With the EU Parliament's approval of a European standard for e-invoicing in public procurement, we got one step closer to the creation of a true digital single market in Europe. Now, it is time to accelerate the journey towards full digitisation, writes Martin Hurley.
Martin Hurley is the vice president and general manager of outsourcing services at Ricoh Europe, a technology company specialised in office equipment.
When the European Parliament backed the Commission’s proposal to set up a European standard for e-invoicing in public procurement, we got one step closer to the creation of a true digital single market in Europe. Although it may not have grabbed headlines, it was a major breakthrough for millions of companies, speeding up the digital transformation of Europe’s business critical operations. There are also significant economic benefits to this move, as the harmonisation of e-invoicing standards across the EU will create efficiencies and reduce costs, not only for the public sector but also for businesses. It will also help to support a goal of the European Union Digital Agenda to create a paperless public administration in Europe.
So far, the standardisation of e-invoicing has taken place at a member state-level only, which means limited interoperability and increased costs for firms wanting to participate in cross-border procurement. With that in mind, it is no wonder that the uptake of e-invoicing has been limited across Europe, accounting for only 4 to 15 per cent of all invoices exchanged. This fragmented patchwork of standards is inefficient and a real barrier to expansion across markets for all businesses, particularly for SMEs.
More and more businesses are investigating how much they can save by adopting e-invoicing, and it’s easy to see why. The technology has already been adopted in public procurement procedures in countries such as Denmark, Austria, Sweden and Finland. The European Commission highlights that each year, Danish taxpayers save €150 million, and local businesses reduce costs by €50 million, thanks to e-invoicing. Meanwhile in Italy, using e-procurement saves over €3 billion. The Commission also points out that, if implemented across the EU, the use of e-invoicing in public procurement could save up €2.3 billion a year.
The proposed legislation also has very tangible implications for individual businesses. Ricoh-sponsored research shows that it can cost a company €17.60 to receive and process a paper invoice at any given time, versus just €6.70 for an electronic version. Issuing a paper invoice costs €11.10, versus €4.70 when the process is managed digitally. We helped a client in the utilities sector with a turnover of €8.6 billion and operations spanning 42 different countries to save €200,000 per annum by moving to a fully electronic invoicing system.
These costs savings can be reinvested by European businesses to drive innovation, support business growth, and contribute to a healthier economy. But a pan-European approach and support is needed in order for the Commission to realise its goal of making e-invoicing the predominant form of invoicing in Europe by 2020.
In February, the European Parliament approved a €1 billion investment package to support pan-European digital projects and high-speed broadband networks. This is part of the Connecting Europe Facility, a Commission proposal to support European transport, energy and digital infrastructure projects. A major part of this package will provide funding for digital services in the area of cross-border public services such as e-invoicing. Neelie Kroes, Vice-President of the European Commission for the Digital Agenda, stated that e-invoicing is one of several “building-block” services which will allow Europe to build a true digital single market without barriers. Ms. Kroes also noted that “When we have seamless networks and services that everyone can use, that’s when we’ll know that Europe is ready to compete for decades to come in the global economy.”
Removing cross-border barriers for the uptake of e-invoicing is a crucial milestone in the move towards a smart, strong and competitive European digital economy. The European Parliament’s overwhelming support for a European standard for e-invoicing in public procurement was undoubtedly a step in the right direction. Yet challenges remain. Recent research commissioned by Ricoh Europe revealed that 63 per cent of European business leaders believe they are far from ready for digital transformation. Organisations across Europe remain largely unaware of the multiple benefits that switching to e-invoicing can bring. As such, some are unnecessarily cautious and slow to change. The new pan-European standard on e-invoicing provides a great opportunity to facilitate technological revolution. Across the continent, small and large organisations that want to thrive in the digital age and maintain their competitive advantage can no longer afford to ignore the business potential of e-invoicing.
The next step for European businesses is to accelerate their journey towards full digitisation. This begins with reviewing existing processes, technology systems and ways of working. Once these requirements have been optimised, leaders will soon realise the financial, operational and reputational benefits of business in the digital age. Changing business-critical document processes requires the right expertise and change management programmes. It is important to remove complications and manage the process, without impacting on day-to-day core business activities. Organisations should gain advice from, and entrust the task to, a document process expert who can manage the transition from paper to electronic invoices on their behalf, leaving them to focus on what they do best.