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Full Project – Design and implementation of an electronic invoicing system

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CHAPTER ONE

INTRODUCTION

Background Note On Electronic Invoicing And Rationale For The Study

This study is carried out within the frameworks of the Real Time Economy (RTE) Program founded in collaboration with Federal University Otuoke department of computer science and Technology. The Program aims at research and promotion related to the implementation of new information technologies that enable real-time business processes, and consists of three subsequent projects focusing on electronic invoicing (e-invoicing), value chain processes and electronic accounting respectively. More specifically, the current thesis work is complementing the first part of the Program by looking into the adoption of e-invoicing technology and realized benefits within a number of Finnish organizations.

Electronic invoicing as an emerging technology has been taking increasingly more attention in recent research and given a number of implementation initiatives, both domestically in Finland and different parts of the world. While European Commission’s Directorate General for Enterprise and Industry broadly defines e-invoicing as the electronic transfer of invoicing and payment information via the Internet or other electronic means between the parties involved in commercial transactions, this study uses a narrower definition. It refers more specifically to the transmission of invoices in a structured format through XML1 -based open standards (Penttinen 2008) such as Finvoice, PostiXML and TEAPSSXML in the Finnish context, and, thus, invoices in e.g. .doc, .xcl, .pdf, jpg, etc. formats sent as attachments in e-mails are left out from the scope of this e-invoice definition.

At the European Union (EU) level within the Single Euro Payment Area (SEPA) project, e-invoicing is seen as a major contributor to European integration,

transaction transparency and costs reduction, as well as to environment preservation, which is supported by a number of recent studies (e.g.EEI2007, Capgemini 2007). Besides the afore mentioned and other advantages of e invoicing, such as e.g. contribution to work efficiency and triggering of introduction of other digital transactions, it is also deemed to be a significant source of productivity1 increases in Europe (Harald 2009). Regardless of sound reasons to transfer to e-invoicing, a certain lag in adoption has been observed both in business-to-customer (B2C) and business-to-business (B2B) contexts. Even in Finland, though the country proved being a leading society in technology development and penetration 2 , out of all businesses there were only 34% receiving and 32% issuing e-invoices at the beginning of 2008 (Exhibit 1). Some of the restraining factors voiced were, for example, lack of conversion

between operators, inability to send extra information together with an invoice such as file attachments, inflexible cost structures among companies, operators and banks, and differences in both data interchange standards and local legislation in relation to international e-invoicing (EBA 2008, Penttinen 2008).

The lag in ubiquitous adoption of electronic invoicing is reckoned to hinder the apprehension of considerable benefits at company and society levels. For academics, the lag also means that there is obvious scarcity of company data which can be used for assessing business value of the e-invoicing technology. In this respect, the current thesis uniquely contributes to the existing literature by exploring real life cases of the transition to e-invoicing and post-implementation gains that companies have been able to withdraw so far. Having obtained in-depth information and factual support from the business life, the study helps to trace the experiences, understand internal processes, and see bottlenecks and success factors upon the implementation of electronic invoice handling system. This information can be used further, processes. The fact that the thesis also finds the evidence on actual post-implementation gains may facilitate promotion of e-invoicing among the businesses and prompt them to sooner undergo the transition.

1.2 Statement of Problem

During the analysis and data collection of this project, it was discovered that there existed a manual form of collecting and storing customers’ invoices in other for them to be attended to, and for future purpose.
That is to say that the process of daily task and activities are done manually which is quite unfortunate; manual procedural execution produced delays in writing down all the customer bought, at some instances the business owner can’t keep a proper record of the goods and services sold out in a particular day, week or Month, which reduces result in businesses.
Manual invoicing record keeping has resulted in many setbacks to the expected standard. The setback encountered includes:

Time wastage in writing down everything bought by some customers.

Partial or total loss of invoice by both business and customers.

Under recording of invoice analysis.

Inefficiency of some members of staff due to laziness in searching of the invoice.

As a result of these problems, the manual system of invoice record information storage, input and retrieval is very clumsy: inefficient and unbelievable.

Purpose Of The Study

To develop a computerized Electronic Invoicing software to carryout tedious work and activities performed by human beings, in which they end up misplacing and discarding some important files and costumers records. But if this (computerized Invoicing software) is implemented and installed it will render remedy to this case.

1.4 Aim and Objectives

The aim of the system is to simplify the invoicing technique in various organisations by designing an electronic method of issuing invoices.

Below are the listed Objectives of the System:

To design a web based invoicing system to replace some extent of human role in cases of unavailability of job.

To provide quick retrieval of customer’s invoice records on site or case of loss of original invoice.

Also, the purpose of this software is to model a computerized invoice system to enable proper invoice generating for customers and control this records.

Scope Of The Study

By means of multiple case studies, the thesis looks into the implementation of electronic invoice handling technology in three Finnish organizations and assesses how well these have been able to apprehend the benefits attributed to e-invoicing technology. The cases are largely built around incoming invoicing, because it is where the most benefits of electronic handling are expected to evolve.

Invoice handling itself is a very tiny process of supportive and non-revenue generating nature that is intensely coupled with other processes within a supply network. Measuring contribution of e-invoicing benefits, such as e.g. productivity gains or profitability effects, at the level of a company’s financials may be almost unfeasible due to complexity of interrelations of variables and often lack of relevant data. Herewith this study is bounded to rather look into qualitative merits and straightforward quantitative enhances observed at a department or individual level where appropriate. When assessing the processing costs of an incoming

invoice, the study only looks at the human labor requirements to handle one invoice. The estimates, thus, include purely labor costs per invoice processed, while other possible non labor costs, e.g. technology license and service fees or complementary investments in training and reorganization, are left out from the scope of this thesis.

Limitations Of The Study

There are some limitations or constraints confronting this study, they are as follows

Time: I have a very little time to carry out this research this was the fact that I combine the research work with my academic studies. You can agree with me that time constraints is one of the limitations I experience while carry out this research work.

Finance: however, finance is another constraint I experience while carry out this research. The lack of funds to carry out this research slow down the research work. Despite the limitations every effort was geared towards accomplishing this project.

1.7 DEFINITION OF TERMS

Computerized: Convery (information) to a form which is stored or processed by computer

Customer: A person who buys goods or services from a shop or business.

Database: A collection of different files in a specialized way for easy retrieval and update.

Electronic: Controlled by or connected to a computer and as an activity or service which is available on or performed using the internet or other computer network.

Invoice: A non-negotiable commercial instrument issued by a seller to a buyer. It identifies both the trading parties and list describes and quantifies the items sold, show the date of the shipment and mode of transport, prices and discounts (if any) and delivery and payment terms.

Inventory: An itemized catalog or list of tangible goods or property, or the intangible attributes or quantities

Record: Document that memorializes and provide objectives of activities performed, resulted achieved, or statements made.

Transaction: Agreement, Contract, Exchange, Understanding or transfer of cash or property that occurs between two or more parties.

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