BUSINESS VALUE OF ELECTRONIC INVOICING

Postgraduate

ABSTRACT

This thesis discusses how the business value of an invoice system could increase with the use of IT. The issue is analyzed in purpose to determine what business value an electronic invoice system can contribute to from a sender’s perspective and to create a decision base for a recommendation on the eventual usage of electronic invoicing at Volvo Penta.

 

We have performed an inductive exploratory research in order to perform a productive decision analysis. Desk research and in-depth qualitative interviewing were performed during the case study in order to obtain a full overview of the problem area and the present situation.

 

The most obvious business value that comes from an implementation of electronic invoicing is gain in time and cost. Businesses that use electronic invoicing benefit from decreased invoice handling costs, reduced number of days outstanding for receivables and payables data and faster dispute resolution. Depending on how the invoice is distributed; different value can be achieved. The greatest business value is achieved when the electronic invoicing is connected to payment. The most attractive and value adding solution for Volvo Penta is EDI and Web EDI. 


 Background

The Information Technology (IT) has developed quickly the last years, which has led to many advantages but also many disadvantages. The businesses of today have accepted that IT creates competitive advantages and this has led to increasing investments in Information Systems (IS). But the businesses want to predict what business value an investment in IS/IT could lead to before they invest.  

 

This thesis ascertains how the business value of an invoice system could increase with the use of electronic distribution. This is done by an analysis of what business value an implementation of an electronic invoice system could lead to. Established theories in the area are put together and an empirical study is performed in order to illuminate important aspects and present new angles of incidence. 

 

The term business value does not only imply tangible, economical advantages as decreased costs and time savings but also intangible factors as employees’ opinions and thoughts.

“’IS Business value’ is the sustainable value added to the business by IS, either collectively or by individual systems, considered from an organizational perspective, relative to the resource expenditure required.”

 

The foundation of the analysis is the empirical study. The study objective is the business value that may increase when transitioning from manually sent invoices (by fax, phone, or e-mail) to electronic invoicing. This transition can contribute not only to increased cash flow and better invoice survey but also decreased administrative time and cost. 

 Purpose and Focal Question

To have a focal question that is as clear and delimitated as possible is very important. If necessary, the focal question may be divided into sub questions that together answer the main question

 

The purpose of this thesis is to ascertain how the business value of an invoice system can increase with the use of IT. The focal question is:

 

What business value can an electronic invoice system contribute to from a sender’s perspective?”