Originally published on the European eBusiness Lab website:
The Lab, with the assistance of Mark Abouzeid, completed an extensive study that shed light on the potential benefits of invoicing and payment automation, presenting a roadmap for the Region of Puglia which identified the advantages of such developments starting from a single company, to its supply chain and, finally, to the whole regional economy.
EBL developed an Impact Assessment Model which goes beyond the analysis of the process automation and takes into account the impact of those initiatives on the companyʼs working capital and its liquidity, a critical factor in the current market conditions. The Roadmap for Impact Assessment starts from a basic model of savings from adopting e-invoicing and payments. This is applied in a greater context of the entire financial supply chain, client to cash cycle and the cash conversion cycle with increasing benefits defined within each larger context. Going outside the specific definition of a company, the model explores how adoption impacts opportunities among supplier groups, the vertical industry supply chain, dynamic networks and, finally, the economy of Puglia, overall.
The data used for the study has been gathered through direct interviews, online surveys and case studies carried out with companies located in the Region of Puglia, in the first quarter 2010. Benefits are estimated at 3.5 billion euro, i.e. 4.9% GDP of the Region. The results show that for invoice automation, 36% of the savings derive from outbound invoices, while 64% from automating the receipt side of the invoicing process.
In particular, annual savings from complete automation of the invoicing process are estimated at 709 million euro, while the potential benefits derived from the use of online payments are of 932 million euro. Moreover, when automating the invoice-to-payment process there would be a dramatic reduction of errors and non-conformities which would result in an estimated 948 million euro in savings. In terms of working capital and liquidity, sending e-invoices daily, or in real time, would unlock 666 million euro, yearly.