How to accelerate the adoption of e-invoicing in the UK public sector
It’s been a busy and productive week for e-Invoicing in the UK. Last Monday the Department of Business Innovations and Skills collaborated with the UK National e-Invoicing Forum (UKNeF) to host a roundtable on interoperability in e-public procurement and e-Invoicing, and last Tuesday Stephen McPartland MP led his Parliamentary Inquiry into the slow adoption of e-Invoicing in the UK public sector.
Joining Stephen McPartland on the committee panel were Philip Aiken, Chairman of the AVEVA Group, Professor Dermot Cahill, former UKNeF chairman Chris Godwin, Manos Schizas of ACCA, and Pete Loughlin of Purchasing Insight.
Speaking at the inquiry, Stephen stated his intention to raise the profile of e-Invoicing as a source of real savings and efficiency, and see a commitment in all the party manifestos for the 2015 UK general election.
All of the participants agreed that there are significant benefits to automating public sector supply chains. We won’t repeat the arguments here but we would like to talk about some of the other key points that arose from the discussion.
Ten steps towards public sector e-Invoicing
1. A mandate to require e-Invoicing has been a success factor in driving adoption around the world in both the public and private sectors. This can best be achieved by enshrining the requirement in contract terms rather than legislation. However, accounting systems on the buyer side have to be ready. Examples and case studies of successful projects give us a great step forward.
2. More work is needed to provide a compelling and quantified business case that outlines both the buyer and supplier benefits of e-Invoicing. We need to establish, and shout about, the ‘size of the prize’. There’s serious money to be saved by embracing digital business processes. We all agree that whatever the number is, it’s a big number. It’s up to us to find out what that number really is.
3. Suppliers should not bear disproportionate costs. Public sector buyers should not recover costs from their savings at the expense of suppliers. Suppliers may be required to pay for the direct value received, although at the smaller end a free portal is a good idea.
4. e-Invoicing has inherent value for suppliers, thanks to prompt and predictable payments and increased liquidity from supply chain finance and early payments.
5. The shared service programmes in the public sector are incredibly beneficial, but there must be incentives for BPO operators to save money from re-deploying labour away from archaic administrative processes.
6. Pre-award procurement projects should be separated from the transactional processes of post-award order-to-pay, while of course maintaining end-to-end integrity. This is because order-to-pay processes centred on the invoice are capable of high automation levels, involve relatively low data volumes and represent easy savings. Pre-award processes are more complex, involve many more tendering parties and are managed by separate teams. Partitioning makes sense.
7. Universal standards will help. The proposed EU semantic data model and its representation in commonly used data formats will be a good step forward and drive interoperability. A purely home-grown set of standards will not be useful. The UK should push to accelerate the EU standards design process.
8. There are some good country examples that offer interesting contrasts. For example, we could compare Norway and Denmark’s experiences with Brazil and Mexico. The group also suggested that current early stage projects in Germany, the Netherlands and Singapore are worth monitoring. And let’s not forget that a large number of global multinationals are well down the e-Invoicing path, and in many cases have higher invoice volumes than some entire countries. We should look to these organisations for best-practice examples.
9. Around 4% of manual invoices contain errors or are mishandled. Simply eliminating these errors while also providing predictable payments and faster turnaround times offers huge benefits.
10. UK public sector adoption of e-Invoicing requires clear political direction and a change in mindset.
These steps will give everyone in our industry plenty to think about and lots to do, and we welcome this inquiry and the UK government’s increasing commitment to e-Invoicing. Given the many benefits, public sector adoption of e-Invoicing is inevitable. The question is whether the political will exists to embrace paperless automation sooner rather than later.