1. E-Banking Snapshot 30
E-invoicing: crown or catalyst
August 2009 of an efficient billing process?
Digital economy and structural change
E-invoices have passed the one billion mark in Europe. E-invoices
describe a variety of electronically sent invoices: They range from bills simply sent
by e-mail to consumers to fully integrated payment management systems.
According to Billentis, a consultancy and e-invoicing advocacy, close to 900m B2B
and 500m B2C invoices will be sent electronically this year. chart 1
The market share is tiny. The number of e-invoices grew by more than 40%
p.a. over the last few years. Nevertheless, e-invoicing has so far only reached a
tiny market share of 5% of the total billing volume. chart 2
20% of European companies send or receive e-invoices. This is an
increase by 17% compared to the previous year. However, Eurostat only asks
whether or not companies use e-invoicing, not how many bills they send or receive
electronically. This may distort the picture. chart 3
No clear pattern in Europe. Estonian firms are most likely to use e-invoices
followed by Norwegian companies. More surprisingly, Italy has sneaked into the
top group whereas Sweden is below the EU average. In fact, typical leading
indicators for adoption, such as GDP per capita or latitude, have no explanatory
power. chart 4
Wholesale and retail trade firms are leading adopters in Europe. That
may have to do with the number of transactions and bills they work with. But the
degree of business IT sophistication is also important. For instance, more than
60% of large German carmakers, which operate highly advanced systems, send
invoices electronically. chart 5
Big firms cajole smaller ones to use e-invoices. Larger companies often
have standardised billing processes and hence tend to benefit more from
e-invoicing. But to make it worthwhile, they must also exchange e-bills with their
many smaller counterparts. Yet, large companies have much bargaining power
over their suppliers to make them comply. chart 6
E-invoicing needs to overcome structural obstacles. Large companies
often use already quite advanced legacy systems for billing and payment. Smaller
and medium-sized enterprises are discouraged by the complexities and the lack of
Author a critical mass of counterparts. Imposing a mandatory standard top-down might
Thomas Meyer
+49 69 910-46830
solve that but would also inflict substantial adjustment costs on firms and payment
thomas-d.meyer@db.com providers. chart 7
Editor The hidden treasure of e-invoicing is a streamlined billing process.
Antje Stobbe Billentis argues that an e-invoice may be EUR 18 cheaper than a paper-based bill.
Technical Assistant However, the foremost part of these savings occurs in a better billing and payment
Sabine Kaiser process – not by sending or receiving the bill as such. This puts many of the
Deutsche Bank Research claimed benefits of e-invoicing into perspective. They won’t materialise without a
Frankfurt am Main fully integrated billing process. chart 8
Germany
Internet:www.dbresearch.com Are e-invoices crown or catalyst of an efficient billing process?
E-mail marketing.dbr@db.com Sceptics of e-invoicing say that first the billing processes should be modernised
Fax: +49 69 910-31877 because that’s where the biggest savings are. The e-invoice is just the cherry on
Managing Director top. Advocates claim that once e-invoices are being introduced, they would trigger
Norbert Walter this modernisation and push otherwise reluctant enterprises. Evidence across
Europe suggests that e-invoicing is one of the later steps of IT sophistication,
particularly among medium-sized companies. chart 9

2. E-Banking Snapshot 30 E-invoicing
E-invoices have passed the one billion
E-invoices surpassed the one billion mark mark in Europe. E-invoices describe a
Electronic invoice volume in Europe, m variety of electronically sent invoices:
900
800
They range from bills simply sent by
700 e-mail to consumers to fully integrated
600 payment management systems.
500 According to Billentis, a consultancy
400 and e-invoicing advocacy, close to
300
200 900m B2B and 500m B2C invoices will
100 be sent electronically this year. back to
0 front page
2005 2006 2007 2008 2009*
B2B B2C
* Estimate Source: Billentis Market Report, 2009 1
The market share is tiny. The number
Tiny market share of e-invoices grew by more than 40%
Share of e-invoices in total invoicing volume in Europe p.a. over the last few years.
Nevertheless, e-invoicing has so far
only reached a tiny market share of 5%
of the total billing volume. back to front
E-invoices page
5% Paper-based
invoices
95%
Sources: Billentis, DB Research, 2009 2
More companies use e-invoices 20% of European companies send or
% of enterprises in the EU-27 that used automated data exchange for
sending or receiving e-invoices
receive e-invoices. This is an increase
25 by 17% compared to the previous year.
+17%
However, Eurostat only asks whether
20 or not companies use e-invoicing, not
15
how many bills they send or receive
electronically. This may distort the
10 picture. back to front page
5
0
2007 2008
>10 employees Sources: DB Research, Eurostat, 2009 3
August 2009 2

3. E-Banking Snapshot 30 E-invoicing
No clear pattern in Europe. Estonian
Who saves the trees? firms are most likely to use e-invoices
% of enterprises that used automated data exchange for sending or followed by Norwegian companies.
receiving e-invoices, 2008
45
More surprisingly, Italy has sneaked
into the top group whereas Sweden is
40
below the EU average. In fact, typical
35
leading indicators for adoption, such as
30 GDP per capita or latitude, have no
25 explanatory power. back to front page
20
15
10
5
0
HU SI UK RO PL ES SE FR EU IE SK PT DE FI* NL IT NO EE
>10 employees. *2007 Sources: DB Research, Eurostat, 2009 4
Wholesale and retail trade firms are
Adoption varies by industry leading adopters in Europe. That may
% of enterprises in the EU-27 which used automated data exchange for have to do with the number of
sending or receiving e-invoices, 2008
transactions and bills they work with.
Wholesale & retail trade
But the degree of business IT
sophistication is also important. For
Utilities instance, more than 60% of large
German carmakers, which operate
Manufacturing highly advanced systems, send
invoices electronically. back to front
Transport & communication
page
Other business activities
Construction
0 5 10 15 20 25
Receive Send
> 10 employees Sources: DB Research, Eurostat, 2009 5
Big firms cajole smaller ones to use
Big firms cajole others to use e-invoices e-invoices. Larger companies often
% of enterprises in the EU-27 which used automated data exchange for have standardised billing processes
sending or receiving e-invoices, by number of employees (2008)
and hence tend to benefit more from
35 e-invoicing. But to make it worthwhile,
30 they must also exchange e-bills with
25 their many smaller counterparts. Yet,
20 large companies have much bargaining
15 power over their suppliers to make
10 them comply. back to front page
5
0
10 - 49 50 - 249 > 250
Send Receive
Sources: DB Research, Eurostat, 2009 6
August 2009 3

4. E-Banking Snapshot 30 E-invoicing
E-invoicing needs to overcome
What drives, hinders e-invoicing?
structural obstacles. Large companies
Drivers Brakes often use already quite advanced
Potential cost savings legacy systems for billing and payment.
Critical mass of users needed
Pressure from counterparts Ill-prepared billing processes
Smaller and medium-sized enterprises
are discouraged by the complexities
Joint or open standards Differences in payment habits and
and the lack of a critical mass of
legal traditions
counterparts. Imposing a mandatory
Solutions from standard softw are Legacy systems
standard top-down might solve that but
packages
would also inflict substantial adjustment
Source: DB Research, 2009 7
costs on firms and payment providers.
back to front page
The hidden treasure of e-invoicing is a
Biggest savings potential in streamlining billing streamlined billing process. Billentis
process – not e-invoices as such argues that an e-invoice may be EUR
Costs in EUR per transaction
18 cheaper than a paper-based bill.
Invoice issuer However, the foremost part of these
Print, Remittances savings occurs in a better billing and
Payment
envelop,
reminders
& cash Archiving payment process – not by sending or
send mgmt receiving the bill as such. This puts
Paper 3.90 0.50 4.50 2.20 many of the claimed benefits of e-
invoicing into perspective. They won’t
Electronic 0 0.40 3.00 0.80
materialise without a fully integrated
Invoice recipient billing process. back to front page
Payment Archi-
Entering Validation Dispute
Receive & cash ving
Codification & matching Mgmt
mgmt
1.10 3.00 4.00 2.50 4.80 2.20
0 0 1.20 2.00 2.00 08.0
Example of a company with 5,000 employees.
Source: Billentis, 2009 8
Are e-invoices crown or catalyst of an
Cherry on top efficient billing process? Sceptics of
% of enterprises in the EU-27 which use the following, % (2008)
e-invoicing say that first the billing
processes should be modernised
because that’s where the biggest
CRM savings are. The e-invoice is just the
cherry on top. Advocates claim that
ERP
once e-invoices are being introduced,
they would trigger this modernisation
Digital signature
and push otherwise reluctant
E-invoicing enterprises. Evidence across Europe
suggests that e-invoicing is one of the
0 10 20 30 40 50 60 70
later steps of IT sophistication,
particularly among medium-sized
Medium-sized enterprises Large enterprises companies. back to front page
Sources: DB Research, Eurostat, 2009 9
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