Thursday 5th December, 2013

New research has found that the UK public sector could be wasting as much as £2bn a year as a result of being slow to take up e-invoicing. The adoption of e-invoicing would make a real contribution to economic growth in the UK, driving productivity and efficiency by allowing greater output of goods and services for lower factor inputs, whilst also facilitating prompt payments and providing much-needed liquidity to many SME suppliers of large companies and the public sector.

In most cases, electronic invoicing allows the capture of a minimum 60 percent saving per invoice over manual processes for a buying organisation, which based on relatively conservative assumptions, an annual savings potential of at least £2bn across the UK public sector. Depending on other factors, there's the potential to significantly increase these benefits; some estimates have put this as high as 4bn-6bn GBP per annum.

Denmark has already implemented public sector e-invoicing and has estimated a saving of 120m-150m EUR a year.

E-invoicing adoption by the public sector will help bring liquidity to SMEs, making it easier for smaller companies to work with the government. Furthermore, the findings of PwC's latest working capital study suggest that if all companies, public sector and private, deployed e-invoicing and achieved close to the best performance in their sector, a somewhat difficult to visualise,  3.7 trillion EUR of excess working capital could be released worldwide, averaging out at 10-12 percent of company turnover.

"For the public sector, a lack of central direction and policy drivers have resulted in the UK lagging behind countries such as the Nordics, Brazil and Mexico, where government-driven schemes are driving huge savings." said Luke McKeever, executive director of Tungsten Corporation.