Following my last post on the differences between the US and EU markets, I would like to delve into some specifics as to why the two are different.
The first area of difference I noted was the underlying cost structures in the two markets. I think it is fair to say that, in general, the costs to process an invoice are lower in the US than in the EU. I don’t want to quote metrics ($XX vs.€ YY per invoice) because everyone measures these things differently and it’s hard to make direct comparisons. The plain fact is that US-based organizations benefit from several issues.
First, they benefit from a greater ability to achieve scale since US centers don’t have to worry about supporting myriad languages, cultures and regulatory authorities. They can, therefore, achieve lower unit costs by driving higher volumes over standard processes and technology platforms. Second, it’s easier for US-based organizations to implement electronic solutions (regardless of the flavor, i.e., e-procurement, pcard, EDI, supplier portals, etc.) in the absence of VAT complexities. Third, labor laws in the US make it easier to address redundant staff.
How does this relate to e-Invoicing? Obviously, the underlying economic differences may impact the relative business cases in the two markets. That’s not to say, however, that the business case in the EU is necessarily more compelling than in the US. While the unit cost savings on a per-invoice basis may be greater in the EU, the available volumes (and, therefore, the aggregate savings) for a US organization may offset any differences. US companies may also experience slightly higher take-up by suppliers since US suppliers tend to be more accommodating to client requests than their EU counterparts (but, that’s a topic for a later post).
Therefore, while the economic motivations in choosing an e-Invoicing solution are similar in both markets, the path to achieving that solution may differ.