The road to better UK Public Procurement (Part 1)
Tuesday, 2 Jun 2015
With recent news of the Small Business, Enterprise and Employment (SBEE) Act receiving Royal Assent, the UK Public Sector has been given a ‘kick’ to start receiving e-invoices before 2016.
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As the SBEE Bill is further developed into Law and adopted via government edict over the coming months, we ask our own Andrew Jesse (AJ), VP of Basware, and Stephen Carter (SC), Head of UK e-invoicing Centre of Excellence, what this means for the UK economy.
What opportunities do you think e-invoicing will bring to the UK public sector?
AJ: From a public sector ‘buyer’ point of view, I think there are four main opportunities that surpass others:
- GDP growth via liquidity back to SMEs. As e-invoicing helps SMEs become more efficient, it can also lead to them being paid sooner. In turn, this will mean a greater overall profit for the economy with the possibility of achieving a better GDP growth
- Efficiencies of the back office (Accounts Payable) will enable the focus to shift onto the front office and citizen services
- It gives them international reach so that they can acquire services from the best provider anywhere in the world. They are no longer limited to just UK borders.
- Up-skilling their employees and their citizens to use technology
SC: Going beyond the benefits to just the public sector organisations which AJ covered, we should also think about the benefits to the extended supply chain. From the perspective of a supplier to the public sector it means that they can get invoices into their customer’s hands earlier, avoid lost or disputed paperwork and ultimately reduce Days Sales Outstanding. Not only that, e-invoicing gives them an opportunity to go after other public sector contracts and work across international borders more easily so is a real revenue generating opportunity.
Regardless of the SBEE, e-invoicing is something that public sector organisations, and suppliers to the public sector, should be doing.
What are the current barriers to e-invoicing in the UK public sector, and how can these be overcome?
AJ: There is currently not enough education and awareness to allow buyers and suppliers to understand the benefits of e-invoicing, while highlighting the simplicity of adopting the process. Once people have a better awareness of how e-invoicing works and how it can save money, there is a much higher chance of adoption.
To help raise awareness of the benefits of e-invoicing, we need forward thinking branches of the government to communicate their successes. Basware is working on a number of large adoption programs which other organisations across the public sector could take good learning’s from
SC: There are no legal barriers to adoption right now. In fact, the biggest barrier I see is having the budget to do this. E-invoicing is still seen as a cost to many organisations – however, as we are demonstrating in a number of pilots across the public sector, the savings and ROI that can be achieved are huge. Many of our private sector customers have had a ROI in less than 12 months.
I believe that the combination of the SBEE, better education and awareness of the benefits e-invoicing can deliver, will start to see the uptake in e-invoicing really gain momentum as we move through 2015 and into 2016.
How can public sector e-invoicing drive capital into local economies and create a more dynamic community?
AJ: Communication is key; unless the public sector can show benefits to the local community, the uptake will be low. This includes showcasing where suppliers are benefiting from using e-invoicing and how it can be easily applied to other businesses. With suppliers having a better understanding of the benefits and opportunities offered through e-invoicing, they can see how to take advantage of cost savings and help to reinvest back into their businesses and the local economy.
SC: e-invoicing really helps to facilitate the flow of cash into local economies. Businesses that work with the public sector and authorities are typically small, local businesses. If the public sector becomes more efficient by implementing e-invoicing, they can finance more effectively and paying their suppliers much quicker.
Public sector bodies have a responsibility to the taxpayer. Paying suppliers on time ensures that they have the funds to pay their taxes and employees promptly. This is an immeasurable benefit to the community as it aids sustained cash flow back into the economy.
Watch out for the second part of this blog that explores how the UK can learn from early adopters across Europe.