in 150 countries. The PerkinElmer client base is composed of 30% public sector clients and 70% private sector and PerkinElmer has sales offices in most EU countries.  Of the business that PerkinElmer has already automated, PerkinElmer has bilateral eBusiness trading agreements with some of their clients (25%), while they use service providers to integrate with the other 75% of their trading partners.

 

The company uses a number of service providers for business automation depending on the country, industry and tools.  Extracts from the interview are detailed below.  The full interview can be found as one of the PEPPOL user stories at: http://www.peppol.eu/news/supplier-perspective-on-the-challenges-of-einvoicing-with-the-public-sector

 

 

PEPPOL.EU: What are the key challenges that PerkinElmer faces for eInvoicing with the public sector in Europe?

 

We have a very skilful and dedicated team in house that focuses on Procure to Pay automations with customers. We will try to accommodate our customers whenever we can, but after 6 years of doing e-Invoicing projects we can say that there are some real challenges for us as supplier.

 

1- The first challenge relates to the different standards and formats we have to support.

 

We currently support many different standards, versions of standards and formats and this is not sustainable anymore. If you look at the cost benefits of automation, supporting 4 different standards represents a break-even point for us, dealing with 2 or 3 standards would put us in a very good position, but having to support one single standard would result in huge savings, as we would realise the real benefits of business automation with minimal setup and maintenance costs. Every new format or standard requires training, learning the codes, developing and testing new code, and then maintaining it. It is a serious investment and maintenance cost.

 

For example, in the Nordics, governments pushed for e-Invoicing and countries like Sweden mandated national standards. This is an additional burden for us, as we are told to follow a new standard. Internally, we have to define criteria to evaluate every new project if it is a good investment for us, otherwise we will not support it. We are now rejecting most of the requests to support new e-Invoicing formats or initiatives.

 

2- The second challenge relates to the business models, as there are myriad of fee structures that service providers impose and that are completely different, some of the fee structures are even difficult to understand.

 

There are several fee structures that service providers typically use for e-invoicing: from free for suppliers, a fixed subscription fee, a fixed fee per invoice to a percentage fee on the amount of the invoice. So, in addition to the technical complexities we also have to evaluate the fee structure when deciding to support a customer’s request for e-Invoicing or not.  Doing business electronically can benefit both sides – buyer and supplier – but if many clients choose different platforms that we have to support, it becomes impossible for us to support all of the platforms and related fees for all of our clients.

 

3- Another challenge is lack of focus on the bigger picture and the myriad of isolated initiatives

 

After 6 years we found that submitting invoices electronically as a standalone initiative brings little value to us as a supplier. We have streamlined our paper invoice process a long time ago so the cost of raising and sending a paper invoice is very low for us, often lower than the fee we would have to pay to the service provider. Also, we found that the positive impact on (on-time) payments is very low. e-Invoicing becomes more interesting for us as supplier when we can have other benefits, for example visibility on the invoice and the payment status information, at a minimum. Ideally, we want that the customer’s purchase orders be sent electronically to us so that we can automate these. This gives us similar benefits as customers get with e-Invoicing. These functionalities are present in some portals but again, there are so many portals that we cannot follow all of these portals manually.

 

We have to provide and maintain our company profile (VAT, company information, etc.) up to date on all the portals of our public sector clients. We have to support many portals with different profiles. PerkinElmer have thousands of customers and it is extremely challenging, if not impossible, to keep the information up to date on these different portals, where the process is always different. This is a key issue.   The process for building a profile and updating the information should be standardised. The information to include can differ according to specific product/service requirements but that is not an issue if the process is the same (something like the PEPPOL Virtual Company Dossier).

 

 

PEPPOL.EU: How can PEPPOL address these challenges?

 

1-      Providing one standard for electronic documents through which we can do business with all our public sector clients across Europe

 

2-      Reducing the number of islands of closed networks and gateways we have to support – just 1 PEPPOL Access Point to reach everyone in Europe. At the moment we have to support almost 30 points of access globally (including direct customer interactions), and this number is increasing.

 

3-      Indirectly, we believe that more integration will harmonise the fee structure, or the cost structure, which should be more related to the actual benefits suppliers get from the automation, this is what we are willing to pay for. There are certain service providers who require a fee simply “to be” on their network.

 

4-      To achieve interoperability, service providers will have to play a different role. Some of them seem to be trying to keep their network closed, in order to keep control of their customer base and their revenue stream. Sometimes the discussion does not seem to be about the progress of e-Procurement in Europe as a sector, but about control of their network. With PEPPOL, we hope to see increased market competition and dynamics, where clients can no longer impose their service providers on us. We will have access to the open and secure PEPPOL network, being able to choose freely for the providers that give us the most added value. The same will be true for customers and the focus will be more on added value than on control.

 

5-      We believe that if PEPPOL is successful e-Procurement will be much more accessible for public customers and their suppliers, even for small companies. This will give e-Procurement in Europe a big boost, make the market more dynamic and facilitate doing business in Europe.

 

However, the success of PEPPOL is highly dependent on the European Commission to mandate it across Europe for all public authorities.  The standardisation benefits that PEPPOL brings are more than enough to justify our support. If the public sector fully embraces PEPPOL, we expect that the private sector will follow quickly. 

 

 

Interview conducted on June 2012, with Tom Vanautryve, Global E-commerce Manager at PerkinElmer.

 

For editorial content, please contact Carmen Ciciriello: carmen.ciciriello@peppol.no

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