Electronic invoicing is up to 70 percent cheaper than paper invoicing

Stefan Engel-Flechsig, the president of the EU Commission for e-invoicing, who visited Zagreb last week, claims that investments in the compatibility of systems for receiving digital invoices are highly profitable. The biggest challenge is convincing employees that change is necessary.

Written by: Vanja Figenwald

At the eighth European Conference on Business Processes held in Zagreb last week, the key speaker was Stefan Engel-Flechsig, the president of the EU Commission for e-invoicing, probably one of the most informed individuals regarding the informatization of business processes. The Commission’s role within CEN, the organization responsible for standardization in Europe, mandated by industry and the European Commission, is to find best practices and compile guidelines for industry and tax authorities after analyzing available technologies and legal frameworks. It is an advisory group established in 2001 that initially gathered only five companies, but today the number of members has grown to around 80, including representatives from five tax authorities, which Flechsig considers a significant achievement because, as he explains, tax authorities are generally oriented towards other institutions rather than such advisory bodies.

Stefan Engel-Flechsig’s unofficial specialization in e-invoicing is certainly of great interest to the business community that seeks to save through the informatization of operations. Flechsig states that the value of e-invoicing, which has received its own working group within CEN, is manifold. – E-invoicing is actually one of the most important business documents, the central document of the business process that can be viewed from several perspectives – explains Engel-Flechsig. First, it is one of the most important accounting documents; second, when reclaiming VAT, the invoice is a key reference point. Every time value is added to a product, a tax refund can be requested. The invoice is the most important proof in this regard. Furthermore, it is also the beginning of payment, or confirmation of the transaction, and since it must be archived, it can also serve as an excellent and precise indicator of the company’s operations during audits.

Profitable investment
Keeping this in mind, the benefit of switching to electronic invoicing for Flechsig is clear and undeniable, although he claims that the level of savings varies from company to company. As an example, he cites a rudimentary study indicating that electronic invoicing saves about 70 percent compared to traditional paper invoicing. He warns that this is merely an illustration, but one that clearly indicates that benefits exist. A deeper analysis, he says, shows that the recipient of the invoice saves much more, while the sender saves somewhat less. The sender receives ready and prepared data that no longer require additional work and effort because the system is adapted and standardized for their acceptance. Flechsig mentions a Danish study indicating that the recipient saves about 18 euros per invoice. He acknowledges that investments in the compatibility of systems for receiving digital invoices are necessary, but examples and calculations clearly demonstrate the profitability of such investments.

Flechsig, a lawyer by profession, participated in Germany during the 1990s in the creation of the world’s first electronic legislation, so he is very familiar with the issues of IT technologies in business organizations. Several key aspects, he explains, are regulated by this legislation, with the most important being the determination of responsibility for content on the internet, data protection, and the introduction of electronic signatures along with the necessary security infrastructure for them. The goal was, he says, to balance the need for regulation with new business opportunities. Therefore, the laws are designed to provide a framework for operation without hindering business development.

Responsibility of social networks
Meanwhile, the European Union has expressed interest in this legislation, and over time, what was created in Germany has begun to be incorporated into the common acquis of the European Union. A new challenge, he announces, will be regulating the responsibility of social networks, which he calls the next evolutionary step. Flechsig reminds that the internet forgets nothing and therefore believes that a new significant debate in this regard will be conducted precisely about social networks. He does not want to speculate on which direction this will take, but he cites the current debate on the right to delete undesirable material such as child pornography. Until now, the practice has been, he says, merely blocking access, but some are calling for the deletion of such material, so it will be interesting to see how this unfolds.

A frequently asked question about technological advancement is about its advantages and disadvantages. For Flechsig, at first glance, there are actually no disadvantages. According to him, there is a possibility of job loss, but he reminds us of the simplicity and speed that technology enables. – The benefit for the business community lies in the informatization of its business processes, as it frees up time for performing other tasks. People can be utilized for other tasks that are more valuable to the company than, for example, sorting invoices. People are the most important, so they must be used in the most efficient way – Flechsig justifies technology and continues with another example, globalization. – Another example is the globalization of the economy and the expansion of scope. Now, through the internet, you can sell all goods to the entire world, which you could not do before. The possibilities for expansion are now global, which is a significant thing for the economy. My son sells his toys online without any problems. As the last direct benefit of introducing technology, he cites information, or easier access to data, which allows for tracking trends and competition, and consequently a faster and easier adaptation of companies to always very changing conditions.

Security issues
Flechsig, however, acknowledges that increasing use and networking also mean insecurity and vulnerability of systems, but he warns that in practice, all these large and complex systems work very well. There are problems, but they are always resolved and rarely recur, he explains, and he also reminds us that people simply have to account for insecurity. Organizations must take this into account and be informed about potential problems. Although he is an obvious proponent of a large amount of technology, Flechsig knows that it can be overdone. – When I think about how much bureaucracy I have to go through, I think there is too little technology – he says. On the other hand, some examples have shown that technology can be misused, as was the case with electronic ID cards in some countries, which turned out to be overly complex and ineffective. Another example of too much technology overwhelming people is the electronic health cards in Germany, which also had an unfortunate outcome as they proved to be overly complex and insecure.

– Sometimes there can indeed be too much technology, so a balance must be found. It can be useful, but also overly complicated – says Flechsig. It is clear that before the fruits of the digital age can be reaped, something must also be invested in improving business processes. – It has been shown that larger organizations find it harder to integrate large systems and must invest more to achieve optimum. It cannot be precisely measured how much effort is required. The biggest challenge, I believe, is to convince employees that change is necessary because the age structure of employees is different, so some will accept these changes more easily, while others will find it harder – concludes Flechsig.