Much has been made of Denmark’s transition to mandatory electronic invoicing in 2005 which requires any business who trades with the government to submit their invoices in an electronic format. The success of the system has seen the Danish government making efficiency savings of between €120 and €150 million each year since 2005.
Such headline figures have seen many other national governments looking to implement similar systems with a view to reaping comparable cost savings. The Dutch government have been the latest to make a headline-grabbing statement about e-invoicing, but the technologies they have implemented fall outside what is typically thought of as e-invoicing.
So what is e-Invoicing?
At its most basic level and as the name implies, e-Invoicing is the presentation of an invoice for products or services electronically. e-Procurement platforms such as that operated by the Danish Government, allow suppliers to generate electronic payment demands which are then submitted directly into the Government accounts system.
What isn’t e-Invoicing?
Many people, including the Dutch Government think submission of an electronic version of a document is the same as an e-Invoice. Under this definition, simply emailing a Word document or a PDF counts as an e-invoice because the payment demand is transmitted electronically.
Why does it matter?
Although there are similarities between the Danish and Dutch electronic invoicing systems, the Danes have a clear advantage. By having suppliers submit electronic invoices directly into their accounts system, the Danish Government recognise cost savings immediately through reduced time and effort manually entering invoice details themselves. As soon as the eInvoice is received it is ready for authorisation and payment by the Treasury.
The Dutch Government also receive invoices immediately as documents are attached to emails allowing for savings in postage at the very least. However these invoices must then be manually re-entered into the accounts system, requiring additional staff and duplication of effort for both supplier and customer. As a result, any cost savings recognised by the Dutch Government “e-Invoicing” system will be well below those of Denmark.
The use of a true e-Invoicing system generates substantial cost savings for both buyer and supplier. If in doubt as to whether a suggested system will generate the savings you hope for, try speaking to a specialist provider such as Celtrino.