Using EDI to improve supply chain efficiency
Improving efficiency is one way for businesses to help battle rising costs and inflation. One efficiency improvement businesses are turning to is EDI.
- All
- 3PLs
- EDI
- EDI Webforms
- E-invoicing
- government
- Logistics
- Retailers
- Single Touch Payroll (STP)
- Software providers
- Suppliers
- XERO
Could mandatory eInvoicing be on the cards? Business eInvoicing Right (BER) explained
The Government’s roll-out of eInvoicing started with a mandate for Federal Government agencies to adopt eInvoicing by July 1, 2022. Several State Governments have also taken the initiative to adopt eInvoicing, with one driving force being to support the Federal Government’s initiative and to help boost adoption among businesses – after all, what business wouldn’t want their invoices paid in 5 days? This has been a good step in eInvoicing adoption. In late 2021, around 10,000 businesses were registered for eInvoicing, but with over 2.4 million businesses in Australia, there’s still a long way to go.If we rewind to November 2020, Treasury released consultation paper that looked at a possible mandate for businesses to adopt eInvoicing, suggesting three different options:
- A phased mandate for all businesses
- A mandate for only large businesses
- No mandate.
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Accounts receivable automation using eInvoicing
Getting bogged down in manual processes can really hurt an accounts receivables team. After all, invoices that take a long time to process cost a business and make for an underperforming team. Thankfully there’s technology out there to deal with this. eInvoicing automates the exchange of invoices directly from your software to your customers’.
eInvoicing works like this:
- You find your customer’s purchase order (PO) in your software and create an invoice from it. Your team then sends the invoice electronically from your software. The invoice is sent, almost magically, through the Peppol network directly to your customer’s software. They don’t need to scan it, type it in or anything.
- Your customer’s software may then be able to match the received invoice against the PO for payment authorisation.
Get paid faster
If you’re in accounts receivables, you want to send out invoices and get paid as quickly as possible. That’s where eInvoicing comes in. Studies have shown eInvoicing can reduce processing cycle time by up to 65%. Some government agencies even promise to pay their suppliers’ eInvoices in just five days.Reduce disputes
The automation of eInvoicing also makes it very unlikely for any errors to show up on invoices when your customers get them into their software. This reduces the chance of your customers ringing you up asking about invoices with the wrong quantities or costs… yikes!Get more visibility
Typically when you email an invoice, you only know it's approved once you receive the payment into your bank account. Or sometimes your customers might be nice enough to send you a remittance advice. The eInvoicing model supports eInvoice responses, which can tell you when an invoice is acknowledged, approved, paid, rejected and more. It can even tell you why it's been rejected.Reduce invoice processing costs
eInvoicing digitises the whole invoicing process so it’s one less thing you need a printer for. Plus, an added bonus of eInvoicing is less need for archiving invoices, which reduces costs by up to 32%. Overall, studies have shown it costs $30.87 to process a paper invoice, $27.67 a PDF invoice, and only $9.18 to process an eInvoice.Interested in learning more about eInvoicing for your accounts receivable team? Ask our experts by getting in touch below.Request a call back
What rules the roost – EDI process or business- and software-process?
We often get companies come to us when they want to implement EDI. And one of the points of confusion is often around where EDI fits in with their business processes and software. They ask what comes first – is EDI the cart or the horse, the chicken or the egg?As a general rule, we say EDI should support your business processes, not rule them. We suggest companies map out their process, whether it be existing or what they want them to be, then insert EDI at points that it can help. For example, if you want to scan inventory in when it arrives, you’ll probably choose to use an advanced shipping notice to get the data into your software ahead of time and have your suppliers attach scannable SSCC labels to their shipments. If your software conducts two-, three- or four-way matching, you’ll need to make sure you exchange the relevant messages that are used in those checks.
The other thing is, you don’t want to make your project bigger than Ben Hur – it’s ok to phase in different stages. Start with where it’s simple to bring EDI into the process. Then if there are other pain points down the track that can be resolved with EDI, then add them into the mix. A key reason for why projects can go awry is biting off more than one can chew.
Different industries, and even different businesses or different software all operate in their own ways. And there’s good reason for that. It’s important that you get your processes in a place that suit your business needs. EDI should ideally be used to bring in automation and to reduce your team’s workload.
Here at MessageXchange, our software can help with the EDI portion, but our powerful business process management layer can help fill gaps between EDI and your processes and software. MessageXchange is flexible enough, and smart enough, to cater to processes regardless of their complexity. For example, two-way matching can be conducted within MessageXchange itself by taking the EDI order and invoice and reconciling them against each other, then sending the result on. It can do the same with three-way matching by including the shipping notice too. It can even enhance the data in your message. For example, if you find it’s difficult for you or your suppliers to include a supplier number or GLN, MessageXchange can insert that into messages for you.
Looking for more information on this topic? Get in touch with us below.
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What’s next for eInvoicing?
eInvoicing continues to grow in popularity and it’s expected to expand further. There’s a lot coming to eInvoicing in the future so we thought we’d look at some of the developments.
More message types on the Peppol network, not just eInvoices
Studies have shown that 72.5% of invoices globally are paid late . In 2016, Australian companies were an average of 26.4 days overdue on their invoice payments. With the help of eInvoicing, we’re seeing sellers being paid in less time. This improves cash flow and allows businesses to use their funds more strategically.
Could there be a business mandate for eInvoicing?
In 2020, the Commonwealth government’s Treasury sent out a request for feedback from businesses on options to accelerate the adoption of eInvoicing an. One option involves requiring all businesses to have the capability to send and receive Peppol eInvoices, with large businesses being the first. Another option would be to require only large businesses to have the ability to send and receive Peppol eInvoices. The last option is a non-regulatory option that offers more flexibility for businesses to choose their own pathway to adoption. This is by no means a mandate for eInvoicing at the moment, but some of the options, if implemented, could bring a mandate.
We’ve also seen the Government push the Business eInvoicing Right (BER) initiative to encourage the adoption of B2B eInvoicing. The BER allows companies to request their trading partners to send them eInvoices in the Peppol format. The objective of the BER initiative is to gradually introduce the obligatory use of eInvoicing among Australian companies, based on their size.
Push by government to get suppliers onboard to eInvoicing
With government agencies and departments going through mandatory implementation of eInvoicing, it’s only a matter of time before their suppliers follow suit. There’s already been talk about government agencies mandating their suppliers to implement eInvoicing. The ATO is currently focusing on a push to large businesses, particularly in the utilities and telecommunications sectors, to support eInvoicing.Have more questions? Ask our experts by getting in touch below.
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Things to keep in mind when onboarding large amounts of suppliers
Onboarding suppliers to EDI can be costly and time consuming. A typical onboarding process will involve these steps:
- Engaging suppliers Letting them know you’ll be onboarding them to EDI.
- Getting them familiar with requirements (MIGs) All requirements are normally shared via a message implementation guide (MIG)
- Schedule in testing Set up a time and deadline for testing of messages to start
- Test Send and receive EDI messages from your suppliers to ensure they are sending the correct data.
- Go live!
Testing is the most time-consuming process
Testing is time consuming because it requires a lot of back and forth checking and communication with your suppliers. This takes time and puts more pressure on you to keep things moving along. A more efficient solution is to use a message compliance testing tool (MCT), like Colladium. It allows suppliers to test their EDI files, often through an online portal, without your team needing to check them. This means you don't have to wait for your EDI team to match up availability with theirs. In fact, your resources don’t need to be involved at all. This also allows the supplier to fix up any issues with their mapping or EDI file generation so that when they go live, you're not scrambling to resolve issues.Make templates for your communications
This makes it easy for anyone in your team to communicate with suppliers consistently and accurately. The templates should include who your suppliers should contact, the expectations and requirements to onboard and their scheduled time for testing. Just be aware it is pretty normal for these templates to evolve over time as you and your suppliers learn. These templates can also be tailored to the supplier’s knowledge and readiness for EDI.Communicate internally
It’s key that everyone within your business is on the same page when it comes to onboarding. A step by step process should be finalised and communicated to your EDI team. This process should establish the roles for each part of the process and who to contact. Have more questions? Ask our experts by getting in touch below.Request a call back
EDI for 3PLs and logistics service providers
EDI has been prominent in the retail industry for decades and one area of the supply chain that benefits the most is third party logistics providers, or 3PLs. Let’s have a look.EDI replaces postal mail, fax and email, and eliminates manual inputting of data. It allows trading documents, like orders, shipping notices and more, to be exchanged electronically between businesses. EDI can help streamline and automate logistics processes, such as:
- receiving and stocking goods
- managing inventory
- managing of warehouse movements
- expediting shipments
- refund processing
- repackaging processes (co-packing).
An improved experience for your customers
We’ve seen 3PLs roll out EDI solutions, including portal solutions, for their customers. It makes the whole information flow between you, your customer and their customer easier. When your customer receives an order, they can accept it and at the same time, their EDI service can send a copy of it onto you so you know what to despatch, when and where. You can pick and pack the goods as usual, then when you create the shipping notice, you can send this via EDI to the recipient. Again, a copy can be sent to your customer for visibility. All of this ensures you’re not relying on PDFs and emails, and data is being exchanged in the quickest way possible.Benefits of EDI
Cost savings
With supply chain costs going up, now is the time for logistics companies to find ways to cut costs. During busy periods instead of receiving an email or phone call every time a customer needs stock shipped, you can get the request via EDI, straight into your software for processing. You won't have to worry about missing an email, or having staff on-hand to enter the PDF into your software and you won't need to 'scan' PDFs into your software and deal with potential scanning errors.Speed and accuracy
As your orders increase, your time to process them will only increase, unless you automate. EDI allows documents your customers need to be processed and sent faster. By reducing manual inputting, EDI also reduces the risk of inaccuracies in documents you send to your customers. Here are some stats that back the benefits:- can speed up your business cycles by 61%. Get documents directly into your software from your customers’ within minutes.
- It delivers at least a 30—40% reduction in errors.
Reduced manual processing
With staff shortages a big issue around the world right now, logistics companies need to find ways to make process more efficient. With EDI, not only does your speed improve, but the pressure on your staff is reduced. EDI makes it easier for you to process more shipments with fewer people which allows you to take on more customers and more of their orders.Compliance with retailers
If your customers supply to retailers, they’ll require documents via EDI. Send advanced shipping notices (ASNs) to the stock recipient, and even have a copy go to your customer for their visibility. Have more questions? Ask our experts by getting in touch below.Request a call back
5 reasons why companies are choosing eInvoicing
We continue to see eInvoicing gathering momentum. Here in Australia, the number of companies registering for eInvoicing is growing hugely. Here are five of the reasons companies are choosing eInvoicing.
They’re getting paid faster
Studies have shown that 72.5% of invoices globally are paid late . In 2016, Australian companies were an average of 26.4 days overdue on their invoice payments. With the help of eInvoicing, we’re seeing sellers being paid in less time. This improves cash flow and allows businesses to use their funds more strategically.
They’re saving time by reducing manual processes
With an outdated system, processing invoices involves lots of steps. With eInvoicing there’s no need to enter invoice data, saving you time. MessageXchange can even automate more processes such as matching invoices to PO numbers and more. All these things let your staff focus on more important tasks.
They’re saving costs and reducing errors
The ATO estimates paper and PDF invoices can cost between $27 and $30 to process. eInvoicing reduces the costs to less than $10. In Australia alone, 1.2 billion invoices are sent each year, so you can already see the savings that are to be made. You can save on:
- paper costs
- printing costs
- additional scanning equipment costs.
Manually inputting invoices exposes businesses to human errors. The automation from eInvoicing can reduce errors by up to 37%. Errors can be costly for any business, and especially the costs involved to rectify them.
They’re using a more secure way to exchange invoices
Invoices are often a targeted way for scammers to commit fraud. A recent study by XERO found 18% of Australian SMEs have fallen victim to invoice fraud and this costs a business an average of $15,500. This number has only grown with the increase of scams during the pandemic. To avoid this, eInvoicing messages go through the secure Peppol network, which has processes in place to reduce the risk of fake or comprised invoices.
They’re on a digital transformation journey
Digital transformation is the move to digital technology to improve existing processes. eInvoicing does exactly that and is a great starting point. Can you imagine if you were still issuing invoices by fax? We’ve well and truly moved on from that, and eInvoicing is the new way.
Getting started with eInvoicing
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Check your software
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Our team connects you to the Peppol eInvoicing network
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Go live!
Want to get started with eInvoicing? Get in touch with our eInvoicing team below to learn more.
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EDI mapping explained
In most industries, there’s an EDI standard – whether it be EDIFACT, GS1 XML, ANSI X12 or something else. While standards are fantastic because they make it easier for companies to trade with each other (because they don’t need to setup different messaging standards with each trading partner), ERP software generally doesn’t export the standards out of the box, if at all. Typically, software exports an XML or CSV document. So this is where mapping comes in.
What is mapping?
A mapping translates a file from one format to another. For example, if your software exports an XML file but your customer requires an EDIFACT message, the mapping process transforms the XML to EDIFACT. The way MessageXchange work allows the mapping process to also incorporate business rules. For example, it can be used to enrich data, perform calculations and more. This is particularly helpful for those companies whose software doesn’t export all the information that a customer requires. A mapping is setup once and then it just runs. There’s no intervention needed when a new message comes in, the whole process of mapping a file is automated.When would I use it?
As I mentioned above, mapping is typically used when software isn’t able to export the file format required by a company’s trading partners. It’s the way to mediate between your software and that of your trading partners. It can even cater for your trading partners who have different requirements – logic can be setup to use certain mappings for certain customers. Mapping cover all message types too – so if you receive an order, the purchase order can be mapped from XML to EDIFACT, but the POR, ASN and INV can be mapped from EDIFACT to XML, for example.What are the benefits of mapping?
It allows a company to easily comply with their trading partners’ requirements
There’s no changing your software or investing in additional staff or other resources to manage this.It automates processes
It’s ‘set and forget’. It just runs.It’s scalable
There’s no extra work to do if your message volumes increase. Once the mapping is setup, any new messages that are exchanged automatically go through this process. If you're needing help with your mapping get in touch with our EDI experts by filling in the form below.Request a call back
The future used to be paperless. Now it’s PDF-less.
Not too many moons ago, there was a big push towards a paperless office – everything needed to be digital. No more faxes and no more mail – email was the new hero. This was a big progression at the time. It was more sustainable, there was less chance of things going awry and it was just more efficient.
But times have changed.Nowadays, technology has advanced a lot more. And yes, while emailing PDFs is still much more efficient than snail mail or faxes, there are still downfalls. Many companies ‘scan’ or use optical character recognition (OCR) to truly make their invoices digital. However, many companies who come to us report only a 70% accuracy rate with OCR. Imagine then having to find the errors and on top of that, fix them. No thank you! And companies who don’t use this technology are still typing invoices in letter-by-letter, number-by-number. Yikes!
We’re lucky to be in such a time where we now have better options.
You might have heard of electronic data interchange, or EDI. It gets data from a supplier’s software to their customer’s software. Instead of the customer having to scan (or OCR) a PDF invoice or manually type it in, a machine-readable file is sent to the customer’s software. There’s no manual intervention required and it just appears, almost like magic. This also happens for other procurement documents like purchase orders and shipping notices.
The Australian and New Zealand Governments have also identified that going truly digital brings massive benefits. $28 billion in benefits to the Australian economy over the next 10 years, to be specific.
Because of this, the Australian and New Zealand Governments have worked collaboratively to bring an electronic invoicing (eInvoicing) standard to businesses: Peppol. This works in a similar way to EDI – it sends invoices from the supplier’s software straight to the buyer’s software. No typing, no scanning, no nothing.
And major accounting software providers are onboard too. Both MYOB and Xero allow their customers to send and receive eInvoices. How good is that.
So next time you find yourself typing another invoice into your software or fixing up an invoice mistake, have a look into eInvoicing or EDI. After all, the future is no longer paperless, it’s PDF-less!
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The art of writing MIGs
When you onboard suppliers it’s important for them to understand what the requirements are for the messages they need. A Message Implementation Guideline (MIG) refines a generic EDI standard such as UN/EDIFACT and details how it will be used for your company. In simple terms, it tells your suppliers what messages they need to send, what information the messages contain and how they’re formatted.Here are important things you need to know…
Choosing an EDI standard
There are different EDI message standards used around the world. Once you choose a standard it will be used as the base for your MIG. Here are a few of the common ones and where they’re most used:| UN/EDIFACT | Standard coined by the United Nations and the most commonly used worldwide, and heavily used in the Australian retail supply chain industry. |
| ANSI X.12 | Commonly used in North America |
| EANCOM | Commonly used in the European retail industry |
| ODETTE | Commonly used in the European automotive industry |
| EbXML | Global standard developed by United Nations body for Trade Facilitation and Electronic Business Information Standards (UN/CEFACT) and Organization for the Advancement of Structured Information Standards (OASIS ). |
| TRADACOMS | Commonly used in the UK retail industry |
| HIPAAhow | Commonly used in the North American Healthcare industry |
| SWIFT | Commonly used by financial institutions worldwide. |
Choose the message types you want to use with your suppliers
This comes down to what your objectives are as a business. Here are some of the common messages and what they do:- Purchase order Sent from buyer to supplier to order goods or services
- Purchase order change Sent from buyer to supplier if the original purchase order has changed
- Purchase order acknowledgement Sent from the supplier to the buyer to acknowledge receipt of the order
- Purchase order response Sent from the supplier to the buyer to let them know how much of the order can be fulfilled, and any discrepancies from the original order
- Advance shipping notice (or despatch advice) Sent from the supplier to the buyer to let them know when and how the goods will be shipped
- Invoice Sent from the buyer to the supplier for payment of the goods or services
- Recipient created tax invoice (RCTI) Sent from the supplier to the buyer for payment of the goods or services
- Remittance advice Sent from the buyer to the supplier to confirm payment
- Price/sales catalogue Sent from the supplier to the buyer with up-to-date product and pricing information
- Product activity data Sent from buyer to the supplier with the number of units sold and units on hand
- Transport instruction Sent from a buyer to a transport supplier (and related parties) to communicate transport arrangements
- Transport response Sent from a transport provider to confirm instructions
- Functional acknowledgement An automated response sent from a receiver of an EDI message to confirm receipt of the message.
Find out what data your ERP system requires to process your message types
This is important because it’ll determine what fields and values you need from your partners. This includes things like:- character limits
- whether only integers are allowed
- if it needs to be number
- how many decimal places
- whether the field is dependent on another field (conditional)
- whether a field is used for particular use cases only
- how calculations are made.
Putting your MIGs together
This is where you take everything from the previous steps and document it. Writing MIGs can involve a bit of work and so you can get an external party to help. This where an EDI provider, like MessageXchange, comes in. We can assist or lead the MIG writing process, developing it from scratch or upgrading your MIG. Find out more here. Have more questions? Ask our experts by getting in touch below.Request a call back
How eInvoicing delivers a better procure-to-pay (P2P) experience for your suppliers
eInvoicing is strongly emerging here in Australia and New Zealand as one of the key digital transformation activities in 2022. Its dominance is being led by the Government because of its massive benefits to the economy (think $10 billion to the Australian and New Zealand economies). But that’s not its only benefit – it can deliver a much better procure-to-pay (P2P) experience for suppliers too.