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1. E-Invoicing
Don’t Let your Business Case Embarrass You
The Delhaize Belgium Story
Thierry Claes
StF Consulting

2. Introduction
Delhaize Belgium
Delhaize Group is a Belgian food retailer present in 8 countries on three continents with a
sales network consisting of 2,673 stores (2008);
Delhaize Group posted EUR 19.0 billion in revenues (2008) and EUR 410.1 million (USD 562.1
million) in net profit for 2007.
At the end of 2007, Delhaize Group employed approximately 138,000 people. Delhaize
Group’s stock is listed on Euronext Brussels (DELB) and the New York Stock Exchange (DEG).
As part of Delhaize Group, Delhaize Belgium’s sales network consisted of
775 stores (730 in Belgium, 40 in Luxembourg, 4 in Germany and 1 in
France).
In 2008, Delhaize Belgium posted EUR 4.4 billion in revenue, presented a
market share of 25,7%* and employed approximately 18.000 people
More than 3.000 suppliers
Around 650.000 vendor invoices per year
* Source AC
Nielsen
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3. What will be covered in this presentation ?
• Real questions for Real project !
– What’s e-invoicing ?
– Why should you go for e-invoicing ?
– What are the benefits AND the costs of an e-invoicing project ?
– What are the key elements for your RFP ?
• Sharing of experience from on real case !
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4. Agenda
1. Define Vision
2. Business Case
3. Solution
1. E-invoicing Model Selection
2. Service Provider(s) Selection (RFP & Contract)
3. Selected Solution
4. Critical Success Factors
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5. Vision Definition
Understand E-Background
• As in every projects, you will have to start by Defining your
Vision
• You will be confronted with the “e-vocab”
E-Billing
Scanning
OCR
E-Invoicing Digital
Mail Room
• Let’s put some conventions …
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6. Vision Definition
Understand E-Background – E-invoicing
E-invoicing
• What’s e-invoicing ?
– E-invoicing is used in a “buyer centric” model to
describe the vendor’s invoice. VENDOR BUYER
– Vendor’s paper invoice is replaced by an electronic
message => replacing the legal paper vendor invoice
– The electronic message is seamlessly recorded in the
AP system …
– Sending a PDF invoice by mail is NOT e-invoicing !
– Vendor’s paper invoice was never created => never
received by buyer
– When using the term e-invoicing, we usually consider
the AP process
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7. Vision Definition
Understand E-Background – E-invoicing
• Scanning/OCR is NOT e-invoicing !
– Digital Mail Room, OCR, Scanning are “just” a way to encode paper into your (AP)
system
– Vendor’s paper invoice still exists and (most of the time) remains the legal invoice
– Manual and low added value tasks are still present in the process, so are the
handling costs !
=> it will not be part of this presentation
AP
Delivery Isolate Open Scan OCR Validate Integrate
Workflows
Paper
Archiving
Low Added Value tasks
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8. Vision Definition
Understand E-Background – E-invoicing
• What’s E-Billing then ? E-Billing
– E-Billing is used in a “biller centric” model to describe
the bills/invoices sent to the customers. VENDOR
Customers
– Same characteristics as e-invoicing
– When using the term e-billing, we usually consider the
AR process
• Today, we will talk about e-invoicing !
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9. Vision Definition
Starting point - Does it look familiar ?
1 Manual encoding and poor productivity
2 Mislaid and lost invoices
3 Unnecessary duplicates
4 Poor control of approvals
5 A/P people chasing approvers
6 Missed supplier discounts or Missed due dates
7 Managers spending time on invoice handling
8 Painful Compliance Processes (SOX,…)
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10. Vision Definition
Drivers & Objectives
Direct cost savings of XFTE by eliminating manual encoding, paper
Direct cost savings
copies/image scan, archiving and decrease volume of disputes
Payment on time
From a daily challenge to an usual & easy procedure
& Better Service
Working Capital From blocking factor to enabler for increasing cash discounts
Management and cashflow management initiatives (eg. reverse factoring)
Compliance &
Visibility From lost in banana box to perfect audit trail
Eliminate non value
added tasks Upgrade and valorise AP people and activities
Corporate
Responsibility Paperless strengthen Company’s “green” image
Enabler for sourcing
or centralize AP Provide necessary flexibility for Future
operations
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11. Vision Definition
Why should you implement E-invoicing ?
Today’s competitive environment requires
optimal cost structure
E-invoicing will help you to achieve your
objectives by reducing the timing of
transactional processing
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12. Vision Definition
Scope of e-invoicing
INVOICE
RECEIPT & ENCODING MATCHING BOOKING PAYMENT
(WORKFLOWS)
(WORKFLOWS)
HANDLING
SUPPLIERS
LEGAL PAPER ARCHIVE
“NON LEGAL” E-ARCHIVING
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13. Vision Definition
E-invoicing Solutions Models
Buyer Centric (direct model)
– Buyer driven supplier
– Order-to-Payment Buyer
– A/P and Procurement optimization supplier
– B2B custom features
– Extendable to other message streams
(logistics,..)
Consolidator
– Roll-out efficiency : Community, Translation, on-boarding
services, interoperability Company Company
– Legal Compliance Conso
– Cost- and time-efficient roll-out if standardized way is OK Company lidator Company
– Works for Buyer and Sender centric models (mostly)
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14. Vision Definition
Models - Direct vs Consolidator
Direct – Point2Point
+ -
• “legacy” EDI communication hub • Roll-out dynamic
• Buyer Centric • Compliance management for
• Customization capabilities dematerialized invoices
• Other business transactions supported
(logistics, procurement,..)
Consolidator
+ -
• “New” but emerging • Degree of standardization vs customer
• Works for multiple inbound- and features required,
outbound invoicing • Contractual guarantees on compliance
• Compliance certifications
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15. Vision Definition
Inhouse vs Outsourced
ONBOARDING RESOURCES
• Telesales & community care centers
• Functionality to cope with various supplier/customer
segmentations
MITIGATING THE COMPLIANCE RISK
DECISION :
• Know how
• Investment in Audit certificates – Insurance – Dialogue with OUTSOURCING !
Tax administration
• Capability to monitor and adapt if any regulatory change
ADVISORY ROLE
• IT Resources (not) available
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16. Vision Definition
Ultimate Project Objective
Replace 90% of our paper supplier invoices
by e-invoices within the next 3 years.
Outsource the Compliance “headache” and
the onboarding management to a service
provider
Increasing our productivity and decreasing
our operational costs by …
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17. Agenda
1. Define Vision
2. Business Case
3. Solution
1. E-invoicing Model Selection
2. Service Provider(s) Selection (RFP & Contract)
3. Selected Solution
4. Critical Success Factors
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18. Business Case
What are the elements to consider
• Benefits – Costs Reduction Opportunities
– Tasks elimination
– Productivity Gain
– Storage costs reduction
– Working Capital Improvement
• Project and Process Costs
– Training and Communication Costs
– IT and Business Change Requirements
– E-invoicing processing costs
– E-Archiving costs
– On-boarding costs (resources,…)
• Timing
– Timing for your business case will depend on your on-boarding timing
• Volume of invoices converted
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19. Business Case - Benefits
Where will be the cost savings ?
Outbound – Supplier: A/R process
Draw up Follow-up Solve Manage Financial
Prepare Send Archive Reconcile
invoice unpaid issues disputes impact
Inbound –Buyer: A/P process
Process Make Manage
Handling Matching approval Archive
(key-in) payment disputes
Source Isabel
paper 1,2 € 2€ 5,6 € 3€ 1,4€ 1,8 € =15 *€ *average
AP cost according
Billentis/Certipost
“The average cost for a customer bill is 5 USD, of a dispute is 20 USD” – Gartner (Research Note, B2B
invoicing, Cash is King)
Methis study: “substituting all paper bills into epaper, contributes 0,7% of Kyoto norm for Belgium”
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20. Business Case
Where will be the cost savings ?
Outbound – Supplier: A/R process
Draw up Follow-up Solve Manage Financial
Prepare Send Archive Reconcile
invoice unpaid issues disputes impact
Inbound –Buyer: A/P process
Process Make Manage
Handling Matching Approval Archive
(key-in) payment disputes
Source Isabel
•A/P Aberdeen Group estimates that digital invoice processing at A/P side saves up to 80% of
encoding, archiving and dispute costs
•A/R: Gartner estimates that typical saving is 3,35 USD per invoice and 10 USD per dispute – Gartner
Research Note, B2B Invoicing, Cash is King
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21. Business Case
Complexity - How hard can it be ?
•
1 Company with low maturity AP
processes : lots of manual
transactions, paper based, non
efficient workflows, low visibility on
process performance …
BUSINESS CASE IS EASY
AP Maturity
2
2
• Company with high maturity AP
processes : already using EDI (eg) or
digital mail room and OCR,
approval/exception workflows are
efficent, payment are made on time
BUSINESS CASE IS CHALLENGING
1
Complexity
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22. Business Case
Elements to consider based on AP maturity
Optimization of Working Capital :
Capture of discount, decrease of
late payment penalties, early VAT
claims, Dynamic discounting,
Enabler for other projects (eg
Reverse factoring initiatives …)
AP Maturity
Optimization of Exception Processing and
Supplier Services
Mail Room Staffing, Data entry Staffing, Reduced
costs of storage, Reduced costs of managing paper
Complexity
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23. Business Case – Project and Process Costs
Business Requirements & Developments
• Data Capture of E-invoicing
– Where should the e-invoice message be integrated ?
– Initial process started with the paper receipt (also for EDI invoices)
– How to make the difference between non legal EDI invoice and legal EDI
invoice ?
• Pre-Controls on e-invoicing plateform
– Where controls should be performed ? In E-invoicing platform or in
company’s processes
– What about the master data exchanges ?
– When E-invoice is created, it may not be cancelled => credit notes is to be
created if changes are required
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24. Business Case – Project and Process Costs
Business Requirements & Developments
• Archiving
– Where do you need to have the invoice image and for which task?
– Visualisation versus Hyperlink
– Connection or Copy-pasting the database
– You always can have 2 archiving databases but there is always only one
“legal”
• Vendor Portal (legacy) – status of invoice
– Do you already have a “vendor Portal” ?
– Build or outsource
– New functionalities
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25. Business Case – Project and Process Costs
Training and Internal/External Communication
• Focus on External Communication
– Rely on communication package provided by service providers but “one size does
not fit all”
– Your communication needs to be aligned with your suppliers segmentation and has
to :
– Be Enriched with your company’s style
– Be in phase with your ambitions and project steps
– Combination of targeted mailings, workshops and personalized communication
through Procurement department
• Do not underestimate the Internal Communication and Training
– Every people in contact with suppliers needs to be aware of the project basics
– Training depending on audience
– Do not underestimate the profile shift needed and the education required to go
along with this shift
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26. Business Case – Project and Process Costs
What does e-invoicing cost ?
• The cost per invoice is depending on the service providers and the volume
of invoice
• A quick market review showed for a volume of 500.000 invoices an average
between 0,5 eur and 1 eur
• These costs will indeed depend on the additional services to be included
such as :
– The onboarding activities
– The archiving
– The technical assistance
– Etc
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27. Business Case
Onboarding Timing
100% Y3 Average 90%
90% 76%
80%
Y2 Average
70% 46%
60%
50%
40%
Y1 Average
16%
30%
20%
10%
0%
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28. Business Case
Delhaize specifics
• Assumption : Delhaize is outsourcing the e-invoice generation
=> For our business case we took a conservative approach of 1 eur (including legal
archiving)
=> Onboarding was to be done by Service provider
• Our business case has been firstly build on the very conservative approach of only
considering the direct payroll cost on :
– Mail Room
– Data Entry (manual & scanning)
– Storage and data retrieval in case of Supplier enquiry
• The option of outsourcing the scanning of all the remaining paper invoice as from
day 1 has been rejected during the vision definition but is still an option to consider
when drafting your business case
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29. Business Case
The preliminary results
P/L Impact without outsourcing remaining paper invoice
600.000 1.600.000,00 €
1.400.000,00 €
500.000
1.200.000,00 €
400.000
1.000.000,00 €
#Invoices
300.000 800.000,00 €
600.000,00 €
200.000
400.000,00 €
100.000
200.000,00 €
0 0,00 €
Y1 Y2 Y3 Y4 Y5
Volume DEMAT Salary Cost Savings Cost (Transactional +OTC) Profit
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30. Agenda
1. Define Vision
2. Business Case
3. Solution
1. E-invoicing Model Selection
2. Service Provider(s) Selection (RFP & Contract)
3. Selected Solution
4. Critical Success Factors
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31. Solution
1. E-invoicing Model Selection – The Drivers
DIRECT GOODS
Point2Point - EDI
• Standard for Retail Industry is EDI (PO, DESADV,
RECADV, INV, …)
• Already more than 30% of our invoice through EDI
(but still with paper) •Strategic Decision to select
• Strategic Decision to select an EDI solution for Direct an EDI solution for Direct
Goods Goods
Any2Any Format
INDIRECT PROCUREMENT
• No existing standard
•Strategic Decision to have 1
• Roll out complexity specific solution for each
• Mitigating Compliance risk channel
• Suppliers segregation – specific approach & tools are •Consolidator Model –
required relying on the Any2Any
business model
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32. Solution
2. Selection of Service Providers – The RFP
• Service Provider’s profile and shareholder structure
• Technical aspects (interfaces used, supported format, …)
• Compliance :
– Authorized E-invoicing Method used (EDI, AES, Other)
– Certifications obtained
– SAS 70 & Other comfort letters
– Ruling with local tax administrations
• Liability cap (if any)
• Onboarding :
– Method and guarantees
– Languages capabilities
– Interoperability
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33. Solution
2. Selection of Service Providers – The RFP
• SLA’s towards the client AND the supplier
• Setup and maintenance costs
• Pricing
• Optional Services : Scanning, dynamic discounting, portal …..
• YELLOW PAGES (% match between the supplier community and the
suppliers on the plateform)
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34. Solution
2. Selection of Service Providers – The Contract
General Attention Points
• Do not underestimate the time you will take to validate the contract and
convince people internally
• Complex versus “New and Unknown”
• Have your Tax and Legal Department on board
• Set your objectives straight and have clear Risk Assessment :
– Do we already have this risk ?
– Do we want to keep the same risk level as today or do we want to decrease the
risk ? (eg VAT rate validation)
• Conceptually, e-invoicing implementation means “replacing the Postal
Service” :
– But do you want to outsource/add some more controls ?
– Do you just want to replace the “mail guy” ?
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35. Solution
2. Selection of Service Providers – The Contract
Compliance Roadmap
1. Be careful : Technical Compliance versus full coverage of the compliance
– Does the Service provider fulfill only the “e-invoicing” law (European
Directive)?
– Does the Service Provider warrant that the e-invoicing that you will receive
fulfills any “Any applicable laws” : EU Directives, laws, binding rules, or
regulations issued by a governmental authority of the relevant country” (VAT –
Commercial Tax)
– Cross Border Compliance – outside Europe/ Intra-Europe/ Local
2. Have the SAS 70 and read it !
– What’s the timing for deficiency resolution ?
– What type of deficiency is for you critical ? (eg Compliance, Archiving,…)
3. Certifications/Comfort Letter
– From a reputed auditor …
– As always, be careful on the wording of the comfort letters
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36. Solution
2. Selection of Service Providers – The Contract
Compliance Roadmap
4. Insurance
– Warranties are nothing without any insurance
– What’s the content of the insurance policy
– Is it only for you ?
– What’s the covered amount ? What do you want as coverage ? What is
reasonable ?
– VAT penalty amount (10% of total yearly expenses)
5. Right to perform your own audit
– Do not limit the scope of the authorized audit
– What’s the guaranteed support of Service provider during this audit ? Is it free
of charge ?
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37. Solution
2. Selection of Service Providers – The Contract
Worst Case Scenario
• SLA’s
– SLA for service availability
– Archiving and data losses
– Onboarding campaign
• When are you entitle to break the contract ?
• What if service level is not in line with expectations and SLA and that you
decide to break the contract ?
• Consequences …. Are you covered for this ?
• Search for new Service Provider, Processing of the paper invoice,
communication to suppliers …
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38. Solution
2. Selection of Service Providers – The Contract
Tasks Distribution
• What’s the support expected from the company ?
• What are the resources required ?
• Is it sufficiently described in the contract/Service Manual ?
• Are the answers to the RFP part of the contract ?
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39. Solution Choosen : Direct Goods
EDICOM
SUPPLIERS
With EDI
SUPPLIERS
With WebEDI
SUPPLIERS
W/o EDI
DESADV
AP System
PO
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40. Preferred Solution : Indirect Procurement
The Consolidator model
Financial
System
Supplier
Archive
Auto Match
Invoice
Supplier Data in Buyer
Format PO
Check
Transaction A/P
Non PO
or
System
Transaction ACH
Supplier
Image/ Work Flow Approval
& G/L Allocation
Invoice
Data Transformation
Supplier - Validate
rm
Fo
- Enhance
eb
Supplier - Re-format
W
Requisitioner
Supplier Payment & Remittance
* Picture from OB10
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41. Agenda
1. Define Vision
2. Business Case
3. Solution
1. E-invoicing Model Selection
2. Service Provider(s) Selection (RFP & Contract)
3. Selected Solution
4. Critical Success Factors
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42. Critical Success Factors for an Easy Selection
• Sponsorship from Finance and IT Departments… and Supply Chain
• Tax and legal department on board and understanding the project
• Managing compliance risk on a practical way
– Good view on risk involved
– Outsource to professionals (service providers, insurance, ….)
• Have a clear view on your internal resources and on task distribution
between Service Provider and Your organization
• Do you have a fall-back scenario ? What would be the cost of it ? Who would
bear the cost of it ?
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43. Critical Success Factors for an Easy Business Case
• Do not make your business case more complex than it is !
• Be clear on your objective ! Replace the “mail guy” vs AP process Re-
engineering
• Take into account the Supplier’s perspective in your business case (Win-Win
Solution)
• E-invoicing as the starting point for new Working Capital initiatives
(Intangible benefits)
• Identify carefully the required changes (legacy system, archiving, master
data) to work paperless
• Do not underestimate the training and communication costs in your business
case
• E-invoicing will only mean additional costs if you do not convert your
efficiency gain (task redistribution, downsizing, volume increase, …)
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44. THANK YOU
QUESTIONS ?
Thierry Claes
thierry.claes@stf-consulting.eu
+32 473 64 00 60