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Embracing Europe's e-future

Photo: All rights reserved © Jakub Jirsák - iStockphoto.com

While electronic invoicing promises significant time and cost savings to customers and businesses alike, some obstacles still hinder its full take-up. The European Commission has recently put forward a plan to help Europe to exploit fully the benefits e-invoicing can offer.

The European single market is a real engine of prosperity. The free movement of people, goods, services and money has resulted in new business opportunities, more choice for consumers and closer collaboration between people, across borders which no longer act as barrier. A key concept underlying the single market is that European enterprises and citizens should be able to do business as easily anywhere in the EU as they can at home.

However, some barriers still block the free flow of online commercial services across national borders and EU single market rules need to be updated for the digital era. Information and communication technologies have already driven half of European productivity growth over the past 15 years and they have a very good potential in further contributing to smart, sustainable and inclusive growth.

Therefore, the Digital Agenda, one flagship initiative under the Europe 2020 strategy, has identified the strengthening of a digital single market as one of its priority actions. In this framework, e-invoicing is a promising area and the European Commission has recently proposed a plan to address the issues hampering its take-up.

A big difference

The European Commission wants to see e-invoicing become the norm in Europe by 2020. E-invoicing is quicker, cheaper, and what is more, is becoming increasingly commonplace. Providing invoice data electronically allows businesses to benefit from shorter payment delays, fewer errors and reduced printing and postage costs. Most importantly, structured e-invoices facilitate business process integration from purchase to payment, meaning that invoices can be sent, received and processed without manual intervention.

"E-invoicing has the potential to make a big difference, for businesses, consumers, and European trade as a whole," says Michel Barnier, Commissioner for the Internal Market and Services.

Due to diverging legal and technical requirements, however, e-invoicing across borders has not yet been fully realised. Although large companies are using e-invoicing systems, take-up has been minimal among the EU's 20.7 million SMEs and in the public sector. Systems for exchanging e-invoices are often complex and costly, in particular across borders and for SMEs.

Electronic invoices with real benefits

The European Commission has tackled these issues in a Communication entitled 'Reaping the benefits of electronic invoicing (e-invoicing) for Europepdf [65 KB] ', which was presented in December 2010. The document underlines that rules covering e-invoicing are not uniform, and that, as a result, potential benefits remain under-exploited. To accompany the Communication, the Commission has decided to set up a European multi-stakeholder forum on e-invoicing, which should be complemented by national forums established by Member States.

"Revolutionising the way we pay bills, e-invoicing will boost the overall competitiveness of European companies, especially SMEs," indicates European Commission Vice-President Antonio Tajani, who is in charge of industry and entrepreneurship.

Four key priorities on e-invoicing have been identified. These are ensuring a consistent legal environment for e-invoicing; achieving mass market adoption by getting SMEs onboard; stimulating an environment that creates maximum reach between trading partners exchanging invoices; and promoting a common e-invoicing standard. For each of these priorities, the European Commission has put forward a number of specific actions.

Europe's e-future in action

In 2011, for example, the European Commission plans to propose a revision of the e-signature Directive to provide cross-border recognition of secure e-authentication systems. Two new projects under the Competitiveness and Innovation Framework Programme (CIP) will also be launched to help specific sectors deal with electronic data exchange along the supply chain, with a focus on e-invoicing.

In addition, the European Committee for Standardisation (CEN), a provider of European standards and technical specifications, should develop a Code of Practice that would include consistent terminology and clearly defined roles and responsibilities for actors involved in e-invoicing. Implementation guidelines for a cross-industry invoice data model should also be developed by CEN, says the European Commission.

The implementation of these actions will help consolidate the European single market as a functional reality, and provide concrete benefits to businesses and individuals. Indeed, Europe has much to gain. E-invoicing could save some €238 billion over six years - or around €40 billion annually - in business-to-business transactions alone in the EU if applied widely enough, according to a study financed by the European Commission in 2008.

Moving towards e-invoicing will also help to reinforce the Single Euro Payments Area (SEPA), which aims to integrate and standardise electronic payments across the EU. And the environmental benefits of e-invoicing - in terms of reducing paper consumption and energy costs - are also significant. In effect, e-invoicing is a win-win situation from any perspective, and the European Commission's proposals aim to pave the way to its wide and effective take-up.

Leading by example

The European Commission can already accept electronic invoices in a well-defined number of cases, but of course its actions in the field are not limited to this. In June 2010, for instance, the Commission adopted the ISA Work Programme, which has allocated €26 million to actions in support of electronic cooperation among public administrations aimed at promoting interoperability. One of these actions, the e-PRIOR project, has successfully developed an electronic services platform that is able to exchange e-catalogues, e-orders and e-invoices through the provision of a web services interface which can be accessed by any machine. This platform has been in production at the Commission since 2009. e-Prior is also being offered as a free-to-use, open-source, online tool under the name of Open e-Prior. Open e-Prior aims to help public administrations connect their back-office systems to the Pan-European Public Procurement Online (PEPPOL) infrastructure. The out-of-the-box connection to the PEPPOL network makes Open e-PRIOR very attractive to Member State administrations because it is simple, effective and easy to use.

The PEPPOL project aims to implement common standards enabling EU-wide public e-procurement. Existing national systems will be linked so that all participants can enjoy the full benefits of a single European market. The growth of cross-border e-procurement however depends on public administrations connecting to PEPPOL, and it was therefore the goal of e-PRIOR to accelerate this process.

The dissemination of Open e-PRIOR to Member States in the context of e-Procurement is a first step in making this platform available for cross-sector use. And once Member State administrations use Open e-PRIOR, they can use it for any electronic business document exchange.

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