June 13, 2013 The History of E-invoicing
Since the early 1970’s businesses have used their own individual electronic systems to exchange invoice and purchase order information. These transactions have generally been in an ELECTRONIC DATA INTERCHANGE, or EDI, format.
The US Transportation Data Coordinating Committee and EDI
In 1975 the U.S. TRANSPORTATION DATA COORDINATING COMMITTEE (TDCC) completed a set of industry standards that any company could adopt for the purposes of exchanging transactional information with their trading partner.
The TDCC was formed in 1968 to coordinate the development of translation rules among four existing sets of industry-specific standards (McNurlin, 1987)
These standards evolved into what is the current industry standard for ELECTRONIC DATA INTERCHANGE, ANSI X12. (EDI-Guid, 2005).
EDI was the main way to exchange transactional data between trading partners until the early ninety’s. With advances in internet technology companies began to appear offering more robust user interface web applications with functions that catered to both supplier and customer.
These new web based applications allowed for online submission of individual invoices as well as EDI file uploads. Among the other methods of file uploads includes CSV and XML. These services allow suppliers to present invoices to their customers for matching and approval via a user friendly web application. Suppliers can also see a history of all the invoices they submitted to their customer without having direct access to the customers systems.
With this technology transactional information is stored in the data centers of the third party company that provides the invoicing web app. This proprietary information can be regulated by the customer in order to regulate how much transactional information the vendor is allowed to see. (For example payment dates, or check information). (GXS, 2013)
iPayables and AP Automation
One of the organizations that pioneered the use of a web-based AP AUTOMATION software was IPAYABLES. Founded in 1999 by Kenneth Virgin, Jonathan Titel and Robert Ripley. Their unique model allows customers and suppliers to exchange transactional documents including invoices, purchase orders, remittance notes, EDI FILES and more using solely a web based application.
iPayables is relatively unique in the industry in-that they have a DYNAMIC DISCOUNTING FEATURE, OFFER FREE VENDOR ADOPTION and NO SUPPLIER FEES. Other organizations that also offer AP AUTOMATION solutions include ARIBA and OB10.
As companies advance into the digital era, more and more are switching to ELECTRONIC INVOICING SERVICES to automate their ACCOUNTS PAYABLE DEPARTMENTS. Many believe E-invoicing to be an industry standard in the near future. According to a report done by the GXS team in 2013, “Europe is adopting government legislation and encouraging businesses to adopt ELECTRONIC INVOICING practices.”
The US Government Mandates Electronic Invoicing
The US Department of Veterans Affairs (VA) has finalized actions to mandate electronic invoice submission from suppliers to the VA Financial Services Center (VAFSC). The transition supports the requirements of the Improper Payment Elimination and Recovery Improvement Act signed by President Obama on January 10, 2013. The Federal Mandate is located in the Federal Registry at https://federalregister.gov/a/2012-28612.
Deputy Secretary of the US Treasury Neal Wolin recently stated that, “ELECTRONIC INVOICING will mean lower costs for taxpayers and faster payments for private sector companies doing business with the federal government.”
The US treasury estimates that implementing E-INVOICING across the entire federal government would reduce cost by 50% and save $450 million annually. (Bruno Koch, 2013)