Business Payments Coalition B2B e-Invoicing Modernization is the Solution We Desperately Need

In a recent blog post, I commented about e-Invoicing interoperability promised in the early days of electronic invoicing. I wrote that the industry had teased the notion of supplier organizations connecting to and sending invoices through a centralized network that accommodates straight-through processing from suppliers to multiple customers – regardless of their e-invoicing solution provider. Here we are decades later, and we are still struggling to make interoperability a reality. Companies like Pagero are to be applauded for making significant strides toward interoperability, but they are not the only ones. The Business Payments Coalition, in collaboration with the Federal Reserve Bank of Minneapolis, shared the outcome resulting from an electronic e-Invoicing exchange proof of concept. This exchange, if implemented, offers a route toward interoperability and automating straight-through processing for invoices.

The work of the Business Payments Coalition revolves not just around the idea of creating a framework for electronic invoices; it offers the opportunity to develop a similar framework for remittance information.

According to the Federal Reserve’s FedPayments Improvement website:

An electronic exchange framework is a set of standards, policies, and guidelines enabling businesses to connect once and exchange with anyone within the framework, independent of their platform, system, or application.

How it might work

The proposed exchange would work the same way an email exchange framework does. Email accounts allow anyone to successfully send and receive emails regardless of whether they use Yahoo, Gmail, or another solution. The use of email has become ubiquitous, and, for the most part, no one worries about whether their intended recipient has received their email. Even if emails end up in spam folders, there is a simple way to resolve that issue.

The proposed framework is precisely what the electronic invoicing industry needs to truly become ubiquitous and allow solution providers to ultimately work in unison rather than work against each other as they try to carve out market share. Who can blame e-Invoicing solution providers for carving out their niche and touting their networks over the competition? If there are issues with a competitive network, the primary selling point for a solution provider is “our network is better than theirs,” rather than “here is the way we can fix this issue, so it benefits everyone.”

There is hope that the leadership role the Business Payments Coalition has taken over the last several years regarding this issue will result in a breakthrough in e-Invoicing. This breakthrough may result in e-Invoicing becoming the norm, like email or the Internet, rather than the exception. According to our most recent Perceptions Analytics study, even among suppliers using e-Invoicing, paper (64%) and email (85%) remain a common method of submitting invoices to customers. No matter what anyone says, these alternatives are a major obstacle to universal e-Invoicing because they are easy to use but can be more costly in the long run.

What about the e-Invoicing networks?

Theoretically, e-Invoicing solution providers should view a possible exchange created by the Business Payments Coalition as a good thing. As it stands now, interoperability for e-invoicing appears to be a bridge too far. No solution provider would create a framework that a competitor could easily use unless it results from a limited partnership. That would be akin to Delta Airlines allowing Southwest to use its jets along any route any way it sees fit. While code sharing does exist in the airline industry, that’s more of a limited partnership rather than a swapping of jets with complete autonomy.

What becomes the differentiator in a world where e-Invoicing networks operate within a framework, and true interoperability exists? Is it the number of suppliers, breadth of customers, ease of use? Perhaps it’s access to invoice financing options or detailed analytics. Whatever the selling point, interoperability paves the way for true ubiquity in e-Invoicing.

The BPC test drive

To test the validity of an e-Invoicing framework, the Business Payments Coalition, with support from the Federal Reserve, will roll out the E-invoice Exchange Market Pilot in early 2022. If an operational B2B invoice exchange framework can be proven for the U.S. market, then work to expand it and facilitate universal e-Invoicing can begin in earnest.

The Business Payments Coalition deserves credit for its efforts to bring about e-invoicing ubiquity and remove friction from automated, straight-through processing.

Ernie Martin is Founder and Managing Director of Receivable Savvy. He brings over 25 years of experience in financial supply chain management, marketing and communications and draws upon his extensive experience to share knowledge and best practices with AR professionals. He previously chaired the Vendor Forum of the Federal Reserve Bank of Minneapolis and his resume includes time at several well-known brands and companies such as Tungsten Network, Delta Airlines, CIGNA Healthcare and Georgia Pacific as well as a number of years as an independent consultant.