Outdated back-end processes create unnecessary costs. Here’s how to solve the issue

When Facebook opened to the public in 2006, it took three years for the social media platform to hit 50 million users. However, augmented reality game Pokemon Go, which was launched 10 years later, achieved the same figure in 19 days.

This goes to show that the pace of business is accelerating, and in catering to consumer demands for digitalization and speed, many enterprises have quickly realized that slick apps and intuitive user experiences can only go so far before dated back-end infrastructures start holding them back.

“Business efficiency is looking at both the front-end as well as the back-end,” says Bill Xiao, assistant director of the E-Invoice Project Office at Singapore’s Infocomm Media Development Authority (IMDA), which aims to bring more businesses on board the nationwide e-invoicing network known as InvoiceNow.

Bill Xiao, assistant director at IMDA for its E-Invoice Project Office / Photo credit: IMDA

With CEOs more focused on a company’s front-end infrastructure, he opines that businesses often don’t pay as much attention to their equally important back-end processes. Xiao says that there are significantly more front-end tasks to manage in a company’s operations, but an increasing amount of this is being automated. Although it’s also possible to automate back-end processes with modern tools, firms are simply opting to allocate more resources to the department, causing significant manpower inefficiencies.

“Businesses must pay more attention to their back-end processes rather than investing significantly more for front-end tasks in managing a company’s operations,” he adds.

With Southeast Asia fulfilling analyst predictions of becoming a high-growth market, it is in the interest of the region’s enterprises to ensure that their back-end processes can keep up to leverage the myriad of upcoming opportunities.

Sifting out inefficiencies

When it comes down to identifying which back-end systems need improvement, Xiao likes to envision the trifecta of process, people, and technology.

To address process, which is the flow of how tasks are executed and how objectives are met, Xiao’s team at IMDA stepped into the shoes of the businesses they hoped to help. They commissioned a study on the larger ecosystem of B2B interactions, and results showed that it costs approximately US$6 for a business to process an invoice, according to Xiao. He adds, however, that if there are errors in that invoice that need rectification, the cost can skyrocket eightfold to more than US$50.

The reality of these charges may not be obvious, since it does not require any money to send an invoice as a PDF over email. What businesses do not recognize, however, is that this PDF needs to be re-entered into the other party’s accounting solution before the amount on the invoice can be verified and payment can be made. And because manual entry is prone to error, that is where costs can start accumulating.

Based on these insights, it was easy for Xiao’s team at IMDA to champion the benefits of a unified e-invoicing network across businesses.

Getting buy-in and managing communications

Xiao’s team then moved on to considering the second item in the trifecta: people. This includes all the parties involved if the identified back-end processes were to undergo changes.

“Based on our experience, technological implementation isn’t the hard part,” Xiao muses. “Change management – both internal and external – is.”

Photo credit: everythingpossible / 123RF

When automating finance operations, for instance, the finance department is far from the only party involved. IT has to be looped in with designing the system, sales and procurement teams will have to become familiar with the accompanying processes, and business partners have to understand how to be part of the system.

Xiao recommends having a senior executive to drive the change across all necessary parties. He emphasizes having a solid strategy to communicate with and manage partners who will be affected by the update.

Also related to this is the issue of documentation. When a solution or vendor is changed, Xiao says, legacy processes are likely to break down unless the shifts in process have been taken into account. Without this, there could be more revenue loss.

The right tools for the job

The final piece in Xiao’s checklist is technology. This involves picking out the tools and services that can help solve whatever inefficiency has been spotted and weighing the actions that can be done.

“Sometimes doing nothing is also an option, if you are waiting for an upcoming tech refresh,” adds Xiao.

Today, the IMDA team is dedicated to helping more businesses reap the benefits of digitalization, encouraging enterprises across the country to make use of InvoiceNow, which enables more efficient invoicing among businesses that are connected to it. At present, more than 50,000 businesses utilize the InvoiceNow network.

Much like 4G or 5G networks, InvoiceNow is system-agnostic. This allows companies to either engage with an IMDA-certified solutions provider that offers InvoiceNow-ready accounting solutions or continue using their preferred enterprise resource planning systems and connect to the network via an IMDA-certified access point provider.

E-invoicing, Xiao says, significantly reduces the friction between business parties and helps improve back-end processes. It also streamlines the consolidation of incoming and outgoing invoices and prevents them from falling through the cracks when emails are missed or employees come and go.

Adopt and adapt

While Xiao recognizes that the process of transformation is tedious, he says that it can be made easier by not reinventing the wheel.

“Adopt solutions and best practices that are already out there and adapt them accordingly [to your needs],” he advises.

The Singapore government’s use of the Peppol network for InvoiceNow is a great example of this in action. First developed as an invoicing framework for businesses across the European Union to send invoices to each other, the Peppol network is now used internationally in countries like Singapore, Australia, New Zealand, Japan, and more.

In seeking out ideal e-invoicing networks, Singapore found that Peppol’s open-source nature and low costs made it ideal to adopt as a foundational tool, as there was no need to construct it from scratch. It was then adapted for nationwide use by adding functions and customizations for Singapore’s particular business environment, resulting in InvoiceNow.

This philosophy allows businesses to get started more quickly on transforming and improving their back-end efficiency and removes any reluctance that may stem from needing to build their own solutions.

InvoiceNow is Singapore’s nationwide e-invoicing initiative that facilitates the direct transmission of structured digital invoices across finance systems. The network helps businesses of all sizes enjoy smoother invoicing, faster payments, and a better way to save the environment.

Learn more about InvoiceNow at one of its monthly business briefings or get onboarding assistance to start sending and receiving e-invoices with InvoiceNow.