2023 Looms as Banner Year for eInvoicing in the US

The pivot toward electronic invoicing — and away from paper — will get a significant tailwind this year in the United States.

The Federal Reserve and the Business Payments Coalition (BPC) have been moving through a pilot exchange framework, first announced in 2021, that will connect businesses to exchange digital invoices. That pilot program has included 73 organizations to set up that exchange. The Fed and the BPC have also stated that another 42 organizations are delving into whether a similar framework can be used to deliver remittance information across various payments types. The exchange has yet to be formally launched, though the pilot had been announced to be running through the first quarter of 2023.

PYMNTS has reached out to the Fed requesting comment on when the exchange will go live but has not heard back as of publication time.

The Fed had paved the path toward eInvoicing standards back in 2016 in a paper titled “U.S. Adoption of Electronic Invoicing: Challenges and Opportunities,” and wrote back then that “A major barrier identified by U.S. businesses to adopting electronic payments is the willingness of their trading partner’s ability to send or receive automated electronic information (e.g. invoice and remittance information). Although, businesses may choose to implement electronic payments alone and separate from the associated electronic information, oftentimes they maintain and rely on checks if related elements of the end-to-end process, such as the invoice, cannot also be migrated to electronic forms.”

What Lies Ahead

As 2023 progresses and as the exchange looms, one end result would be a transformation of B2B payments, where, as noted in this space, as many as 45% of smaller firms have cited manual invoice review as a pain point when making payments.

At a high level, a registry and exchange model increases the speed and security of procure-to-pay cycles.

And with an exchange in place, the U.S. winds up making strides already seen in Europe, where Italy mandated eInvoicing in 2019 and France has such mandates in place that take root in July of 2024. Across the EU, the European Commission introduced an eInvoicing standard in 2017 to streamline the various eInvoice formats used across the region. For U.S. companies already conducting cross-border transactions, paying (and getting paid by) firms in Europe, there’s at least some familiarity with standardization and presentation of invoices.

For the firms that sign on to the exchange when it launches here in the States, there lie the advantages of speeding payments and reducing errors. For the governments and tax authorities within a given country, there’s the advantage of collecting taxes at the moment the transactions make their way across digital channels.

Last year, as detailed in a PYMNTS Intelligence study, companies implementing AP and payments automation reported cost savings of approximately 70% in addition to faster processing times. There’s a significant greenfield opportunity to improve those back-end tasks: A total of 88% of AP professionals in another report blamed the preponderance of payment errors on manual systems. Respondents told PYMNTS that it takes an average of 11 days to obtain invoice approval from department heads. Of those AP professionals who had automated their accounting and invoicing processes, 74% said they had fewer late payments.