When we look at a technology that has huge future potential while already sitting firmly in the here and now, it’s hard to beat electronic invoicing. The ability to send and receive invoices directly between accounting systems (and eliminate the need for emailed manual, error-prone PDFs) offers some very interesting benefits.
Electronic invoice There are different stages of adoption around the world, with some governments either mandating or supporting it as a core part of the invoicing process. However, the potential of what it can do remains largely unrealized, especially when you think about combining it with other technologies such as artificial intellect, Blockchain, Smart payments and the Internet of Things.
Let’s look at one example where this type of technology can benefit small businesses. In this case, a cafe in South Melbourne called JB’s Cafe.
The real value of zero touch
After an impromptu Thursday morning coffee, owner JB pours the last liter of milk by 11am. He opens his supplier purchasing app and quickly browses all the milk wholesalers in Melbourne to compare price and delivery times. It costs $2 a liter from the 1st supplier, but the milk doesn’t arrive until 2pm. Supplier 2 is more expensive at $3, but it will arrive in half an hour – perfect. He presses accept and goes back to making coffee for the customers.
Thanks to smart payment technology, the transaction is completed before JB places the phone on the counter, with an electronic invoice automatically recorded in the books of all three parties. Payment details are changed automatically and there is no need to enter a month-end PDF invoice anywhere. He doesn’t even have to sign anything until the delivery driver fills the fridge and waves goodbye.
Before that, J.B. He managed his own accounting. It was all paper and PDF-based, so he was constantly falling into the trap of forgetting things, paying suppliers late, and trying to reconcile numbers after a long day.
After he spoke with an advisor to help him digitize his business, they connected his accounting software, connected it to applications across inventory management, inventory and payments, and created an e-invoicing contract for inventory (such as milk). Business suddenly became a lot nicer for JB.
The next frontier of electronic invoicing
To truly appreciate the potential e-invoicing technology can unlock more broadly, it’s worth understanding what underpins it: the Peppol network.
Peppol is a secure, global network that facilitates the exchange of electronic documents. It’s run by a non-profit organization that standardizes how information is structured so you can send documents (such as electronic invoices) directly to other registered software systems, even if your customer or supplier uses another system. It’s a far cry from the current paper and PDF invoices, which are very error-prone and time-consuming.
So what kind of future state could reasonably exist if futuristic technologies were built to work together? Let’s imagine another scenario for JB.
When supplies ran low, sensors in JB’s milk cooler automatically notified the small business platform that full cream and skim milk needed to be ordered. The software then displays a list of suppliers with availability, delivery times and prices (and even makes recommendations based on previous milk usage history).
JB would decide the best price and the software would send the order. Once the milk arrived, a sensor would detect that it had been refrigerated, triggering a confirmation with the supplier who could issue an electronic invoice. Over time, the artificial intelligence built into these tools could analyze JB’s sales and proactively adjust orders to work around peaks and troughs.
JB may be required to move their normal Friday milk delivery to Thursday thanks to the promotional fixed wholesale rate. Once he agrees, the delivery cadence is adjusted accordingly.
Of course, this may apply to other suppliers as well. Using the same integrated technology, JB’s air conditioning unit and coffee machine can be connected to an energy management platform supported by solar panels on the roof. This will automatically adjust the electricity supplier’s electronic invoices based on usage (and solar availability).
As an added efficiency, it can automatically adjust the air conditioning during quiet periods to save energy. This is commonly known as “IoT” or Internet of Things, a concept where household items are connected to the Internet. Now JB is no longer captive to fluctuating milk or electricity prices, operating costs are reduced by 10% per month.
Looking to the future
While this may be a hypothetical scenario, the use of electronic invoicing is very much a reality. Governments around the world are investing heavily in e-invoicing and adoption – particularly in Australia, New Zealand, Singapore and the UK.
Not only can your business or practice reap the benefits of increased efficiency, reduced costs, and faster payment times, it’s also a great first step toward preparing for other exciting technologies in the future.