e-invoicing could save 2bn GBP a year in UK public sector

LONDON, UK: The UK public sector could be wasting as much as 2bn GBP a year as a result of being slow to take up e-invoicing, according to new research.

The adoption of e-invoicing would make a real contribution to economic growth in the UK, driving productivity and efficiency by allowing greater output of goods and services for lower factor inputs, whilst also facilitating prompt payments and providing much-needed liquidity to many SME suppliers of large companies and the public sector:

Electronic invoicing allows the capture of a minimum 60 percent saving per invoice over manual processes for a buying organisation.

There is an annual savings potential of at least 2bn GBP across the UK public sector, based on conservative assumptions, and there is the potential to significantly increase these benefits; some estimates have put this as high as 4bn-6bn GBP per annum.

Denmark has already implemented public sector e-invoicing and has estimated a saving of 120m-150m EUR a year. When scaled up for the UK, this equates to 1.25bn GBP) a year.

The general view for public sector buyers is that there exists a savings potential from e-invoicing of up to 11 EUR per invoice for buyers and around 6 EUR for suppliers, which equates to a 60 percent saving over the cost of processing a paper invoice and 10 minutes of staff effort per invoice.

E-invoicing adoption by the public sector will help bring liquidity to SMEs, making it easier for smaller companies to work with the government.

Furthermore, the findings of PwC's latest working capital study suggest that if all companies, public sector and private, deployed e-invoicing and achieved close to the best performance in their sector, a staggering 3.7 trillion EUR of excess working capital could be released worldwide, averaging out at 10-12 percent of company turnover.

"There is an annual savings potential of at least 2bn GBP across the UK public sector based on conservative assumptions," said Luke McKeever, executive director of Tungsten Corporation. "For the public sector, a lack of central direction and policy drivers have resulted in the UK lagging behind countries such as the Nordics, Brazil and Mexico, where government-driven schemes are driving huge savings."