To mandate or not to mandate?

The UK government is encouraging the use of e-invoicing across all central government transactions. Mandating will be considered as a possibility, if it’s seen as an effective way to spread best practice. From our perspective encouraging e-invoicing is a great step. It will support the government’s wider aim to help SMEs grow and compete for public sector contracts.

E-invoicing is the starting point for improved efficiency, something the government has experienced first hand in some local authorities and NHS trusts. More and more organisations are adopting e-invoicing, too. Research commissioned by Basware showed that the number of B2B e-invoices sent increased by 20% in 2012[1].

However, there are certain factors that government must consider if its centralised e-invoicing programme is to be successful. These centre on the fact that the government works with suppliers of all sorts and all sizes, from data storage providers to cleaning companies. With such a broad range of suppliers, including an increasing proportion of SMEs, flexibility and interoperability is key.

E-invoicing systems catering to SMEs must be flexible and easy to use. It is typical for senior managers in small businesses to have high workloads that include financial duties, yet according to our research 45% have not received formal training[2]. While a greater understanding of the role is needed to successfully forecast budgets and set strategy, many other financial tasks can be simplified, automated and delegated to free up the time of senior executives. An intuitive e-invoicing system can be one of these.

The government has committed to improving the interoperability of e-invoicing for SMEs – a critical factor if the full benefits of the system are to be achieved. Information must be able to flow smoothly from one organisation to another, regardless of the software being used. And if the government is to mandate e-invoicing it’s essential that it adopts an open network or open principles in terms of what it’s able to accept. Thankfully, open e-invoicing systems are available and sit over the top of existing systems. This enables uptake by all suppliers, regardless of their background.

If backed up by proper thought and preparation, the government’s stance is wholly positive. But mandating suppliers, as may happen, differs from encouraging them.

Many governments across the EU have already mandated e-invoicing, including Denmark (2005), Spain (2007), Finland (2010), Greece (2012) and Norway (2012). Austria and Italy will follow in 2014. UK competitiveness may suffer if our government doesn’t follow suit.

There remains a knowledge gap when it comes to e-invoicing; senders don’t necessarily realise the benefits that automation can bring. Uptake among UK companies is currently low, despite many seeing it as the way to streamline business processes. This is a pretty strong indication that assistance is needed to move towards e-invoicing. Perhaps mandating could help SMEs to realise, in both senses of the word, the benefits.

[1] Billentis E-Invoicing / E-Billing Report 2013

[2] Basware SMB Finance Research