ONESOURCE Pagero E-Invoicing Provides Benefits Beyond Tax Compliance

Thomson Reuters commissioned Forrester Consulting to interview a representative of an organization using its e-invoicing capability, which is powered by Pagero, and conduct a Total Economic Impact™ (TEI) study to better understand the benefits, costs, and risks associated with e-invoicing.¹ This abstract will focus on the interviewee’s organization’s use of Pagero e-invoicing and its value.

Forrester interviewed the regional CFO for a European-based financial services organization. The organization employs more than 5,000 people and operates in over 50 countries. Before deploying ONESOURCE Pagero e-invoicing, the organization used another e-invoicing solution for some of its needs but processed many of its incoming and outgoing invoices manually.

E-invoicing, or electronic invoicing, refers to the process of issuing, transmitting, and receiving invoices in a structured electronic format that allows for automatic and electronic processing. This digital approach replaces traditional paper and PDF invoices, thereby streamlining invoice processing, reducing errors, and enhancing consistency.

In the past several years, many countries have introduced regulations that require companies to generate and accept e-invoices in an effort to increase tax compliance, reduce fraud, and encourage transparency, as well as establish more sustainable business practices. This regulatory impact, along with advances in the sophistication and availability of invoicing applications, is part of a broader move toward a more interconnected and digitally-driven global economy. At the same time, as more and more countries introduce unique, local requirements and practices for electronic document exchange, multinationals are increasingly challenged by the growing complexity of the regulatory landscape. Businesses must adapt to these changes to stay competitive and compliant in the evolving digital landscape.

INVESTMENT DRIVERS FOR E-INVOICING

The interviewee’s organization adopted ONESOURCE Pagero e-invoicing primarily to comply with regulations in northern European markets where it had recently expanded. These markets were farther along in their transition to e-invoicing and complying with their regulations was beyond the capability of their current e-invoicing solution. As a result, the interviewee’s organization struggled with several challenges in its legacy environments, including:

• Regulatory compliance. The interviewee noted their organization’s finance team struggled to ensure adherence to local tax regulations in the many different countries in which it operated, as well as the differing regulations concerning e-invoicing itself.
• Manual processes. The finance team at the interviewee’s organization previously spent a significant amount of time on manual, error-prone tasks in their invoicing workstream, leading to inefficiencies.
• Invoice errors. The interviewee noted error rates of approximately 3% in invoicing, which had the potential to affect days’ sales outstanding (DSO), employee productivity and frustration levels, and even the company’s reputation with its customers.

• Integration with enterprise resource planning (ERP) systems. The interviewee’s organization needed a solution that would integrate seamlessly with the existing ERP systems in place at newly acquired subsidiaries. These were different from the systems in place in established offices and was one of the key reasons that their legacy e-invoicing solution was not appropriate.

ONESOURCE Pagero e-invoicing Features

The interviewee’s organization chose to invest in ONESOURCE Pagero e-invoicing for the following reasons:

• Increased compliance with ever-evolving e-invoicing regulations in multiple countries. The interviewee told Forrester that local regulations were changing quickly across the region for which they are responsible. The regulations were stricter in some countries than others, and the status in each country changed frequently. Overall, they saw an increased insistence that e-invoicing should become the standard in order to reduce errors and increase transparency. The interviewee reported that countries levied penalties that include fines for noncompliance with e-invoicing mandates, penalties for incorrect invoicing, and late submission penalties, as well as administrative penalties like additional reporting requirements and audits.
  
  ONESOURCE Pagero relieved the interviewee’s organization of the burden of monitoring these regulations and making changes in their own processes to stay current. The interviewee stated: “Pagero helped us achieve compliance quickly and easily, especially in countries like Norway and Denmark where regulatory requirements are more advanced. This definitely helped us avoid potential noncompliance fees.”

• Integrated with existing ERP systems, automating tasks and improving workflow. Integration with the more advanced ERP system used by recently acquired firms in the region was a key consideration in the adoption of Pagero. The interviewee confirmed that many of the tasks and workflows involved in processing invoices (whether sending them out or taking them in) were still performed manually. They explained: “[With Pagero], you can integrate it into your ERP system. And then when an invoice is not paid, it pushes the task to the dunning department, so that a dunning note is sent out automatically. There are a lot of steps that were done in a quite separate manual way that can be integrated using this solution.”

• Reduced errors in generating and paying invoices due to automation of manual tasks in the workflow. The interviewee noted there were financial benefits to improving the accuracy of invoices, including receiving the appropriate payment for goods and services faster when the customer received the correct invoice. However, the interviewee reminded Forrester that there could be even more dire consequences to invoicing errors than higher DSO or discounted revenue payments: “Client retention is key for us, so we cannot afford to send out incorrect invoices. We are really running a risk of losing valuable clients when we don’t do our homework ourselves. I think we both can imagine how we view a company that wants money from us and doesn’t even manage to get the invoice right. I think we’re really talking about a significant impact here.”

Key Results For ONESOURCE PAGERO e-invoicing

The results of the investment for the interviewees’ organizations include:

• Increased labor efficiency for accounts receivable (AR) and accounts payable (AP) teams. Based on this interview, Forrester assumes that the composite organization outlined in the original study employs AR and AP employees who spend approximately 50% of their time preparing and processing invoices manually before the switch to e-invoicing. This includes time for accounts receivable employees to prepare, quality check, and send invoices as well as time for accounts payable employees to perform manual checks for accuracy and fix errors in incoming invoices. The full implementation of e-invoicing saves all the composite’s employees 15% of that time and makes their jobs less stressful and frustrating.

• Avoided certain IT help desk tickets. Invoicing errors impact not just the finance team, but also the IT team. As the interviewee explained, “Every time we have to dig into those incorrect invoices, the IT team gets involved because we need to retrieve some data.” By reducing the invoicing error rate, they said, “That is definitely beneficial for IT because it eliminates those operational tickets.”
• Eliminated paper and postage costs related to paper invoices. The switch to e-invoicing allowed the interviewee’s organization to stop printing and posting paper invoices. The composite organization prepares 350,000 paper invoices per year before adopting e-invoicing. The avoided direct costs alone of paper, ink, envelope and postage for the composite organization could easily exceed $1.50 per invoice.
• Improved DSO. The interviewee told Forrester that their company saw a reduction in invoicing error rates from approximately 3% to less than 1% after deploying ONESOURCE Pagero e-invoicing. Invoicing errors prior to ONESOURCE Pagero e-invoicing resulted in extended payment delays of days — or even weeks — as customers disputed the invoices and engaged in negotiations to correct the amount demanded, and these delays impacted the interviewee’s company’s DSO and, eventually, profitability. Beyond the quantifiable impact of the increase in DSO, invoicing errors eroded customers’ trust in the company and, in extreme cases, could result in the loss of a customer. The improvement in invoicing accuracy was a benefit for the interviewee’s organization.
• Enhanced employee experience. The interviewee explained how the use of ONESOURCE Pagero e-invoicing created a better experience for employees on the financial team: “Our teams expect us to bring in new tools, to bring in better technological solutions, and Pagero certainly helped in that sense. And this is something that we are asking our teams in a Net Promoter Score℠. ‘How happy are you with the tech stack,’ for example. It’s trending upward and Pagero certainly contributed to this upward trend.”

Appendix A: Endnotes