Europe set to progress e-invoicing in public procurement

With the European Commission due to deliver new proposals in 2013 around the adoption of e-Invoicing in public procurement, Tungsten Network takes a look at the key issues.

Electronic public procurement is firmly back on Europe’s agenda. By mid-2013, the European Commission will deliver proposals to further the adoption of e-Invoicing within the public procurement activities of its member states. Its consultation on e-Invoicing closed in January and the views from the 700 responses received will be published shortly and no doubt reflected in the Commission’s proposals.

The following are likely to be key issues:

1. Application of single market principles – ensure that suppliers take advantage of public procurement opportunities on a pan-European basis, in accordance with established EU internal market frameworks.
2. Consequences of current uneven developments across the EU – could individual member state’s actions be complemented by developments at EU level to promote interoperability between the various national environments?
3. Consideration of the various available EU intervention tools – such as legislation, mandating the use of e-Invoicing, recommendations etc.
4. The impact of ramping up e-Invoicing between business and government – an assumption that it will have positive spill-over effects into the wider market.

The benefits for public sector buyers

It is easy to rehearse the benefits case of e-Invoicing. For public sector buyers, there are significant cost and efficiency gains, especially direct cost reductions in back office processing and reconsiliation, whilst protecting front-line services. The introduction of e-Invoicing will release resources for more productive work and contribute work flow efficiency and transparency. The result is a more stable and satisfied supply chain, as well as error and fraud reduction. Through the pivotal e-Invoice, a platform for full end-to-end e-procurement is created which will also deliver clear environmental benefits.

Of course there are costs and challenges to be confronted. With scope and scale phasing, through the avoidance of ‘monster’ centralised IT projects, and by building confidence and competence in project management, these challenges can be met. There is usually a need to address integration issues with enterprise resource planning/back office platforms and to overcome the possible negative consequences of multi-level and de-centralised decision-making. The deployment of shared service centres can be a valuable approach, while supplier on-boarding, the provision of manageable channels for both domestic and European-wide contractors, as well as good communication at all levels are also key success factors.

The benefits for the suppliers

For suppliers, it is essential that e-Invoicing requires no, or limited, additional IT investment; that it delivers faster and more visible payment processes; and, allows the re-use of solutions for business to business, on top of business to government.

In this environment, service providers have a key role to play in supporting and operating a number of the key operating models such as:

1. Individual service providers who have built scale and a large installed network, are able to link thousands of suppliers directly to public sector buying organisations.
2. An interoperable network of service providers linking their clients by means such as the PEPPOL infrastructure or alternatively through bilateral agreements, such as the Model Interoperability Agreement deployed by the European E-Invoicing Service Providers Association (EESPA). EESPA has recently joined the new Open PEPPOL association as an observer and is closely monitoring developments.
3. As well as file transfer for larger flows, portals (either stand-alone or through service providers) can be a useful means of helping the ‘long tail’ of smaller suppliers.

Other techniques that could form part of the solutions portfolio will be Purchasing Cards for low value purchases and direct EDI (point to point) connections, although the latter are rare in public procurement. Residual paper will exist as will scanning and optical character recognition (OCR) in some instances.

Further suggestions surrounding the guiding principles, include:

1. The need for an open architectural framework and a reasonable choice for solutions for suppliers.
2. The avoidance of a separate silo for the public sector based on completely different channels and standards, so as to maximise interoperability on a pan-European basis.
3. Ensuring the project is viewed from a business point of view and is not overwhelmed by technophiles.
4. Care regarding the preference to particular solutions and being alive to the re-use of existing capabilities and tools, so as to encourage ease of integration for all players.
5. Modularity of deliverables to allow progressive development.
6. The minimisation of project and financial risk and the use of benchmarking and open tendering.
7. Two-way exchange of learning between private and public sector.

The question of standards is also important, to which we will turn in a future blog.

Your ideas are welcome

The EU Multi-Stakeholder Forum on e-Invoicing has formed an activity on public procurement, and this channel is being use to provide the Commission with ideas and suggestions as the thinking develops. With the next meeting on 7 March 2013, your ideas and contributions are very welcome.