e-Invoicing in UK Local Government – Basware Survey Paints Mixed Picture

Last week, Basware (procurement and finance software specialists) published a new report on electronic invoicing in the UK devolved public sector, surveying organisations across local government, housing and emergency services.

There are some interesting if somewhat worrying findings, with the headline that  92 per cent of the UK public sector still relies on paper invoicing to operate.

That is despite EU directives promoting e-Invoicing and many organisations supposedly moving towards purely digital practices, with the NHS required to go paperless by 2020. (However, 62% of respondents are unaware of incoming legislation anyway, even though it is UK policy!) But as well as regulatory compliance issues, a reliance on paper invoicing clearly has implications for efficiency as well as leaving organisations at risk of fraud and error in the invoicing process.

136 organisations took part in the survey, which is a very decent sample size, and generally, the view of e-Invoicing is positive. The majority of participants “felt that adopting e-Invoicing was a good way of improving the number of payments made on time, and a further 61% saw it as a way of increasing visibility of the workflow process. Yet many also stated that a lack of resources (40%) and difficulties gaining supplier adoption (30%) were significant barriers to increased adoption”.

Quite shockingly, almost three-quarters of participants (72%) were still printing and scanning PDF invoices. Now you may feel that you are “doing” e-Invoicing simply by accepting PDFs, but really, you’re not.  More organisations are using PDF email invoicing as a process, up to 90% of organisations from 63% two years ago, which is positive to some extent, but virtually all still accept paper involves too. It is not clear that organisations really have a clear strategic view of the desired end-game here.

And, as the report says, “This is surprising given upcoming legislation across government will move away from PDF invoices, as it is considered to be a resource heavy and costly method of invoicing and the associated security threats with email attachments”.

Just the cost drivers should be enough to make organisations look at this seriously. As the report says, “According to the UK National EInvoicing Forum (UKNeF) – in association with the Local Government Association (LGA) and the Department for Business, Innovation and Skills – each paper invoice processed costs the government £13.98, compared to just £4.77 for those processed via e-Invoicing methods”.

We’re often cynical about savings figures but we suspect this does not overstate the benefit – indeed, there are often other hidden costs of poor invoicing processes (the time spent searching in budget holders’ files and drawers for paper invoices for instance …)!

But there are other benefits too aside from efficiency and fraud protection. E-Invoicing facilitates paying suppliers on time, which benefits the wider economy, and also opens the door to various supply chain finance options, which can have further positives for all parties.

There is some good news; nearly a quarter of respondents plan to invest in e-Procurement in 2017-18, and a further 21 percent intend to increase their capacity for receiving e-invoices. But it appears that there is still a need for more communication and education here. Too many organisations appear to be unaware of legislation, and show a lack of understanding of the options, costs and benefits around invoicing technology.  No-one is saying moving to e-Invoicing is a trivial matter, but neither is it that difficult. If the survey is repeated next year, let’s hope it shows some real progress.

Anyway, the report is well worth a look – you can download it here.

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