Digitization? Just a Stopgap

These days, many German business owners are proud of the fact that paper invoices are scanned in their offices. “Digitization is in full swing in our company!” they say. And sure, it is easier to process incoming invoices when they are converted into digital form. However, among American colleagues, this rather limited approach to digitization is likely to raise eyebrows. Because what actually happens in supposedly “digitized” German offices? The sender creates a document in a digital system, prints it, and sends it—only for the recipient to convert it back into digital form. Many other countries are far more advanced, with invoices arriving in digital form, for example as e-mails, PDFs, or XMLs, and therefore requiring no scanning at all.

In Germany and other similarly “digitized” countries, it’s time to start looking to the future too. Ultimately, the goal is to work digitally – and that means introducing fully electronic and automated processes. We need to move away from digitization as a means of converting paper into bits and instead work with digital documents right from the get-go. Digitization is just a stopgap and needs to be phased out.

The pandemic has shown that paper-based processes simply don’t work for those of us working from home. The labor shortage also highlights the urgent need to create digital workplaces. The lack of qualified candidates for vacancies in purchasing and accounting means that a shrinking number of employees is expected to manage the workload. They can only succeed if labor-intensive, manual routine tasks are automated. And for things to be automated, they need to be digital. If paper documents need to be digitized first, fine; but if there’s no paper involved at all, even better!

E-invoicing is only the beginning

As digital natives, today’s graduates are not willing to waste time standing by the scanner or manually entering invoice data into SAP. They have no reservations about working digitally; in fact, they expect their employers to facilitate digital work. Meanwhile their employers stand to benefit in multiple ways. As well as saving labor, time, and money, digital data are much easier to evaluate than analog data, providing crucial information and revealing potential for optimization.

Despite a good deal of doubt and resistance, e-invoicing has now been introduced to public administrations in Europe and elsewhere, which has important implications for document-based business processes and end-to-end digital workflows. There are several possible reasons why for example Germany has been so slow compared to countries such as the Netherlands, Italy, and Spain, where vendors have been able to send e-invoices to government agencies for several years. However, what matters now is that things are changing. In its latest customer survey, xSuite discovered that even in Germany, companies are receiving more and more digital invoices. A comparison with the results of earlier surveys indicates that there has been a marked shift away from paper.

Thinking ahead

So, why not go the distance by communicating with vendors in entirely digital form, e.g. via a cloud-based vendor portal? This would allow the steps that occur before receipt of invoice to also be performed digitally. Purchase orders would be sent via the vendor portal, and the vendor would be able to create the order confirmation and later the invoice within the same system and send them both digitally. All the document exchange taking place over the course of procure-to-pay processes would thus be performed digitally. And digitization would no longer be necessary.