Govt and firms could save €240m through e-invoicing

9 Feb 2012

The Government and Irish businesses could save up to €240m a year by moving to electronic invoicing, it emerged this morning as the State launches its first e-invoicing pilot. This will mean fewer administrative hurdles in government agencies and firms will benefit by getting paid on time.

This morning, Brian Hayes, TD, the Minister for State with special responsibility for the Office of Public Works, kick started a Government e-invoicing pilot involving a number of public-sector bodies and several technology companies.

The National Procurement Service will oversee the project and the Institute of Technology in Sligo will provide research and technical co-ordination.

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.

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.

The departments trialling the various technologies include the OPW, the Department of Defence, the Department of Justice, the HSE, Enterprise Ireland and the Local Government Computer Services Board.

“The full rollout of e-invoicing could lead to multi-euro savings for the exchequer in terms of reduced administrative and transactional costs, as well as providing savings to suppliers to the public sector,” Hayes said.

“In addition, Irish service providers in this area could become leaders in this technology across the EU member states.

IT Sligo says the pilot has the potential to save both Government and business up to €240m a year. It is expected that the project will lead to widespread adoption of electronic invoices by public bodies and businesses throughout the country for the first time.

The benefits of e-invoicing

The Institute of Technology said the potential benefits of e-invoicing for buyers and suppliers include:

  • Reduced costs – no postage costs, low error rates and reduced staff time re-keying
  • Less confusion – a single standard model for all structured invoices
  • Real-time data delivery – more information delivered and processed more quickly
  • VAT compliant – new EU directive
  • Environmental benefits – less paper and lower carbon footprint
  • Accurate management information about purchasing, supplier and line items detail, and better stock analysis
  • International reach – acceptable across the EU (PEPPOL) and further

The end of the old excuse ‘the cheque is in the post’

One of the companies taking part in the pilot is eBox, a provider of e-invoicing software. The company’s managing director John Larkin told that e-invoicing reduces costs in terms of automating efficiencies in business, saving paper and postage, reducing error and provides a boost to the economy because firms get paid more quickly.

“Receiving an invoice in electronic form means companies can take the information into the system and save on data-entry errors. A lot of companies have this capability on their ERP systems, but the key element is getting suppliers to send invoices in the right electronic format.

“The objective of the pilot is to create a standard format acceptable to all agencies in the State,” Larkin said.

He acknowledged that Ireland is still behind a number of European countries when it comes to moving away from expensive and inefficient cheque-based payments.

“The Nordic countries, in particular, have been leading the way and it is envisaged the Government here may follow the Danish model which in the first instance mandates that all government agencies have to accept invoices electronically.

“For the public sector, the manual tasks associated with processing invoices and payments are reduced and they can focus on providing better frontline services.

“For businesses in an environment where transactions have fallen by 25pc, the speed and efficiencies enjoyed and being able to get paid on time help enormously,” Larkin said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years