The invoice-free company – closer than you think

The death of the paper invoice has long been predicted and the futuristic tale looks like it will soon become reality, as more and more businesses move to e-invoicing. However, the problem is in the phenomenon of the invoice, be it electronic or physical. Invoices that were previously a necessary evil will soon be just an evil. The solution is full automation and the only obstacle is our ability to embrace the existing technology.

E-invoices have certainly streamlined many companies’ finance departments, but have hardly made a dent in the issue of a company’s payment flow. The very raison d’être of the invoice – electronic or otherwise – with its payment terms and information, lies in the fact that somewhere there is the manual ledger processing: manual processing that is no longer necessary, rendering the invoice obsolete.

Unavoidable development

At the beginning of the 1900s, around 98% of Sweden’s population were farmers. Today the figure is 1.5%, but production is much greater. We have seen the same development in the transition from production companies to service companies, where six out of ten firms today are in the latter category, with a current transition from simpler services to full automation. The transition from manual to partly automated to fully automated ledger processing is also unavoidable, if we are to learn from history. This is on the condition that there is incentive for the company to follow this development.

From outsourcing to insourcing

It is common today to see solutions where larger companies – in the fight for lower wage expenses – have moved large parts of their sales ledger processing to low-income countries, in shared service centres. This is a solution which can work to a certain extent on paper, but in the long-term leads to transaction costs in the form of loss of control, reduced security and longer decision pathways. The greatest issue with outsourcing however, is that the concept is based on the notion that manual work is unavoidable. The fact is that not even the most efficient example of outsourcing has justifiable wage expenses. The trend will therefore be to return functions ‘home’ and move them into the Cloud along with IT systems.

Finance departments in the Cloud need new skills

The greatest cause of invoice expenses is simply due to staff costs, involving work with reception, validation, coding, matching, payment and filing. We estimate that as much as 80% of company finance departments could be moved to the Cloud, thereby fully automating this work. This also means that services such as Recovery Audit – where companies can recover a proportion of money lost through invoice processing – will become redundant. This is because any faults are only due to human error. The future will therefore place entirely different requirements on skills for companies with few analysts instead of many administrators. In the long term, this will also place different requirements on the country’s secondary education, where the line between finance and IT is increasingly blurred.

From jerky invoices to smooth payment flow

As invoicing currently incurs expenses, payments are made in spurts. Payment flows will instead be integrated with the supply and stock flows, and be ongoing. Using machine-to-machine technology (M2M), companies can already automate, plan and analyse their deliveries, with payments being integrated into this flow. Payments will be made upon approved delivery, without the involvement of man or invoice. In this invoice-less society, payments are only made for orders received, and there is therefore no need for credit invoices or similar adjustments. Neither does the customer need to rely on the supplier in terms of volume or discount, as this is regulated automatically.

Eventually the contracts themselves will be electronic, so they are searchable and can automatically validate orders and deliveries. We will see a clearer partnership between the customer and supplier, with greater integration of each part in the system in order to together increase quality for the end client.

This will also lead to a questioning of the norms in place for delayed payment. Because why should we accept delays and unintended ‘stock’ in our financial management? There would no longer be any reason for companies to act as creditor for their customers – unless they are paid for it, of course.

Largest incentive: SEK 150 billion per year

On the one hand, we can view investments in the system, Cloud-based services and new knowledge as expenses. On the other hand, we can view it as simply investments that are relatively small in relation to the expense of processing invoices, even go so far as to say that e-invoices are expensive to process. The manual processing of the over 1.4 billion invoices sent in Sweden each year costs companies over SEK 150 billion more than necessary. Paper invoices are obviously the most expensive, and e-invoices can actually reduce the cost of invoice processing to a third of that for paper invoices. However, it is still a seven times greater expense than necessary and, on average, invoice processing costs over 10 times more than necessary. In the rest of Europe where the transition over to e-invoices has not yet come as far, the saving potential is naturally much greater.

Conservatism is the greatest block

The technology for automation is already available, so the biggest block is influencing conservative thought patterns. The fact is that clever CFOs are trained in risk aversion and conservative thinking is largely a factor for success. Part of this way of thinking is that a company ideally wants to allow existing systems to depreciate and be written off before investing in new systems. Though natural, this is actually an incorrect train of thought, leading to lost money for every day that passes. Therefore, it is also difficult to achieve a revolution with a paradigm shift and significant changes in behaviour. But the CFOs who dare to take that first step will be the real heroes.

Henri Taipale, CEO, Qvalia

Qvalia is an accounts payable and transaction management specialist with over 1,000 clients internationally.

We offer a comprehensive suite of services: recovery audit, invoice prevalidation, cloud-based invoicing solutions and VAT management. Headquartered in Sweden, we have offices in five countries and employ the leading experts in each specialist area.



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Large companies conduct a lot of transactions. They often don’t have the tools to check that all the figures tally. Recovery restores lost capital and corrects errors that have been booked.

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To prevent incorrect transactions, Precovery proactively filters the flow of invoices, sifting through and flagging up errors. As a customer you obtain an improved and refined flow of transactions.

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