E-invoicing critical to future business survival
Irish firms need to transform to become e-commerce leaders. As our nearest trading partner, the UK, moves to abolish cheques by 2016, Ireland needs to make sure it is not left behind.
Earlier this year, the EU set a target for all invoices sent between businesses to be electronic by 2020 in a move that could speed up the payment process. There are few Irish businesses today that don’t realise the importance of being paid on time. Late payments can be a vicious circle for business – if one business is late in receiving payment from a customer it trickles on down the line with more businesses being stifled by late payments.
Benefits of e-invoicing
David O’Reilly, product marketing manager with Sage Ireland, believes that moving to electronic payments and electronic invoicing is critical in terms of the future of the Irish economy.
“There’s a huge amount of cost savings that can be attributed to e-invoicing, not just in terms of costs and efficiency but also from the point of view of the environment because you’re making things as paperless as possible.
“Europe is working to remove many of the complex and technical hurdles. Some states are advanced and Ireland is behind. That said, it is on the way and it will save businesses a lot of money.”
O’Reilly believes the 2020 target is achievable. “In many European countries, e-invoicing is being adopted to facilitate a lot of government e-procurement deals, as well as large corporations. In all countries, smaller businesses are behind the curve.
“Irish people are some of the biggest users of cheques in Europe and this is no longer efficient. E-payments and e-invoicing is a strategy that is going to be embraced across Europe and Ireland needs to get on board.”
Sage is one of the best-known providers of accountancy and ERP technology in the country and in recent years made its foray into e-payments to facilitate both online and over-the-phone transactions. Its Sage Pay product integrates seamlessly into its accountancy products.
An example of a business running SagePay is Seoige Technology, whose SavvyBear.com, an internet game for children 5-12 years of age, is subscribed to by 8,500 paying subscribers. “With Sage Pay, we will be able to process the large majority of potential customers’ cards regardless of their country of origin,” says John Joyce, co-founder of the company. “Users can add as many currencies to their account as they need to, free of charge. The reliable infrastructure ensures maximum uptime and resilience.”
O’Reilly says that across the broad spectrum of Irish businesses, technologies like SagePay are making a difference. “At present, it would be 50/50 between businesses using it to accept payments online and over the phone.”
Millions of euro in savings
Ken Halpin, managing director of Celtrino, believes invoicing will help Ireland keep up with its European counterparts, making public sectors more efficient and save Irish firms an estimated €246m per annum.
“Public sector needs to be as efficient as possible in administrative processing so as to reduce current expenditure but more importantly to fund investment into strategic growth areas in the economy that will provide employment for our children and the finances for government in the future.
“It is a given that public administration should be efficient and transparent. E-invoicing can readily deliver these admin goals with significant cost savings.”
“Ireland is an extremely open economy in the throes of a major adjustment to becoming competitive again. This is not just a once-off initiative forced on us by the EU/IMF deal; the reality into the future is that our mindset has to change so that we never again lose the run of ourselves. We need to benchmark our economy rigorously, remain flexible and embrace efficiency. The philosophy underlying our smart admin processes can play a key role here.”
Irish start-up Kooky Dough, which recently won a contract with Tesco, has said it must abide by the trading terms in the contract with Tesco which makes e-ordering and e-invoicing mandatory. Celtrino is working with Kooky Dough to transform its business into an e-invoicing company.
“The initiative by the European Commission for Europe to become more competitive by adopting e-invoicing as the standard business practice by 2016 is complemented by another parallel initiative in e-payments called the Single European Payments Area (SEPA). This complementary initiative will be fully in force across 32 European countries by 2014 and will facilitate much tighter integration between the e-invoice and the associated e-payment,” said Halpin.
According to a report from National Irish Bank in 2010, Target 2013: Modernising Payments in Ireland, e-payments can save the Irish economy up to €1bn each year. Celtrino is working with the Irish banking sector to make integrated solutions of this type readily available, affordable and accessible to Irish companies of all sizes.
The newly published report E-Invoicing/E-Billing in Europe and Abroad by Michael O’Brien states that: “The exchange and automated processing of e-invoicing will deliver 60pc to 80pc savings in paper-based processing.”