According to Paolo Malinverno, Research VP at Gartner, businesses can recoup any spend on setting up e-invoicing in a year. Yet only a very small percentage of UK SMBs are using the technology.
The simplest system involves emailing a PDF to a supplier. But the real benefits of e-invoicing come when it transforms the entire payment process as the invoice becomes a request for payment, integrated with the accounts system and the supplier payment system.
Recent developments suggest that many more businesses will use e-invoicing in one form or another in 2013. An EU VAT directive, introduced on 1 January, removed previous constraints to its adoption by lifting the technical requirements for the delivery of electronic invoices.
Adoption has been held back by a lack of standardisation and interoperability, but that is now being addressed by bodies including EESPA (European E-Invoicing Service Providers Association), the UK National e-Invoicing Forum (UKNeF) and the EU itself with the Pan-European Public Procurement Online (PEPPOL) project OpenPEPPOL. The latter is designed to make it easy for European businesses to deal electronically with any European public sector buyers.
"e-Invoicing adoption isn't what it could be in the UK," says Nigel Taylor, chair of UKNeF and head of e-invoicing at supplier GXS. "The public sector has made some inroads but in general it has not been taken up as well as it should be."
But he points out that among firms ready to sell unpaid invoices to factor companies, which then aim to collect the full rate, those using e-invoicing can get more than the regular rates of 80-90% of the value.
"Because the invoice is processed quickly and it has been matched to a purchase order, a lot of the risk goes away, so new supply chain finance companies are doing a similar thing to factoring but offering a much better rate," says Taylor.
In this way, e-invoicing is opening up an alternative access to liquidity.
Many smaller businesses may have no choice but to use e-invoicing as large customers require them to submit invoices electronically through payment portals. Sometimes this results in companies having to interact with several different portals.
Gartner's Malinverno believes the drive for cost savings is pushing firms towards e-invoicing in the cloud.
"SMBs are thinking, if I have to send invoices electronically to one large customer, why don't I send electronic invoices to everybody?" he says. "They have had enough of interacting with different portals in different ways to invoice different customers.
"They say 'I want to do everything electronically and push the problem, push all this diversity out to an outsourcer in the cloud'. It is proven, even if that monthly fee seems a lot and the cost typically depends on how many invoices you send, that pays itself off in terms of people time and internal IT resources in the space of less than a year."
The main barrier, in Malinverno's view, is the need to change internal processes: "Small business can do that; medium businesses are different. Accounts departments are not the most progressive so changing the processes for them is a huge deal. That is the main inhibitor."
eMail marketing provider PadiAct uses the Avangate e-commerce platform to invoice B2B clients. Claudiu Murariu, co-founder, says: "Invoicing was a very big deal for us. We were only three people and it was essential that we got paid as soon as possible."
PadiAct wanted a solution that would help with international invoicing and would provide e-commerce facilities, as it needed to allow customers to pay by credit card online. Avangate offered both and now does all the invoicing for PadiAct.