InvoiceSmash has cracked the e-invoicing supplier activation problem

E-invoicing is the concept that invoices should be delivered in electronic format so the recipient doesn’t have to ‘rekey’ data. Data originates from the seller/supplier/vendors accounts receivable system in electronic/digital format, is transmitted to the customer/recipient electronically and is then processed straight through their accounts payable or procure to pay system. The value and cost savings of e-invoicing is indisputable as it removes labour and friction from the processes and lowers the end to end time from days/weeks to seconds/minutes. But if e-invoicing is so valuable why hasn’t it been done yet? Why isn’t it ubiquitous already? The technology to achieve e-invoicing has been around a long time and typical EDI/B2B data interchange technology is old technology. Sure there are very large e-invoicing networks where it is working effectively, but they are far from ubiquitous and there is always a long tail of suppliers who are too small for the networks to reach. 

And the perennial problem with e-invoicing is the process of getting every supplier to make a human, technical, or business process change to start sending invoices electronically. This is the “supplier activation problem”. Large percentages of suppliers are only able make the switch to e-invoicing when they are coerced, mandated, or forced to by their customers, or regulators.

InvoiceSmash has cracked that supplier activation problem. Here are the steps to activating suppliers using InvoiceSmash.

Step 1: ask the supplier to email text PDFs of their invoices.  (If the supplier is already doing that, then skip step 1)

Step 2: send to InvoiceSmash.

The end. That’s it.

The supplier will be activated in a couple of minutes by our software. After that InvoiceSmash will send the e-invoice result to the end AP/ERP/Finance system in an automated way and your supplier activation problem is solved once and for all.

Our first supplier EDI connection

A bit of background for our non technical readers. EDI stands for Electronic Data Interchange and is the usual way for businesses to exchange data between themselves. Data such as invoices, purchase orders, shipping notices etc.

You can learn more about EDI here: http://en.wikipedia.org/wiki/Electronic_data_interchange.

Big businesses with IT departments are usually well familiar with EDI. The problem has been that, as good as EDI is, it is too expensive for smaller businesses to adopt. The expense is usually in the setup time it takes for the IT projects to implement the EDI systems. At InvoiceSmash we’ve wanted to change that. So in keeping with our philosophy of democratising technology and making IT available to every business we’ve begun our first EDI connections for our customers.

In this case, just as a first step, we’ve implemented invoice EDI with Bunning’s Australia. Bunning’s is one of Australia’s biggest hardware retailers, used by our construction and trades customers on InvoiceSmash).  In effect what this means to our customers on InvoiceSmash is that as they buy things at Bunnings, the invoices are sent by servers at Bunnings to our servers at InvoiceSmash and they show up on the dashboard just like they do for our normal PDF files. Lots of technical differences under the covers, but from a user point of view its just about exactly the same.

The team that built this EDI capability for InvoiceSmash have many years of experience implementing EDI in Australia’s biggest IT departments. And now it is available as a service to the every business at a fraction of the typical cost.

If you’re a business that wants to do EDI with your suppliers or customers, have a chat with us about what you need.

Item Invoice vs. Service Invoice

An item invoice is an invoice which contains a Quantity and a Unit Price which derive a Total. Usually Item Invoices are for the purchase of physical goods.

Here is a an example of an item invoice. This picture shows the line item grid area of a fairly standard invoice. 

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In InvoiceSmash an item invoice resolve against the inventory items in your accounting system (assuming you have them). If your business doesn’t use inventory (you specify this when configuring the connection) item invoices are converted to a service invoices and the Quantity and Unit Price data is ignored.

 

A service invoice is usually not about physical items. They don’t usually don’t have a Quantity and Unit Price column. Below is an example of a basic service invoice.

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In InvoiceSmash service invoices are coded against the General Ledger codes (as opposed to Inventory).

 

So far the two types of invoices shown above are straight forward to distinguish. But that’s not the end of the story. Some times an invoice is created by a supplier which has a Quantity and Unit Price and is structured like an item invoice but isn’t really about physical things. Let take a look at an example.

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You see that all the columns necessary to make an item invoice are present but that the details of what is being bought/sold doesn’t relate to physical goods that can be inventoried. Therefore it actually an invoice for the trading of services rather than goods. One of the shortcuts for confirming it is a service invoice masquerading as an item invoice is if there is a part unit (eg 0.5 quantity) in one of the lines. It makes sense to buy half a day, but usually not a half a box of soft drink. So humans can easily make that distinction (and if you’ve being doing bookkeeping or accounting for awhile you barely even have to think about this nuance) but software is not so nuanced.

However InvoiceSmash does solve this problem for you.

Here is how it works. InvoiceSmash will extract the data as an Item invoice. You then tell InvoiceSmash to switch it to a service invoice by clicking the following button on the submission screen.

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That button will then send the invoice back to resolve the general ledger rules and create a rule for that supplier that will automatically do that next time. After that you can submit it as a normal service invoice.

So there are three types of Invoices

An Item Invoice resolves against Inventory/Items

A Service Invoice resolves against General Ledger codes

A Service Invoice Masquerading as an Item Invoice resolves against General Ledger codes after you create a switching rule.

Hope this helps.

Mark

Coming soon: Statement vs Hybrid Invoice Statement.

Scammers using fake invoices–be aware

Watch out folks! Tell your associates.

http://www.scamwatch.gov.au/content/index.phtml/itemId/1199838

Invoice email scam now targeting Australian businesses

January 2015: SCAMwatch is warning Australian businesses to beware of an invoice email scam seeking payment re-direction.

The scam involves scammers pretending to be legitimate suppliers advising changes to payment arrangements. It may not be detected until the business is alerted by complaints from suppliers that payments were not received.

How these scams work

  • Scammers hack into vendor and/or supplier email accounts and obtain information such as customer lists, bank details and previous invoices.
  • Your business receives an email, supposedly from a vendor, requesting a wire transfer to a new or different bank account.
  • The scammers either disguise their email address or create a new address that looks nearly identical. The emails may be spoofed by adding, removing, or subtly changing characters in the email address which makes it difficult to identify the scammer’s email from a legitimate address.
  • The email may look to be from a genuine supplier and often copy a business’s logo and message format. It may also contain links to websites that are convincing fakes of the real company’s homepage or links to the real homepage itself.
  • The scam email requests a change to usual billing arrangements and asks you to transfer money to a different account, usually by wire transfer.
  • The scam may not be detected until the business is alerted by complaints from legitimate suppliers that they have not received payment.

http://www.scamwatch.gov.au/content/index.phtml/itemId/1199838

Go Paperless at the Register!

If you’ve been in business, worked in a business, or done business with a business for more than 20 seconds…you’ll know that receipts, paper, and expense claims are an unavoidable fact of life… Well the good news is that its changing. We work with businesses all day every day who are going paperless and it is remarkable how fast things are changing for the better. It’s relatively straight forward these days to get invoices from suppliers electronically via email, but getting electronic retail receipts has not been so easy. But the good news is that its changing. Retail businesses that sell to business customers are increasing allowing receipts to be emailed right at register.

Companies like OfficeWorks or Apple will take your email address at the register and email you the receipt. Our customers on InvoiceSmash are now living the Go Paperless dream…

And of course, any retail business where you have an account and buy on credit, will already be able to email you invoices instead of retail receipts.

So, when you’re at register and they ask you if you want to be emailed the receipt…go paperless!

Do you buy Coke in your business? (Australia only)

TLDR (InvoiceSmash can automate your Coke invoices)

When we started InvoiceSmash we knew businesses in the food service industry were going to love our service. We’ve now automated pretty much every major food supplier in Australasia and we’re adding more all the time. And this is a great thing for our customers.

But one bump along the way that we faced early on was that one of the biggest suppliers of them all, Coca-Cola Amatil, doesn’t produce text/electronic PDFs. Instead, their accounts receivable finance system generates a PDF which is a computer generated image. Typically an image PDF means its a scan which means you need to use OCR…which means bad data quality which means its a pain for everyone. But wait…no, I said its a computer generated image…computer generated images are not the same as scans. They are a much higher quality image and more predictable for OCR software which means it can be OCRed without the drawbacks. 

So what we did is built a little ‘subsystem’ in InvoiceSmash which OCRs coke invoices, does it perfectly every single time, and is completely automated. This demonstrates our commitment to making our customers lives better…er more automated. We are probably the only software service that can do this and give you the line item details.

We’ve also confirmed that Coca-Cola Amatil can and will email their invoices to you as an email attachment if you ask the Credit Team to do so. All you have to do is call the Coca-Cola Amatil Credit Team on 1800 151 791, give them your Outlet ID and your InvoiceSmash email address and perfect AP automation is yours for the taking.

(InvoiceSmash has no relationship with Coca-Cola Amatil whatsoever, we just process a lot of their invoices for our customers in the Food Service industry) 

The business value of line item details

We had a happy customer drop us an email yesterday and this is what they said…

"Hi Mark, i have been smashing invoices and all has been going well. My boss said today that this is the first time ever he has seen the true net cost of running his business. As now the supplier invoices are loaded on time and not all in one batch hit at the end of the month.”

What changed for this customer is that when they switched from manual data entry to using InvoiceSmash all of a sudden, in the matter of a few weeks, all the expenses for individual line items were being assigned to appropriate General Ledger accounts. When the data was being entered manually by the accounts team, it was infeasible to track the spending at the line level and therefore only the totals were tracked. Because the lines were being assigned appropriately for the first time, it is now possible for the business to take a look at exactly what they’re spending money on…not just at the supplier level.

Furthermore, because InvoiceSmash is a software automation system, the supplier invoices are posted to the accounting system within minutes of being received. No amount of human operators can go as fast as our software. This means that all the pain of rushing to get everything entered before the end of the month, and then dealing with annoyed suppliers when payments are missed…all of those problems evaporate with one simple solution.

I don’t like to hype things too much but I believe this is transformative for our customers.

Mark Burch

How does ‘Auto-submit for this supplier work’ ?

On the final approval screen for your invoices you might notice a little check box that looks like this…

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It says “Auto-submit for this supplier”.

This is how it works. After you’ve processed a few files for a particular supplier the InvoiceSmash rules system has built up a history of your preferences.

1) The Contact resolves automatically.

2) Any missing due dates resolve automatically.

3) GL Accounts resolve automatically.

4) Items/Inventory resolve automatically.

After you’ve processed a few invoices there is nothing left for you to do except click the ‘Submit to Your Accounting System” button. But why do you even need to click that button?

Well the good news is you don’t.  If you check the Auto-Submit box what this means is “Go ahead InvoiceSmash submit any future invoices from this supplier automatically if you can. I’m comfortable that this is correct every single time”.

But the InvoiceSmash software is careful. The software checks that there isn’t already invoice with that number from that supplier in your accounting system. If we detect a duplicate no automatic submission can happen. Its up to you to decide to submit a duplicate or ignore it.

But if everything checks out ok, and you’ve granted the software permission, it will be automatically submitted on your behalf. Voila! Hands free supplier invoice processing.

It doesn’t get easier than that! Happy smashing!

Users, Subscriptions and Accounting Files

We built InvoiceSmash to be suitable for users who look after multiple accounting files/subscriptions.

This diagram shows the relationship between users, InvoiceSmash subscriptions and accounting files.

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There is always a one to one relationship between an InvoiceSmash subscription and a file/subscription on Xero/Saasu/Myob. When InvoiceSmash connects via API we sync a bunch of data and set up the rules as you use the system. That data and rules can’t be applied to another accounting file/subscription (obviously) therefore we don’t allow subscriptions to “cross the streams”.

Users however, can access all their InvoiceSmash subscriptions using a single logon/pass. In the diagram, you can see that “Anne” has access to Company A and Company B. “Bob” on the other hand has access to Company B and Company C. The first person who creates the InvoiceSmash subscription is the Administrator of that subscription and they have the ability to invite other users to that subscription. They can also promote invited users to be Administrators of the subscription as well.

In this example Bob and Anne might work for the same accounting firm, but have responsibilities for different clients.

If a user of InvoiceSmash only has a single InvoiceSmash subscription, when they logon they proceed straight to the dashboard. If a user is a member of more than one subscription, when they logon they will be asked which subscription they wish to use for that session.

How to get the best automation results from InvoiceSmash

1. Avoid paper invoices and scans if and where you can. Ask your suppliers to email you invoices as PDF attachments. If your suppliers need to give you paper invoices with the delivery docket, make an arrangement with their accounting department to email you PDF invoices as duplicates/copies. Keep the paper invoices for reference but push the emailed PDFs into InvoiceSmash for automation. To learn more why this is makes a difference to your business read this post.

2. Try to get PDFs from your suppliers that have one invoice per file. Edit: 16/7/2014. InvoiceSmash can now automatically split PDF files from suppliers in which there is a ‘batch’ of invoices in one PDF.  The software can split PDF files at page breaks. Basically what InvoiceSmash does is extract data out of a file and creates a purchase transaction in your accounting system. If there are multiple transactions in a PDF, they first have be split into separate transactions…then each transaction is treated separately thereafter.

3. When you’re just getting started with InvoiceSmash we usually have to teach our software to recognise the details (aka “templates”) in your supplier invoices. This takes varying degrees of human intervention and can take from a few minutes to 2 days depending on many variables. The power of our automation kicks in after this process has happened – that’s when our system will demonstrate its value to you because the invoices are completely automatic at that point. This template automation, only applies to electronic PDFs and does not apply to scanned invoices.

Happy smashing!