Jumping on the Global Bandwagon: Embracing eInvoicing in the U.S.
This article was contributed by expert guest author Bob Cohen of Basware.
Governments across the world are under pressure to reduce costs for the billions of invoices they send and receive every year, while at the same time, increase financial visibility and efficiency. To accomplish these goals, forward-thinking governments are turning to electronic invoicing. The challenge of achieving a higher level of automation and visibility is not simple. It takes time for governments to establish eInvoicing as a priority, while also building the expertise, awareness, and infrastructure to support it. And different regulations and processes from one country to another add complexity to the transformation.
However, governments around the world are motivated by key drivers, which vary from country to country, that make eInvoicing a compelling proposition and require each to take a slightly different approach to implementation and rollout. For example, the UK, which has a large number of small businesses, has adopted a Prompt Payment Code, a voluntary agreement promoting good payment practices to help ensure that small businesses get paid within a reasonable amount of time. Countries receiving significant income through Value-Added Taxes (VAT) and sales tax revenues are relying on eInvoicing to provide the visibility and control needed to ensure compliance. Some Latin American governments, most notably Brazil and Mexico, have established electronic invoices as the only acceptable standard to help prevent fraud.
The U.S. government’s interest in eInvoicing is primarily driven by efficiencies and cost savings. As the largest single purchaser of goods and services in the U.S., processing more than 19 million invoices, approximately 40% of these invoices are processed using electronic invoicing with the remaining using a mix of electronic and manual processes that provide little visibility to businesses and can result in tax dollars being used for late payment fees rather than to support critical agency missions. The U.S. Department of the Treasury estimates that eInvoicing across the federal government would reduce the cost of inputting invoices and responding to invoice inquiries by as much as 50 percent annually, representing savings of $450 million for processing costs alone.
To further these goals while also reducing administrative burden and costs to taxpayers, the White House issued a memo in mid-July pushing for all government agencies to migrate to electronic invoicing by the end of FY 2018. It also is committed to accelerating payments to small suppliers, and part of President Obama’s Supplier Pay Initiative, which was enacted in Nov. 2014, asks companies to pledge to pay their small suppliers faster or provide a financing solution that helps them access working capital at a lower cost. Implementing eInvoicing will significantly help these companies uphold that pledge.
These initiatives in the U.S. are a good sign of things to come, since adoption here has not been as swift as our government’s global counterparts. With the significant cost savings and productivity gains that eInvoicing delivers, it will enable the U.S. government to more effectively conduct business with trading partners on the global stage. For more information on global eInvoicing trends, please register for our free event and watch on-demand at your convenience.
Bob Cohen is Vice President, North America, for Basware, a leading provider of cloud-based purchase-to-pay and e-invoicing solutions that enable better buying, selling, and connected commerce for organizations around the world.Rate this Post: