Tag Archives: B2G

Global Financial Crisis – The Basis for e-Invoicing Success?

Success, Profit, BusinessAs any business owner knows, particularly those in the SME market, securing credit from a bank is nigh on impossible at the moment. Concerns about capitalisation and liquidity are causing banks to keep hold of cash, making loans to businesses extremely difficult, if not impossible, to obtain. As a result wider economic growth is stalled as businesses cannot afford to invest in order to expand. Consequently, companies are being forced to identify efficiencies and costs savings which can potentially free up cash for re-investment, undertaking detailed analysis of financial routines in way that during the “good times” may have been neglected.

These internal reviews are forcing businesses to look ever harder at their own cash flow and the way it is managed. Many have already discovered that the process streamlining available through e-Invoicing has significant benefits, particularly when extended to the wider financial supply chain. The automation of various accounting functions reduces workload whilst maintaining the controls required for low-level financial analysis.

The European Union’s continued promotion of e-Invoicing coupled with similar requirements of many national governments are steadily moving businesses towards electronic invoice presentation and payment anyway, but the global financial instability could be accelerating uptake too. The political drive to increase e-Invoicing should see the concept reach critical mass with SMEs in the next few years and as uptake climbs, so too should use of these platforms in the B2B markets as well as the B2G.

So at a time where literally every penny counts, business decision makers should be following the lead set by the European Union and investigating the potential benefits and savings available through business process automation and outsourcing. e-Invoicing could be one of the ways to ensure business survival and growth despite the apparent obstructions put up banks.

e-Invoicing for Norway

As with many other European countries, Norway is switching its government accounting systems to accept electronic invoices. From the 1st July 2012, business will have to present invoices to the Government electronically. The Norwegian Agency for Public Management and e-Government (Difi) have selected a specialist format known as Electronisk Handels Format (EHF), a secondary subset of UBL 2.0.

The overall aim of implementing e-Invoicing is to reduce the costs associated with manual processing and payments. Similar projects in other countries have demonstrated that such a roll-out does indeed generate significant cost savings.

Industry experts are concerned about the burdens placed on smaller businesses providing products and services to the government who may not haNorwegian public sectorve access to their own in-house e-Procurement solutions. The Norwegian government however is assuring companies in this position that they will be able to outsource these business processes to hosted service providers as is the case in other countries.

But herein lies a major problem. Despite there being over 50 companies offering electronic business to government (B2G) electronic invoicing, only one is capable of generating invoices in the required EHF format. At the moment there is no competition in the outsourced e-invoicing market in Norway. Consequently the incumbent service providers are lobbying hard for incentives to produce the necessary systems. The reasoning here is that if the government is making significant savings from this implementation, they can afford to share the spoils.

Despite this apparent paradox, the doomsayers are failing to recognise the interconnected nature of cloud services which extend beyond traditional national borders. Electronic Invoice Presentment and Payment (EIPP) systems such as Celtrino’s own Smart Admin platform accept input from virtually any data source before transforming it into the required output data type.  Where local service providers are unable to meet needs, the global market can step in and fill the gap.

True e-Invoicing

Much has been made of Denmark’s transition to mandatory electronic invoicing in 2005 which requires any business who trades with the government to submit their invoices in an electronic format. The success of the system has seen the Danish government making efficiency savings of between €120 and €150 million each year since 2005.

e-Invoicing: Netherlands versus DenmarkSuch headline figures have seen many other national governments looking to implement similar systems with a view to reaping comparable cost savings. The Dutch government have been the latest to make a headline-grabbing statement about e-invoicing, but the technologies they have implemented fall outside what is typically thought of as e-invoicing.

So what is e-Invoicing?

At its most basic level and as the name implies, e-Invoicing is the presentation of an invoice for products or services electronically. e-Procurement platforms such as that operated by the Danish Government, allow suppliers to generate electronic payment demands which are then submitted directly into the Government accounts system.

What isn’t e-Invoicing?

Many people, including the Dutch Government think submission of an electronic version of a document is the same as an e-Invoice. Under this definition, simply emailing a Word document or a PDF counts as an e-invoice because the payment demand is transmitted electronically.

Why does it matter?

Although there are similarities between the Danish and Dutch electronic invoicing systems, the Danes have a clear advantage. By having suppliers submit electronic invoices directly into their accounts system, the Danish Government recognise cost savings immediately through reduced time and effort manually entering invoice details themselves. As soon as the eInvoice is received it is ready for authorisation and payment by the Treasury.

The Dutch Government also receive invoices immediately as documents are attached to emails allowing for savings in postage at the very least. However these invoices must then be manually re-entered into the accounts system, requiring additional staff and duplication of effort for both supplier and customer. As a result, any cost savings recognised by the Dutch Government “e-Invoicing” system will be well below those of Denmark.

The use of a true e-Invoicing system generates substantial cost savings for both buyer and supplier. If in doubt as to whether a suggested system will generate the savings you hope for, try speaking to a specialist provider such as Celtrino.

e-Procurement in the EU

As with many technological advances, governments frequently lag behind their private sector citizens. However following a 3 month consultation period, the European Commission has reported “considerable support” for the institution of a mandatory standardised EU-wide e-procurement solution.

In a statement outlining the main findings of the consultation, the EC said: “There is broad support for EU-level action, including the use of legislation, to facilitate the use of standardised e-procurement solutions. A small majority of respondents support the imposition of EU-level requirements to use e-procurement.”

Euro sign on the computer keyboard

Echoing the concerns of private sector implementers of procure-to-pay solutions, 60% of respondents commented that “overcoming inertia and fear” would be the largest barriers to the success of e-procurement deployments, particularly in cross-border situations. Concerns were also raised about the potential for a lack of standards or onerous technical requirements.

The EC is now calling on e-procurement and B2B supply chain management specialists to join an expert group with a view to creating a blueprint for common solutions. The EC is also set to monitor the use of e-purchasing within its member states  to observe and promote best practices.

One of the lessons the public sector has learned in the arena of supply chain automation and e-procurement is that implementations of such systems need be neither complex nor onerous. Outsourcing of procurement processes to specialist providers has proven to be both cost effective and extremely efficient, removing much of the administrative burden associated with e-procurement. Using cloud-based Electronic Data Interchange (EDI) systems such as Celtrino’s Smart Admin platform, businesses can take advantage of sophisticated data format conversions to deliver Electronic Invoice Presentment and Payment (EIPP) information directly into a supplier’s accounting system.

The use of outsourced EDI Managed Services have proven to be of great benefit to private sector businesses by transferring the day to day responsibilities for managing complex data sets and transformations to the service providers, generating cost savings as a direct result. It is therefore feasible for governments to reap similar benefits through use of the same platforms and processes.

Smart Admin for the Public Sector – Supply Chain Cost Reductions

Take a look at our paper discussing ways to reduce cost in the public sector by using Smart Admin and reducing costly manual processes.