Bjørn Inge Dalen has been a driving force within the Norweigan e-invoicing industry. He has deep knowledge both from developing the ISS e-invoicing flows as well as from projects such as E2B and B2B Connect. He will share his idea on process and humans – the ever illusive factors for sucess or failure.
The article will cover:
e-invoicing best practise – KPI metrics -continuous improvements
ISS is one of the world`s largest commercial providers of Facility Services. The company has more than 500.000 employees and operations in 53 countries world wide. The head office is located in Copenhagen, Denmark. The Group annual turnover in 2009 was 78 billion NOK.
“Working with shared services like book keeping, invoicing, and salaries in a high cost country like Norway is quite challenging. Obviously, in a larger company, you can not increase costs in line with the inflation and expect that you will avoid larger downsizing further down the road. As a responsible manager, you should be targeting a yearly decrease in costs, or should at least be able to run with the same costs but handling more tasks than before. Or both, if you are really successful!
The quest for improvements
A couple of years ago, I could feel the fear among my employees when I was preaching the mantra of increased efficiency. It isn`t strange; when someone wants to cut costs they go hunting the largest cost factor – salaries. However, after delivering increased efficiency and the employees see that the jobs are still there, they understand that increased efficiency is necessary to secure their jobs. From my point of view, downsizing processes is an indication of managerial failure: the lack of focus on continuously improvement in the daily operations.
This article is first and foremost covering the eInvoicing subject, but that is only one of many cornerstones for succeeding with your Shared Service Center. I will also stress the following aspects;
- Establish Key Performance Indicators (KPI) on most of the processes in your department!
- Distribute the targets down on each employee, so that they can take part of the goals!
- Mage a grid of all tasks in the department, and distribute the responsibility equally between the employees. Make them feel responsible – make them feel important!
- Formalize all important processes and formalize agreements with other departments cooperating with your department. This will reduce tension!
- Allocate all costs related to your processes on your department. There is no little motivation in decreasing the money spent on stamps if the money is covered by another department….
- Have fun on the way, and measure also the level of fun (satisfactory indicator) in your KPI-matrix!
I have been quite active in the eInvoicing market in Norway the last years, but you will now learn that this is something which I will pay very little attention to in this article. The reason? As a single company, or working together with others, you will have very little impact on the progress in the market for eInvoicing. Unfortuanately. But you can have a huge impact on how you adopt available products to your business portofolio, today!
It is often easy to become disappointed as a result of all the things you still haven`t managed to do, instead of being satisfied with all the things you already have achieved. I would summarise the ISS Norway work within electronic invoicing as an impressing piece of work, but has so far only picked the largest apples on the three. The future for further cost reductions looks bright!
Accounts Payables/Incoming invoices
ISS Norway started with electronically distribution of incoming invoices back in 2004 when we implemented the Basware system, the same supplier as used today. The scanning is performed by our Office Division, which also offer the same services to our customers. The Norwegian activities have been steadily growing, and we are now receiving approximately 350.000 invoices annually.
Natural KPI’s on Accounts Payables issues:
- eInvoices in % of the total number of invoices received, split on XML, mail/Pdf, file
- Number of invoices not sent directly to approving person
- Measure the late payment pyramid; reminders, second reminders, legal cases and interest/charges paid due to this
- Number of invoices (%) matched automatically if you have an order match system
- DPO – Days Purchase Outstanding, average number of days before payment
One of the first improvement issues we confronted a couple of years ago, was the number of invoices not being distributed automatically. We are distributing daily about 1.000 invoices to almost 900 users in the Basware system, based on the department code following the invoice. Back then, 4 ladies started their working day by distributing the ones missing the number, and our KPI’s told us that 45 % of all invoices needed to be distributed manually. We started immediately to send information to the persons buying goods, but we understood it was not sufficient to reach target. Therefore, we decided to return invoices to suppliers who did not include department code in the invoice. We sent out an information letter to all suppliers, and made a deal with our Document Center scanning the invoices to return the original to the suppliers. The first 3-4 weeks was a “hell”. The telephone rang constantly from our suppliers. But then it became quiet, and the KPI showed an improvement of 40 %….
We have attacked the paper volume in 4 different ways. The largest suppliers have been able to provide us with semi column separated files, which we import through a interface in Oracle Applications. Approximately 30 % of our invoicing volume is handled through this channel. We are able to build in tables for the accounting and tax calculations, so that we do not need any manually handling on invoicing level. For this solution we save scanning costs, distribution costs and manually handling costs. A parallel overview is produced to secure the quality of the data imported into the ledger and later paid out. However, this solution is only cost saving for the largest suppliers since there are costs involved in setting up and to handle the weekly downloads.
For medium range suppliers we have established the possibility to receive XML eInvoices through 2 different suppliers. We receive approximately 10 % of all invoices through these channels, but the volume is increasing. We save costs for scanning these invoices, but we are still left with the manual handling of the book keeping and approval at the next stage.
Third, we receive eInvoices through e-mail, making it possible to receive mail with PdF attachments. Our Document Centre is opening and sending the invoices into the Basware system. “Where are the gains?“ you might ask. Well, we reduce the lead time on the invoices, reduce the risk of not getting the post delivered and we now have the possibility to automate the process of opening and reading the invoices through the tools now available in the market.
We have also established a Web-portal for registrating single invoices manually. It is open for internal and external users without the need for username/password. The reason for this is that it still has to be approved in Basware, and there are no username or password for sending a paper invoice in the mail today either…. I don’t think this will be the future solution for sending eInvoices to ISS. The reason for establishing it was from a totally different reason many haven’t thought of yet; In a large company you often get a telephone or an e-mail saying that you have to pay this amount to that person for some reason. So you start to wonder, can this person initiate this payment and is his superior informed about the transaction? We found out that the web-portal was the solution to this problem, since the invoices needed to be approved in our Basware system supported by the approval hierarchy within the system. It has been a great success!
We have still not implemented automatically match on orders, but we are putting a lot of effort on evaluating the future solution for this.
Accounts receivables/Outgoing invoices
The number of outgoing invoices are about the same as incoming; around 350.000 invoices. The level of electronic invoicing is far less than on the incoming side, but the savings are also less. The electronic way of sending is the standard way, and therefore, a fee of NOK 50 is implemented on every paper invoice.
Natural KPI’s on Accounts Receivables issues:
- eInvoices in % of the total number of invoices sent out, split on XML, mail/Pdf, file
- Percentage automatch on incoming payments
- DSO – Days Sales Outstanding, Number of days in average before payment is received
- Broken promises in % of total receivables
eInvoices could be sent in 2 ways;
- XML eInvoices with the Norwegian e2B as standard
- Mail with a PdF attachment
We want off course to distribute most of the volume as XML files, but the largest increase has been in the mail segment. The most likely reason is off course the set up costs. Small customers do not have any infrastructure to receive invoices as XML. Like many others, we experience a lot of challenges on the mail alternative; the receiving mailbox can be full, the attachments are to large and so on. I therefore believe that we soon will go over to a solution where we attach a link to our Invoice Hotel, instead of attaching the file. It also gives us flexibility to send out the invoice as paper if the link is not opened.
Market development and market strategy
As a customer or supplier, you can find information on how to receive/send eInvoices to and from ISS Norway. We are daily receiving request from businesses who would like to connect. Therefore, we have not run any campaigns towards our suppliers or customers yet. But I believe this will intensify in the year ahead.
The market for B2B eInvoicing has developed quite slowly. Many people in the market are now optimistic towards the future due to the new initiative from Difi on a new format and a new infrastructure for electronic invoicing towards the Public Sector in Norway. There is no indication that the new solution will revolutionize the market in the short term – we will still be working with single cases for many years ahead.
Therefore: analyze your largest potential, find the best way to do it and start working!! “[/private]