The road to better UK Public Procurement (Part 2)
Monday, 8 Jun 2015
In our first blog we looked at the wider implementation of e-invoicing within the public sector. We asked Andrew Jesse (AJ), VP of Basware, and Stephen Carter (SC), Head of UK e-invoicing Centre of Excellence for Basware, about the barriers and opportunities that will be made available through the Small Business, Enterprise and Employment (SBEE) Act receiving Royal Assent.
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We now look at the wider European context and what the UK can learn from those who adopted electronic invoicing solutions early on. And discover what you should be considering when looking to implement an e-invoicing process within your organisation.
In April 2015, the European Parliament and council agreed a directive on e-invoicing in public procurement. What needs to happen between now, and May 2017 when the UK plans to adopt this?
AJ: The government needs to agree a mechanism which can scale e-invoicing across the UK in a standard and multi-operator fashion (for scale and risk reasons). This will make it easier for organisations to implement, and in turn save the economy a huge amount. The sooner it is implemented the better as the benefits far outweigh the costs.
SC: I agree with AJ, but would also question ‘why wait until the UK adopts e-invoicing fully when you can already implement and start benefiting from it today?’ The government needs to help change the overall perception by making the benefits to organisations very clear. The message should be less about “You have to do it”, and more about “you can’t afford not to do it”.
What can be learnt from the UK’s private sector?
SC: Our work in the private sector has shown that there are a number of key learning’s:
- Efficiency and cost savings are already happening in the private sector and actually, in small pockets of the public sector too. E-invoicing isn’t an aspiration – it is here and the benefits are real. You can start making this happen today. You can learn what works and what doesn’t from the work we are doing with other organisations.
- The public sector can use electronic invoicing as a way to pay on time and also negotiate better discounts. Discounts can be negotiated against improved payment terms even by offering payment on Order.
What can be learnt from other European countries?
AJ: There is a lot to be learnt not just from the European countries but beyond. The Nordics and Latin America are some of the governments who are really leading the agenda when it comes to e-invoicing. Denmark has made it mandatory for all government institutions to only accept invoices in electronic format. The UK is late to start considering the process but learning from others can make it more effective. Making e-invoicing compulsory has many benefits from helping with overall efficiency, fraud eradication and even cost savings.
SC: The Nordics use e-invoicing to help drive efficiencies not just in the public sector but also when processing VAT. Certainly from a European perspective, governments are starting to look at e-invoicing as a way of cutting down bureaucracy. It also enables them to get a better handle on what’s happening through the supply chain and can help with identifying areas that require work. There are lessons to be learnt for a lot of countries relating to implementation, where they can look at what the early adopters have achieved and how they can better the process. The UK market has yet to impose a particular standard of e-invoicing, so the government should be open to learning from other European countries.
E-invoicing has a good business case. What are the next steps to get smarter invoicing moving within my council?
SC: Look at it from a business case or budgetary perspective and my recommendations are to start, not necessarily small, but smartly.
Start with your local economy and by looking at the profiles of your suppliers. This will help identify the good targets for e-invoicing. You may get kickback initially, but it will be an evolutional change, so don’t expect it to happen overnight! You have to show winning cases and how organisations can benefit from using e-invoicing.
The larger suppliers will be more reluctant to take up e-invoicing, but for SMEs and local suppliers it’s much easier. Local level PR and awareness of the benefits will help target these businesses and enable them to understand the process. You can’t use a blanket approach and target all suppliers in one go. Define the top 40/50/100 suppliers with the right message so that they are aware of why it is effective for the local economy and how they can benefit. You will get early adopters who will help when you need to demonstrate success. The next target is mainstream adoption.
In joining the UK government’s G-Cloud Digital Marketplace, and recently Acquiring Procserve, the leading e-procurement solution provider for the public sector in the UK, Basware aims to enable government bodies to operate more efficiently by automating the purchase-to-pay process. In delivering dramatic back office savings, time and money is freed up for frontline services.
To conclude, e-invoicing not only benefits the public sector, it enables growth within UK PLC. The saving offered by e-Invoicing far out way any initial costs. If you embrace financing and discounting the project could turn into a new revenue stream.
Finally, it’s important for the public sector to embrace e-invoicing now because the SBEE bill puts the boot on the suppliers’ foot. Once inforce, the supplier will be able to send e-invoices to the public sector and they can’t refuse to process them. Fixing this problem later will cost the public sector far more than if they act today.