Dozens of countries around the world currently mandate electronic invoicing initiatives, in an effort to transition away from paper-based invoices to eInvoicing. The benefits of eInvoicing mandates have been well established in Europe and American federal agencies are now slowly transitioning to the eInvoice format, which is expected to save taxpayers $7 million per year, cut invoicing costs by 50 percent and help vendors get paid faster.
President Obama signed the Improper Payments Elimination Recovery Act of 2010 (IPERA) with the goal of reducing the federal government’s improper payments. Research shows that electronic invoicing is the leading technological solution to prevent improper payments by eliminating error-prone manual processing.
In an effort to comply with IPERA, The Department of Veterans Affairs is set to mandate eInvoicing to its contractors and suppliers. The VA Financial Services Center (VAFSC) has mandated that vendors must submit invoices electronically. VAFSC has expanded its electronic invoicing services through OB10 provided solutions. OB10 electronic invoicing services, including mapping/transaction fees, are free to VAFSC vendors.
As part of the latest communications informing VAFSC suppliers of the mandate, the VA offered a number of compelling benefits in return for making the transition. According to Luke McKeever’s OB10 blog, benefits include:
- Delivery of invoices directly into its Financial Services Center’s payment system and routed nationally for approval
- Elimination of mail processing time, postage, and invoice receipt enquires
- Elimination of data error and lost or misplaced invoices
- Verification of invoice receipt and rejection through automated notification reports
- No installation of hardware or software required
VAFSC is also seeking to expand electronic payments through Automated Clearing House (ACH) and is touting significant advantages including:
- Reduced delivery time for payment funds, eliminating unpredictable postal system delays
- Automated payment generation through VAFSC accounting systems, reducing the likelihood of errors associated with paper based check systems
Pete Loughlin from Purchasing Insight “It’s counter cultural to mandate anything like this in Europe and rushing into it would be a mistake. But there is another side to this coin. I can see that the developing world could find themselves with business infrastructures that are much more efficient than the so-called developed world who are slow to adaprt. One of the reasons why we are slow to evolve is that there are too many powerful vested interests being protected. Mandating e-invoicing throws a big hungry cat amongst the pigeons of the status quo and no one really knows who the winners and losers would be.
Mandating e-invoicing is mandating common sense and governments should show some leadership on it.”
According to PayStream Advisors 2012 Invoice & Workflow Automation Adoption benchmarking report, the number one challenge to the adoption of eInvoicing is supplier resistance. See Figure 1.
Challenges to the Adoption of eInvoicing