Beware the supply chain ides of March

It can take months to set up a supplier on existing EDI systems – a level of inflexibility that will only make the potential impact of Brexit even more unnerving. But what if you could slash that to less than one day?

Whatever your view, B Day is either going to be as British as a roast beef dinner next to a roaring fire, or an empty chip packet blowing down a rainswept and rundown seaside resort. And with the UK’s unplugging from the single market now less than two months away, finance teams of all sizes are looking at ways to build agility into their supply chains and so mitigate against the dangers of any eventuality.

Jamie Taylor, from Basware, said: “There are two key challenges accounts payable and procurement teams face; one they can’t do anything about, the other they can.

“The first is of course that no one knows 100% what they’re planning for, the second is the stickiness of the EDI platforms many supply chains are run on. Put simply, it takes so long to set up a supplier on an EDI platform, companies can’t react to events with speed.”

Just like our relationship with the EU itself, Electronic Data Interchange platforms have been around since the 1970s. By replacing paper communication with electronic communication, it was an absolute step change in terms of speeding POs, invoices and other financial documents between companies. But, they’re also unwieldy in terms of setup.

Taylor added: “It can take months, especially as you’re having to undertake so many things, like accommodating the business rules of a new supplier or mapping data formats. So it’s unsurprising that once they’re on an EDI platform, suppliers become sticky, and there’s a difficulty in onboarding alternatives quickly.”

While EDIs will remain a fact of life – and a prerequisite for trading in many sectors – no one is advocating for their removal. However, they are a serious impediment to managing supply chains with the agility currently demanded by Brexit. They’re also not ideal for the long-tail costs that suddenly having to source from different suppliers may attract. This is where e-invoicing can step in, allowing new suppliers to be integrated into supply chains quickly, without disrupting existing systems or back office functions.

“We’re seeing increasing levels of companies and governments moving to a more flexible e-invoicing process,” said Taylor.

“Suppliers can be on-boarded in less than a day, delivering the flexibility to source alternative goods and services quickly. And while we have no idea if there will be queues and shortages after 29 March, a flexible e-invoicing solution is a concrete step that organisations of any size can make in strengthening their supply chain options right now.”

As you would expect, the latest generation of e-invoicing is built on automation. As a general rule, invoices are generated electronically by the supplier’s accounting system, these are delivered directly into the e-invoice service and onwards into the buyer’s accounting system. Automated matching to orders and business rules can also be applied, as can automated workflows within the service. That equates to fully coded, matched and approved invoices into the buyer’s accounting systems for payment.

He concluded: “In addition to supply chain agility, improved controls, and automation, finance teams have 100% visibility of the entire process, freeing up resource for more value-added activities but in the short term, e-invoicing is a valuable tool for organisations to use in their Brexit planning.”