This information is fundamental to build the business case for eInvoicing.

Accounts payable management based on traditional paper invoices is essentially a transaction driven process requiring human resources, and the higher the volume of transactions, the greater the human resources involved. The volume of invoices also drives other costs and benefits; as well as invoice processing, invoices must be archived, retrieved and subsequently destroyed. Being an activity based on scale the benefits of automating inbound invoicing will be greater when dealing with higher volumes.

Greater productivity and efficiency are key benefits of electronic invoicing. Typically, there is one member of staff employed to process 5,000 – 15,000 invoices per year in the Accounts Payable department, so an organisation processing 100 000 invoices per year will employ around 10 staff (in addition to mail clerks).

Large-scale enterprises can process 125 000 invoices per person per year when electronic invoicing is deployed, particularly if deployed alongside a robust procurement system. Many organisations redeploy staff to more added value activities, rather than mundane transaction processing.

Combining the number of invoices and the number of staff employed to process them enables the organisation to evaluate the scale of extensive savings and the potential release of resources for more productive work.

It is important to understand the composition of a public sector organisation’s supplier base in terms of size, significance and any special characteristics. For example, the management of contractors requires a different approach to major corporate suppliers. The efficiencies gained by electronic invoicing are of particular relevance to SMEs – costs are reduced, invoices are delivered quickly (instantly) and payment cycles are improved. In order to gain critical adoption of electronic invoicing it is thought that the ‘mass-middle’ of small and medium sized enterprise companies must begin invoicing electronically.

The cost to process an invoice is the most basic metric, but in many cases, one of the more difficult to assess. A headline cost can be derived from the answers to Q8 and Q9. However, the costs will vary dramatically from department to department, depending on the geographical location of processing, the volume of transactions, the technology deployed and process efficiency, but there is one undeniable truth: Paper invoices and manual processing impedes on the efficiency of your accounts payable operations. Finance departments are often left in the dark, lacking the automation and visibility required to properly manage cash positions.

The cost per invoice gives you a starting point when trying to determine the benefits of automating part or all of your Accounts Payable process. To do that, simply refer back to the process map you created. Remove the steps that automation will take out of the process. You can then remove the time and labour spent on those tasks and come up with a new cost-per-invoice calculation. This will help you get started on the return on investment calculation that is a necessary prerequisite to building the business case.

Failure to pay on time causes undue challenges on the supplier (particularly SMEs), the buyer and the accounts payables department. It is also now relevant in the context of the EU "Late Payments Directive" which states that public authorities will have to pay for the goods and services that they procure within 30 days or, in very exceptional circumstances, within 60 days.

eIinvoicing properly implemented for maximum automation should ensure that the public sector pays its suppliers more promptly or at least more predictably. Because e-invoices are received in a transparent way they can be rapidly processed, reconciled and approved for payment often within 5 days. This compares with the frustrations of paper invoices which can get mislaid, delayed and may take up to 20 days or more to be approved.

Given the improved processing environment, it is a matter of management judgement as to whether payments are made according to an agreed and predictable timescale, or more promptly. The ability of the buyer to take advantage of trade discounts, which are elusive to the paper process, is also a major benefit. As already stated, suppliers may also have the opportunity to use ‘approved to pay’ invoices to raise liquidity through early payment and invoice discounting options.

The opportunity to pay suppliers promptly should be factored into the business case as a clear economic benefit and a means of de-risking and stabilising the supply chain.

Regulations in Europe require that buyers retain invoices for 6-10 years.

Accounts Payable is a labour intensive environment. In the private sector, many corporations have outsourced this activity; the processing is often undertaken in lower cost environments or through sharing services to create economies of scale. The question of outsourcing needs to be discussed, also in the context of working with a number of other public sector organisations in a shared services centre. Care must be taken with outsourcing to ensure compliance with archiving and data protection rules.

The financial shared services model has made significant inroads in Accounts Payable.

Unlike outsourcing, where functions that were previously performed internally are handed over to an external party, a financial shared services model establishes a centralized internal entity to process work. A financial shared services organisation becomes a supplier to the enterprise, and may charge a fee for its services. In all cases, a financial shared services organisation will standardize processes and consolidate systems so that functions become more efficient, more predictable and less costly. The business case can be substantially impacted by a decision to utilise a shared service model.