Large Image With Sidebar

We have highlighted many times the challenges of working capital management. It’s become a cliché to refer to the “perfect storm” – the combination of virtually zero interest rates and constrained liquidity that gives both cash rich, large businesses and cash strapped suppliers a headache. But every cloud has a silver lining. Better working capital management provides an opportunity and now, REL, the specialist working capital arm of Hackett, has revealed the size of the prize, in Europe - a total of €762bn is tied up in excess working capital - equivalent to 6 per cent of EU GDP!

I recall in the late 1990's, I claimed that access to to the internet would soon be seen as more than a convenience, more than a useful tool but a fundamental human requirement. A bit of an exageration you might say and when I said this at conferences people took it that way - as a joke. I wasn't joking. I was guessing but I wasn't joking. Today there are more people with access to the internet than there are people with access to running water. There are parts of the world today where people need to walk 2 km to get water but they can get a mobile signal. What we think of in the developed world as basic infrastructure like electricity and water on tap hasn't reached corners of the globe that the telecommunication infrastructure has.

UKNeF is the snappy acronym for the United Kingdom National e-invoicing Forum. It's constituted under the Chatham House rule. In case you are unfamiliar with the Chatham House rule - it's like Fight Club. The first rule of UKNeF is don't mention UKNeF. And it really is like Fight Club. The action takes place in a basement. It's an orgy of e-invoicing debate starring Edward Norton as "Nigel Taylor", the insomniac office worker looking for a way to change his life who finds friendship with the devil-may-care character "Charles Bryant" played by Brad Pitt. OK, it's not like Fight Club - but it is set in a basement.

The UK Government last week published what they call their “Information Economy Strategy” in which the UK’s intentions for e-invoicing in public sector are stated. It’s been met with a positive, indeed an enthusiastic response. But not from me. This is what the UK government says: “Government also wants to make it easier for its suppliers once they have won contracts, by encouraging the use of electronic invoicing.” And they go on: “Government will not mandate suppliers at this stage, but will look at ways to spread best practice, and will track progress with a view to taking action if required at a later date.” Some commentators seem to believe that this adds up to a commitment. I’m no mathematician but when read this, in terms of commitment, it adds up to the square root of .. well, nothing! This statement of intent is typical politician speak that aims to placate the well informed who know something needs to be done and at the same time reassure the flat-earthers, fearful of change.

The electronic invoice goings on in Mexico have, understandably, attracted a great deal of attention. While nations like the US and the UK continue to sit on the fence, the Mexicans are setting the pace. But this isn’t just a matter for the Mexicans. And it’s not just Latin America that needs to keep a watchful eye on what’s going on as I realized when I spoke to Christian Lanng, CEO of Tradeshift and Steve Sprague, VP Product Marketing and Strategy for Invoiceware International. I spoke to Christian and Steve shortly after they announced a strategic alliance in May. The press releases that go out alongside these announcements are often dry and lacking detail so I was eager to hear what was so special about the Tradeshift and Invoiceware partnership and to get some insight from the people on the ground.

It was announced a few weeks ago that the Mexican Government has given businesses just 6 months to prepare for a major legislative change that will directly affect hundreds of thousands of small and medium sized businesses. And it’s not a trivial change. If businesses want to get paid for goods and services they supply, they’ll need to ensure that they generate invoices correctly and in accordance with the new rules. It’s not optional. There’ll be no excuses. It seems like a good idea to insist on the use of electronic invoices. It’s a mandate for common sense. The Mexican Government is embracing the digital age and at the same time implementing a zero tolerance approach to business taxes. But the rate of change they are imposing could create chaos as businesses fail to meet the deadline.

Insights in your inbox

FREE Purchasing Insight Newsletter

Insights in your inbox

You have Successfully Subscribed!