Partner Article

e-Invoicing: making it happen in public sector

By Amabel Grant, Basware UK Managing Director and Chair of the UK National e-Invoicing Forum

Electronic invoicing (e-Invoicing) could save the public sector and its suppliers a minimum of £2 billion a year, according to the UK Government. Not only that, it can drive efficiency, increase visibility into cash flow, reduce fraud, open up new revenue opportunities, encourage prompt payment, and help boost growth across the supply chain by releasing cash into the wider economy. So with all these compelling benefits on offer, why is e-Invoicing adoption in the UK public sector still stalling?

To understand where it’s going wrong we need to understand the current, ‘standard’ invoicing method and its disadvantages. In most cases, the public sector invoices via paper, received via traditional post and/or PDF invoices received via email – both of which feed into a typically manual data entry process into an accounting system for ultimate payment. As a result, it’s easy to see how the key cost of processing an invoice is the human time needed within the work-flow.

Recent research by iGov on behalf of Basware, has found the costs linked to invoice processing are primarily found in handling, including the high level of human interaction within the invoice payment process. The actual cost per invoice depends on what is measured, for example:

The effort to pre-process the invoice, open, scan or correct content

The time and resources needed to approve the invoice

The time taken to locate an invoice and resolve supplier queries

However, shockingly when asked how much an invoice costs to process, the majority (79%) of respondents didn’t know, were unable to calculate the costs or could not answer. Whilst this is not an issue per se, given the current economic climate, a knowledge and understanding of routine spending (and where savings could be made) should be an essential to any business.

Not only does e-Invoicing reduce human interaction with an invoice, it removes postage and processing costs at both ends. In addition, e-Invoicing acts as a door between the supplier and buyer through which only real invoices can pass, by using the invoice content rather than an image to create the near touchless process. Finally, e-Invoicing reduces the risk of mandate fraud and stops malicious emails being opened by the buyer.

The iGov survey found that adopters of e-Invoicing cited the following additional benefits:

Better visibility across the process giving businesses more control of their spending

The opportunity for Supplier Invoice Financing, and other alternativist payment methods

Helps users to keep up with and meet changing compliance and regulations

Why does this all matter? Besides the knock on effects of saving money, e-Invoicing also protects users from cybercrime. The survey found that 43 per cent of public sector organisations have been targeted by fraudsters, this includes duplicate invoices, fake invoices and fishing attacks. A compelling benefit of e-Invoicing is the end-to-end visibility it adds to the invoicing process; essentially acting as a conduit through which only real invoices can reach an organisation. With the right policies in place, users are no longer exposed to the risk of opening a bogus invoice. When coupled with automated auditing, e-Invoicing can reduce fraud risk across the entire process.

However, in spite of its benefits e-Invoicing adoption across the public sector is still relatively low. The research found that the main barrier to e-Invoice adoption is a fundamental lack of resource – both in internal IT and finance teams – highlighted by 28 per cent of respondents. This was followed by gaining supplier buy-in (24%) and a perception that the current process is “good enough” (17%). However, over 45 per cent of public sector respondents cited an interest in e-Invoicing which has yet to be fulfilled suggesting both education and awareness are clearly required. Many UK public sector organisations are unaware of the current costs of manual invoice processing, much less the benefits of e-Invoicing in terms of productivity and hard cost savings. Others are daunted by the potential disruption of the system, business process and the cultural changes needed to make true e-Invoicing a reality.

Working with UK National e-Invoicing Forum, Local Government Association, the Department of Business Innovation & Skills and the Crown Commercial Service, Basware has launched a special report to offer guidance to local government organisations on how to make the move to e-Invoicing. Supporting data from the iGov 2015 Survey has been used to provide a snapshot of e-Invoice usage within local government across England. This data is qualified through in-depth interviews with respondents to create this more detailed study. The full report is available to download here: http://www.basware.co.uk/knowledge-center/making-it-happen-report-public-sector

Electronic Invoicing: The next steps towards digital government

Methodology: The survey that had 115 participants from 103 unique organisations within Finance Management and Procurement/Purchasing at local councils, libraries, fire and police authorities and housing associations. It looked into the way in which organisations across the UK public sector is adopting e-invoicing.

This was posted in Bdaily's Members' News section by Basware UK .