EU to deliver €2.3 billion through e-invoicing – is it as good as it sounds?

EU to deliver €2.3 billion through e-invoicing – is it as good as it sounds?

Posted by Pete Loughlin in AP Automation, e-invoicing, Electronic Invoicing 28 Jan 2014

When you read the news this week that the European Union has agreed a mandate for e-invoicing you could be forgiven for thinking that the policy makers in Europe have come to their senses. They estimate that a saving of €2.3 billion a year could be delivered by streamlining the back office processes in public sector by using a common electronic standard for transmitting invoice data.

This all sounds very worthy – very 21st century, but as someone with a professional interest in this (as well as a personal stake in it as a European taxpayer), I’m less than impressed. Here’s why.

Purchasing Insight logoFirstly, what does the EU mean by a mandate? Does it mean that the use of electronic invoices will be mandated? Sorry, that would be too easy. No, what it actually means is that public sector organizations must accept electronic invoices should their suppliers wish to send them. I don’t mean to be pot-half-empty but as the business case for e-invoicing is stacked almost entirely on the buyer’s side of the equation, a mandate to accept e-invoices in response to a supplier volunteering to send them will barely scratch the surface of that €2.3.

Secondly, timescales. How long does it take to build a standard? Bear in mind that lots of standards already exist and for reasons known only to itself the EU want its own new one – how much time do they need? A year? Two years? Call it 6 years! That’s the time the EU reckon it will take to build test and finally roll out this “mandate”. Do the math. What’s 6 times 2.3 billion? It’s a lot – that’s how much is going down the European plughole in the time it will take to implement a halfhearted mandate.

Am I being unfair? No. The politicians are being unfair by claiming a credit for finding €2.3 billion of savings then using weasel words to wriggle out of actually committing to collect on the promise.

Of course there is nothing to prevent individual governments from ignoring the EU’s lily livered lethargy and do things properly. I understand that the UK government is preparing to take very seriously the issue of prompt payment and access to funds for SMEs. If they can just make the very real connection between prompt payment and electronic invoicing they just might develop the insight that says that e-invoicing is no longer a nice to have. Rather it is a critical component of an economy that declares zero tolerance on tax fraud, late payment and back office inefficiency. That is of course if it wants to be seen as a government that supports these things. And if all of the EU government did likewise, then that €2.3 billion could change from being self congratulatory political promises that are worth very little into something real that we can all value like teachers, nurses and infrastructure.

Those of us in the privileged position of understand such things should be making more noise.

Pete Loughlin can be found on twitter @peteloughlin

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