WHITEPAPER

BASWARE WHITEPAPER
ELECTRONIC INVOICING IN
THE AUTOMOTIVE INDUSTRY
 CONTENTS

1. Automotives big challenge

2. From bilateral connections to business networks

> EDI and the cost of message exchange
> Regulatory changes

3. Automotives big opportunity

> Buyers and suppliers benefit in equal measure
> Avoiding the manual invoice marathon
> Huge predicted growth in invoice volumes

4. Turning complexity into efficiency

> Adopting Global Invoice
> Tiered supplier complexity

5. Basware: the e-invoice pioneer

> Basware Automotive Gateway
> E-invoicing services at a glance for buyers and suppliers
> Services and technologies in detail
> Industry expertise
> Independence by roaming
> Revolutionizing global payments

6. Future focus
> An integrated accounting process

7. Automotives new golden era

> Companywide optimization from consultation to implementation
> Crystal ball: Analysts excited by the e-invoice potential

02
1. AUTOMOTIVES BIG CHALLENGE

The automotive industry is unique. Hardly any other industry Basware is the leading network for e-invoicing and e-payment
has such a complex, closely aligned production process with solutions within the automotive industry and is uniquely
such global reach. Automobile manufacturers follow the positioned to recognize the challenges facing automobile
market and build cars where their customer base is greatest, manufacturers looking to gain efficiency across their financial
and where they lead the original equipment manufacturers operations. To meet these challenges Basware has designed
(OEMs) and suppliers follow. This agility is one of the highly-effective, industry-specific technologies and services.
industrys great strengths, but global orientation can become
a major obstacle to achieving the benefits of an electronic
financial supply chain.
Basware has been working
with thousands of automotive
The automotive supply chain is a dense matrix comprising suppliers and manufacturers,
thousands of organizations. E-invoicing is a key enabler in
including Audi, BMW, Daimler,
simplifying connections, improving processes, making
significant cost savings and strengthening buyer-supplier
MAN and Volkswagen for many
relationships. These tangible benefits have proven to play a
years, and our team has a
vital role in augmenting a companys future credit worthiness deep knowledge and
and liquidity. understanding of this unique
industry. We know plenty
about the complexities of
e-invoicing in the automotive
industry and adapted our
solutions to accommodate
these challenges. Through our
Basware Commerce Network
we connect over 160
e-invoicing service providers
and over 900,000 companies
globally, which all benefit from
immediate electronic
transaction collaboration with
all their trading partners.
Esa Tihil, CEO of Basware

03
2. F
 ROM BILATERAL CONNECTIONS TO BUSINESS
NETWORKS

The origins of e-invoice processing in the business-to-business Over the last few years, second and third tier suppliers have
environment go as far back as the seventies when EDIFACT been brought into electronic transactional programs too. This
(Electronic Data Interchange for Administration, Commerce is in large part due to the clear benefits of e-invoicing but it
and Transport), a cross-industry and international standard has also been helped by a number of regulatory changes in
for electronic data transmission was established. Europe. For example, the amendment to the VAT Directive of
2010A and the simplification of tax laws meant that electronic
signatures were no longer required in countries such as
Between automotive manufacturers, original equipment Germany, ensuring paper and e-invoices were able to be
manufacturers (OEMs) and their suppliers, these system treated equally, triggering further adoption across smaller
connections today take care of the exchange of electronic businesses.
messages, usually in connection with goods or cost accounts.
Upstream EDI converters serve as translators for the
message transfer between the IT systems of the business
partners, providing a uniform protocol and format for the Automation of invoicing is an
transport of messages from supplier to buyer. important goal at Daimler.
Through our use of Basware
e-invoicing services, we also
A huge amount of effort has been expended on developing
reach the non-EDI-capable
standardized EDIFACT messages such as the widely-used
Global Invoice. Despite this, 1-to-1 bilateral transaction
suppliers all over the world.
exchange remains frustratingly complex. The varying needs of Richard Erzberger, Manager Shared
companies and changing market conditions increase the time, Service Centre, Daimler
cost and manpower required for the development and
maintenance of the required point-to-point connections. This
is why, especially for many small and medium-sized
companies, traditional bilateral data exchange is associated
with considerable and often prohibitive cost levels. As the
number of business partners grows, more and more bilateral
connections must be maintained. This is the reason only the
largest automotive manufacturers and their major suppliers
could afford the cost intensive EDI connections and why they
are now looking towards e-invoicing as a cheaper, more ERP ERP
flexible alternative.

EDI EDI
converter converter

Point-to-point connections with EDI converters can be used in practice

only with high volume business partners.

04
3. A
 UTOMOTIVES BIG OPPORTUNITY

Buyers and suppliers benefit in equal measure First invoices are sorted out from other post in the post
center. Envelopes are opened, advertising and irrelevant
Historically, buyers have had the most to gain from getting
content are removed, the invoice is receipt-stamped and
their suppliers to send e-invoices and therefore they have
endorsed and sent to the internal mail. This process usually
usually been the ones to instigate e-invoicing initiatives.
takes several days. Unfortunately however, any errors on the
Suppliers, often constrained in resource and capital, have
invoice with this approach will not be discovered until the end
often baulked at the need to implement discrete connectivity
of the process. For example, if information does not comply
for each individual customer such effort is perceived as a
with local legislation, the invoice must be rejected because
drain on their time and can appear costly, a perception that
otherwise a tax deduction may not lawful. So the invoice
ultimately becomes a barrier to getting them on board.
comes back to the supplier and must be cancelled before a
Traditionally, some of the biggest costs to the supplier have new invoice with a new invoice number is issues and restarts
been involved in ensuring specific invoice content and data the journey. Following these practices, its easy to see how
requirements are met so the invoices can be automatically invoice processing can easily become a marathon.
accepted into the buyers accounts payable or ERP systems.
The same is true of the method of sending and receiving
However, with modern approaches to transactional
invoices in PDF format via e-mail. This type of document still
connectivity these costs are more than offset by the
has to be entered into the buyers system. This is done either
significant cost savings that e-invoicing unlocks for the
by manually typing the invoice data into the accounting
supplier. For example, significant realizable cash savings are
system or by scanning using optical character recognition
delivered through the instant removal of postage, printing and
(OCR). In any case, trained personnel will be still be required
paper-handling costs.
for the booking and payment process as, regardless of the
More importantly, by establishing an electronic business method, human verification of the invoice contents is still
relationship the supplier increases the likelihood of a long- usually needed.
term partnership with their customer and consequently
According to market research from Billentis, invoice volumes
engenders more confidence in the future. The digital value
are likely to grow in the coming years by two to three percent.
chain is becoming an ever more valued component of buyer-
By 2015 analysts expect a volume of 35 billion invoices in
supplier relationships.
Europe. Its clear that buyers and suppliers relying on these
subpar processes can expect to see their costs increase in line
with these estimates unless they adopt fully automated
Avoiding the manual invoice marathon
e-invoicing processes.
A look behind the scenes of a buyers typical manual invoicing
handling process illustrates the potential of e-invoicing. Paper
invoices demand a long list of manual processes, including
invoice printing, enveloping and postal franking, take time and
create significant waste.

The higher the number of invoices, the more complex and

labor-intensive the postal process. Outsourcing the invoice
printing and postage process can reduce this cost, but often
only suppliers with very high volumes have seen the benefit.
And of course the postal service will always add time to the
process, no matter how efficient they claim to be. This is
where the advantage of e-invoicing can be clearly felt: print,
material, enveloping and postage costs are instantly removed,
and delivery can take a matter of seconds, not days.

But what does a typical process look like for the receiver of a
paper invoice?

05
4. TURNING COMPLEXITY INTO EFFICIENCY

With the opportunity represented by e-invoicing now recognized For example, OEMs such as BMW, MAN and VW conduct
by the industry, its hardly surprising that the ranks of extensive relationships with their primary suppliers such as
automotive manufacturers and their suppliers have become Bosch, ZF Friedrichshafen or Hella. These Tier 1 suppliers are in
increasingly interested in the idea of fully automating the turn supplied by their own set of suppliers of raw materials or
accounts receivable and accounts payable processes. services. In addition to cooperation with their main buyers (Tier
1) these suppliers also often maintain a direct relationship with
Automation has been proven to enable major cost savings,
AUDI, BMW, Daimler, VW and others in part with minor Tier 3
minimize human error, increase the transparency of business
providers, which in turn act as suppliers for certain components.
processes, accelerate invoice processing speeds, simplify
auditing, provide better cash flow forecasting and ease tax
compliancy for both the buyer and supplier. In this environment, the practical implementation of the Global
Invoice transaction standard can appear overwhelmingly
But even though the introduction and adoption of the Global
complicated. This is especially true for small and medium
Invoice industry standard has appeared simple for the OEMs, its
businesses. Specialist solutions, such as those provided by
introduction can prove to be extremely time-consuming across
Basware, clearly have a role in turning this complexity into
the extended supply chain. efficiency.
This is because the required collaboration between buyers and
suppliers can be complex to achieve; because there are huge
number of small and micro businesses within the extended value
chain; and because relationships between OEMs and suppliers
can be so varied, especially within the automotive sector. OEM

Tier 1

Tier 2

Tier 3

Complexity of the cooperation between manufacturers and suppliers

complicates the introduction of Global Invoice into the supply chain

06
5. BASWARE: THE E-INVOICE PIONEER

buyers requirements an approach that ensures each supplier

can quickly and easily exchange e-invoices with any of its
buyers.
Basware has been providing e-invoicing and e-supply chain
Basware has enjoyed over ten years of success in the
solutions since 1985 and is largely responsible for the
automotive industry. More than 12,000 stored format
proliferation of e-invoicing across the globe. The Basware
conversion and workflow rules automate and accelerate the
Commerce Network enables the exchange of electronic business
exchange of electronic documents between more than 5,000
documents across the entire value chain. An integral component
suppliers and automotive manufacturers.
of the network is the Basware Automotive Gateway, an industry-
specific technology platform which provides the solutions and The swift transitioning of suppliers from paper to e-invoicing
services that make these exchanges possible. is vital. To ensure customers achieve this Basware provides a
Basware provides open, secure, cloud-based purchase-to-pay uniquely global Supplier Activation service which works with
and e-invoicing solutions to organizations of all sizes, resulting the buyer to empower all suppliers with instant access to
in greater efficiencies in procurement, accounts payable and e-invoicing via a series of easy, collaborative approaches and
accounts receivable. tools.
Companies across all industries, from small businesses to
The Basware e-Invoicing Services at a glance:
corporate giants use Basware solutions to drive sustainable cost
savings, proactive insight to cash flows and improved buyer Basware for buyers: Basware for suppliers
supplier relationships. The Basware Commerce Network is
Complete handling of global Easy options to start sending
founded on the principles of openness, where all types of supplier activation from e-invoices without changing
organizations can collaborate and trade, making it the largest in conception to implementation current systems or processes
the world. Today we connect millions of business users in Technical solutions to suit all Single supplier interfaces for
900,000 companies across over 100 countries. supplier needs multiple invoice recipients

Full invoice validation for Complete software packages for

completeness, legal requirements safe and cost-effective invoice
Basware Automotive Gateway and accounting accuracy delivery

Generation of the invoice data Increased transparency and

The Basware Automotive Gateway substantially simplifies the format for the receiver quality of invoicing process
process of sending and receiving invoices and other transaction
Generation of the invoice image Faster and cheaper invoice
documentation underpinning the financial supply chain.
file for archive and workflow delivery than with paper
Basware first separates the buyers invoice format requirements documents
from the preferred e-invoice format of the supplier. This Creation of individual tests
and interfaces, and support of Digital signature options
separation is performed on both a technical and a process level. complex approval scenarios
Processing of invoices with
This means the submission and the format of the suppliers Wide installation basis for attachments
e-invoice does not need to match the buyers requirements. suppliers in the automotive
industry Supports all popular formats and
Rather, the Basware Automotive Gateway reacts to the needs of protocols
suppliers and translates the content of invoices according to Deep automotive industry
experience Online portal for invoice key-in
and PO flip

The Basware Commerce

Network for Global Trade

07
Basware technologies and service in detail:

BASWARE E-INVOICE - START RECEIVING 100% BASWARE iSERIES (AS/400)

ELECTRONIC INVOICES FROM DAY ONE: With Basware iSeries (AS/400) spool files can be read and
Baswares e-invoice solution means a buyer can expect to formatted. The spool file is broken down into individual
receive all purchase invoices electronically in one single accounts and after validation is converted to the desired
format directly to their accounts payable system or ERP. format of the recipient.
Basware provides a wide range of supplier sending solutions
including supplier activation and paper invoice scanning, BASWARE EDI
either by fully outsourced scan-and-capture or through in- Basware EDI includes installation and operation of all
house scanning solutions. Theres a tailored connectivity interfaces, sending and receiving structured data, conversion
service for all types of supplier, no matter how large or small. to in-house formats, XML, iDocs, VDA, EDIFACT, ANSIX12 and
creation of an invoice image for the workflow and integration
SUPPLIER ACTIVATION SERVICES: into their ERP system.
Basware employs world class activation tools and processes
to enable buyers to successfully onboard their suppliers. Its BASWARE E-INVOICE ARCHIVE:
designed to provide all suppliers with immediate access to Basware archives the suppliers electronic invoices to enable
e-invoicing in order to reach the highest possible level of fast, secure document access via a portal, with simple search
e-invoice penetration, drive down costs and improve and audit trails. Customers also have the option to receive
efficiency. stored invoice data on an optical disc for archive purposes.

BASWARE PORTAL FOR SUPPLIERS:

Suppliers with low volumes of invoices can take advantage of Basware Commerce Network is the leading network for electronic
the easy-to-use web portal for manual invoice entry. The invoices. Around 5,000 automotive suppliers from industry, trade,
portal can also be used for receiving orders. The order can transWport and logistics use the network daily for the exchange of
electronic documents. In total Basware processes 50 million
then be converted into an e-invoice with a single mouse click. electronic documents per year. The largest network users in the
automotive industry are Audi, BMW, Daimler, MAN and VW, and
the major automotive OEMs are also connected.
BASWARE E-INVOICE VIRTUAL PRINTER
Basware e-Invoice Virtual Printer is a simple and scalable Basware monitors its hardware, software and telecommunication
links to ensure smooth delivery of invoices. In addition, the
solution for non EDI-capable senders. Printing is redirected to supplier and buyer have online access to the Basware Commerce
a virtual printer and transferred to Basware. Here they are Network to view the current invoice status and to respond to error
messages.
converted to e-invoices and sent directly to the buyers invoice
processing systems.

Independence by roaming
BASWARE E-INVOICE EMAIL LITE:
Basware e-Invoice Email Lite allows buyers to receive genuine In order to maximize e-invoicing adoption across its buyer and
electronic invoices from even the smallest suppliers. Suppliers supplier customers, Basware works to ensure easy invoice
continue to send PDF-based invoices by e-mail and the buyer data sharing between the largest e-invoicing service
receives them as e-invoices directly into their accounts providers. To date Basware has over 160 interoperability
payable system. Basware uses existing data from the network partners across the globe, exponentially increasing
embedded text in the PDF invoice, so errors are avoided and the supplier reach for buyers.
invoices processed faster. The service is free and all suppliers
As with mobile telephony, e-invoice roaming enables easy
need to do is register online to create a new email address for
transaction collaboration between buyer and supplier no
sending invoices to each buyer.
matters what e-invoicing operator each uses. Interoperability
agreements define aspects such as the addressability of
CONVERSION OF VDA 4906 TO VDA 4938 STANDARDS
service, the transmission format, the contract design and the
Basware has developed a process which can integrate new
quality criteria for all parties involved.
standards quickly with minimal conversion effort. Senders
send the invoice in the VDA-4906-format to Basware who take
care of verification, testing and forwarding in the VDA 4938
format.

08
 Revolutionizing global payments
The roaming process over E-invoices are key to reducing payment times which can take
the Basware Commerce up to 120 days, but this isnt the only weapon in the armoury.
Baswares new e-payments service in partnership with
Network simplifies the
MasterCard is a global payment solution focused on providing
connection of our customers
buyers with extended payment terms, whilst ensuring
and thus significantly extends suppliers benefit from early, guaranteed payment. Suppliers
the reach to other networks. also benefit from rich remittance data which helps improve
Frank Mueller, IT Manager, Carglass accounts receivable process efficiencies. Its transforming the
way companies pay and get paid.

6. FUTURE FOCUS

E-invoicing will play an increasingly important role for the The Basware Commerce Network can check invoices
creditworthiness and liquidity of companies in the future. This according to national legal requirements and send them back
is because the visibility of real-time financial transactions on directly to the supplier if formal errors are detected. If an
the Basware Commerce Network can be used for economic invoice is rejected the supplier will be informed of the reason
analysis faster and more transparently than with paper-based for the rejection.
invoices.
The buyer can also define further checks tailored to its own
An integrated accounting process business process. These include invoices for purchase of
materials with missing order numbers. There are endless
With e-invoicing, monthly balances and quarterly reports can possibilities for checking and validating invoices in line with a
be completed faster, more easily and with more confidence. particular business need of the receiver.
Whilst paper invoicing sees lead times of weeks (according to
Accenture the average DSO is over 50 days), e-invoicing
processes reduce lead times to a fraction of this.

7. AUTOMOTIVES NEW GOLDEN ERA

For many years bi-directional links between automotive This includes harmonizing business processes based on
manufacturers and their major suppliers were the basis for transactions and trade relations between the partners, and
the exchange of invoices. New regulations and increasingly taking into account logistics requirements and staffing
global business processes are making paper invoices conditions. It is not enough merely to define the protocols for
inefficient and unprofitable. With Global Invoice there is now the transfer.
an international standard, which as well as the technical
possibilities also integrates the tax-related provisions of the As in other mature industries, the automotive environment
legislature and is supported by leading industrial nations. has thousands of suppliers along the supply chain. The
suppliers also have countless, historically developed,
Market observers believe that electronic document exchange proprietary IT systems which are perceived as being difficult
will play an integral part in the business processes between to link to electronic accounting and transactional systems.
automotive manufacturers, their suppliers and the suppliers E-invoicing service providers such as Basware have stepped
suppliers in the future. into remove this complexity and help take over the transition
from consulting to implementation, thus ensuring the
Company-wide optimization transition towards more efficient and cost-saving accounting
in the company and, as a byproduct, delivering
It is clear that a switch to electronic document exchange in environmentally conscious commerce through the elimination
the company need not be understood as an independent of paper and logistics from the process.
project, but as a company-wide process optimization measure.

09
CRYSTAL BALL:
ANALYSTS EXCITED BY THE E-INVOICE POTENTIAL

Market surveys predict a healthy future for electronic exchange,

processing and the archiving of electronic invoices in the B2B
environment. Consequently e-invoices are playing an
increasingly significant role in the automotive industry by
representing the economic basis for an enterprise-wide
optimization of procurement and financial processes.

A recent study by Billentis concluded that electronic invoicing

and automated invoice processing led to savings of 60 to 80
percent when compared with traditional paper processes and
the cost of e-invoicing projects can be recovered within a brief
0.5 - 1.5 years.

The future of the financial supply chain is cheaper, simpler,

faster and greener. Contact a member of the Basware team
now to secure a healthy future for your organization.

CONTACT DETAILS
Hubert S. Hohenstein
Vice President Automotive
Basware GmbH
hubert.hohenstein@basware.com

For more information:

Basware GmbH
Neumarkter Strasse 28
D-81673 Mnchen
Tel: +49 89 3750505 0
Fax: +49 89 3750505 30

infode@basware.com
http://www.basware.com/solutions/industry-solutions/automotive

ABOUT BASWARE
Basware provides open, secure, cloud-based purchase-to-pay and e-invoicing solutions to organizations of all sizes, resulting
in greater efficiencies in procurement, accounts payable and accounts receivable.
Companies across all industries, from small businesses to corporate giants use Basware solutions to drive sustainable cost
savings, proactive insight to cash flows and improved buyersupplier relationships. The Basware Commerce Network is
founded on the principles of openness, where all types of organization can collaborate and trade, making it the largest in the
world. Today we connect millions of business users in 900,000 companies across over 100 countries.
Basware is the global leader in providing solutions for better buying, better selling and connected commerce.
Find out how Basware boosts financial performance and profitability at www.basware.com.

https://twitter.com/basware www.facebook.com/BaswareCorporation www.linkedin.com/company/basware

www.basware.com I Copyright 2013, Basware Corporation

10