Challenges impending the standardization of invoice templates

Find out interesting insights with Jon Naseath , CFO & Strategic Advisor

Moderated by Sherry, Financial technology consultant at Hyperbots

Don’t want to watch a video? Read the interview transcript below.

Sherry: Okay, so let’s start. Hello, and welcome to all our viewers on CFO Insight. I am Sherry, a financial technology consultant at Hyperbots, and I’m very excited to have Jon Naseath here with me, he is an accomplished executive with expertise in AI, machine learning, and computer vision driving impactful technology solutions in education, healthcare, and business. Thank you so much for joining us today, Jon, to discuss the challenges of invoice template standardization and how AI might offer a solution. Let’s dive right into the topic with our first question. In your experience, what are the primary challenges companies face when trying to standardize invoice templates across their operations?  

Jon Naseath: Sure. The main issue is that the invoice is the representation of your transaction with that customer and just like there are every different type of transaction in the world, having to accurately represent that through a paper document is complex and as diverse as the transactions are personalized invoices often create similar complexity.  

Sherry: And how do vendors typically react to requests for invoice standardization and what impact does this have on the relationship between vendors and clients?  

Jon Naseath: Sure. Vendors usually want it to represent their point of view. So they’ll usually want some customized language or some format that represents their business model, and that creates complexity because it might just not be possible with the system they’re using. Oftentimes, you’re just like, “Well, this is what we can do,” and then you end up creating an addendum or some other side document, which isn’t ideal in any contract.  

Sherry: And from your perspective, why do you think there hasn’t been a universally accepted standard for invoices, despite multiple initiatives like UBL and EDI?  

Jon Naseath: Yeah, so that’s kind of like one end of the spectrum to the other. It’s either the customer wants it to represent their transaction, or we’re going to align and kind of force all transactions to comply with the same transactional standard. Within different industries, you can use EDI as an example if you’re doing high transactions of certain products. But oftentimes, again, if you’re trying to represent the unique nature of the transaction you’re doing, it just isn’t applicable. I think there could be interesting opportunities per industry, and I have seen different standardization around e-commerce transactions or things that go through, say, QuickBooks or whatever the ERP system is but that’s fairly generic and just isn’t applicable to a lot of transactions that exist.  

Sherry: Right. And in the industry right now, some businesses prefer detailed invoices, while others prefer summary invoices. How does this preference diversity contribute to the failure of standardization efforts?  

Jon Naseath: Sure, it comes down to what is the nature of the transaction that you’re doing. So if you have a complex multi-year transaction where there are a lot of details that go into figuring out that exact agreed-to price, that can cause complexity in what might otherwise just be a simple line item in your transaction. Also, if there are contingencies or sub-components, they want to show how these sub-components roll up to this overall product offering price. It’s just the nature of what you’re trying to represent and sell. If you don’t do that, if you don’t represent what the customer wants, then you often end up with the invoice just becoming a one-line item or an overly simplified document and then you have the statement of work or the agreement that has more details of what is actually the service order of what is being done.  

Sherry: That makes sense, Jon. How do system interoperability issues contribute to the challenges of invoice standardization? And what are the potential consequences for businesses?  

Jon Naseath: Sure. Well, one of the main issues, and using that same example that I just said, is if the actual transactional details of what your deal is going to be are not on the invoice, then finance and accounting might not be able to have the visibility to understand what that transaction was for or if something changes or needs to be different, which is represented in the service order, that can create a situation where finance or accounting just don’t have visibility in the ERP system or accounts payable to see what the change was for or why it happened. Then they have to go back to the service order, back to the transactional details that are on a different document, and try to understand what happened. So the more that the invoice can be an accurate representation of the transaction, it just helps everybody.  

Sherry: Can you share some examples from what you have seen in the industry of past standardization initiatives and why they didn’t achieve the desired outcomes?  

Jon Naseath: Sure. The main example that always pops into my head is when we were trying to create standardized invoices across a global company where we had merged together six or seven different entities that had been acquired. We found that overall, companies once we got standardized structure and line items all figured out everything was good. Then, we came to find out that in Japan, the standard was that if you’re going to have an invoice with a customer, they require a physical signature to pay it. That was something we hadn’t considered the need to physically sign the invoice before sending it in. We were able to work around it and find ways to have a place where they could sign and print it out to support their own need. So we had a standardized process overall, with an option for where a unique region needed a specific requirement, allowing them their own exception, while still recognizing that this process could be standardized globally with localized exceptions.  

Sherry: And since everybody is talking about AI, how do you see AI potentially solving the problem of invoice standardization by handling non-standard inputs?  

Jon Naseath: Sure. It just enables you to step away from the structured requirements. The invoices will still have their structured baseline, and each company could have its own standard. But when you receive an invoice or a bill from a client, AI can read it, digest the information, and let you know if there’s something to review. More often than not, it will capture all the variations without needing to force the inputs to be standardized.  

Sherry: What advice would you give to CFOs or our viewers considering AI-based solutions for handling non-standardized invoices in their organizations?  

Jon Naseath: Yeah, be patient. It’s coming. The technology is coming, and it’ll be here sooner than later. One of the challenges will be finding the right opportunities for the people who are currently manually doing a lot of that work because AI is going to automate a lot of it and make it a lot simpler. For CFOs, start looking at who on that team you can help coach up and train to do other areas or more value-added tasks because AI will replace a lot of that manual workload.  

Sherry: Thank you so much for these insightful answers, Jon. It’s clear that while standardization has its challenges, AI offers a promising future to navigate these complexities.  

Jon Naseath: My pleasure.  

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