Highlights of the European market description and analysis
Innopay and Euro Banking Association
The following article summarises the e-invoicing European market description and analysis presented by Innopay and the Euro Banking Association (EBA). E-invoicing is considered by many corporates to be an important potential development in their order-to-cash and purchase-to-pay cycles and it has been discussed as a potential benefit of SEPA. The following findings are taken from the Management Summary to the Report, which can be found at www.abe-eba.eu which we would encourage readers to download and discuss within your treasury association.
Finding 1: E-invoicing is growing fast from a low base but there are major unaddressed market segments
There are compelling forces at work to encourage the growth of e-invoicing. But although it has been in the early stages of development for over 20 years, it is reported that less than 5% of volumes are currently dematerialised. Annual corporate and public savings of up to e243 billion are projected across Europe as a whole. The adoption rate of e-invoicing is accelerating with varying growth rates per country. Countries such as those in the Nordic area, Belgium, and Switzerland have relatively greater traction, whereas in larger countries adoption is more diffuse. Domestic volumes predominate but cross-border invoicing will grow as market integration occurs at both a trade and enterprise level.
The end-to-end trade process should always be taken into consideration as the essential context for invoicing.
In general, the current focus is on outbound and inbound volumes from larger corporate entities, especially in the accounts payable area and mass-consumer invoicing initiatives from utilities and similar entities. The strong market power of these players is driving these developments. The role of the public sector is instrumental in some cases. The market for smaller companies and consumers is comparatively speaking unaddressed and an emerging opportunity in this space is clearly identifiable. By adopting generic solutions all market segments could benefit.
Finding 2: The European market for e-invoicing services is very fragmented, and reaching all potential e-invoice users is a serious problem, which banks could assist in addressing
A wide variety of e-invoicing solutions is offered by over 250 service providers focusing on varying needs and different market segments. ‘Consolidators’ and other players including banks overlap in functionality and reach. Service providers are often geographically oriented. There are many ways of exchanging invoices including 3-party and 4-party models. To try to deal with this fragmentation and the resultant lack of reach, a degree of interoperability has been created between some service providers, on the basis of ‘roaming’ models, but which only addresses the interface between a relatively small number of platforms. Bank-inspired models have also shown a promising ability to address the ‘reach’ problem with SMEs and consumers and indeed, where such models co-exist with other consolidator models, there is an encouraging trend of adoption. Banks have notable assets including trust and experience with payment networks. Other service providers have strong business integration and IT skills.