Current state of automation in public procurement

When preparing a strategy and evaluating the cost/benefit goals to target using eInvoicing, it is important to obtain facts and figures on the current activities undertaken not only within invoice processing functions but also from across wider public procurement functions. In particular, the purchase order is an invaluable linking pin between pre and post-award procurement processes. Therefore, the current level of automation in public purchasing procedures will be a key factor in devising a joined-up but modular approach to drive the eInvoicing implementation.

A sample of the questions that should be addressed are listed below:

• How many invoices does your public sector organisation currently receive?

• How many people are employed within the accounts payables department within your public sector organisation?

• What is the cost of processing a paper invoice in your public sector organisation?

• What are the requirements for the archiving of invoices in your public sector organisation?

• What are the opportunities for ‘outsourcing’ or ‘shared services’ for accounts payables processing?

• What is the distribution of suppliers to the public sector? How many are SMEs?

• What is the on-time payment performance of the public sector?

• How many (%) invoices are paid on time?

• How are buyers and suppliers identified on invoices?

• What business processes and functions are supported by invoices in your public sector organisation?

• What references and supporting documents must be present in, or accompany, an invoice to facilitate processing for payment?

The scope of the transposition

The extent to which a Member State is willing to go beyond the scope and requirements of the Directive when transposing it into national law is a key consideration in devising a strategy to implement eInvoicing. Decisions to mandate eInvoicing for public sector buyers and/or suppliers, whether now or at some specified future date, or the level of automatic processing in procurement, payment, tax, accounting processes and audits to be achieved by eInvoicing implementations, will determine whether a minimalist, staged or maximalist strategy drives eInvoicing in public procurement within a Member State.

Public sector goals for eInvoicing

Achieving compliance, reducing costs and creating new efficiencies and value are all potential goals that the Member States can target as part of their business cases for eInvoicing. The compliance requires only a minimalist strategy (i.e. a focus on the capability to receive as opposed to automatically process). However, it is recognised that the cost-saving potential and other benefits increase with the level of automation.  

“End-to-end eProcurement is not about implementing an IT project which would just replicate paper-based processes; it is an opportunity to fundamentally re-think the way public administration is organised. End-to-end e-procurement is, therefore, a key enabler of the above priorities, and can contribute to the sustainable growth objectives of the EU 2020

Strategy.” European Commission (2013) Communication 453 End-to-end e-procurement to modernise public administration.

The legal process – establish a plan and timeline

Set out a plan that clearly defines the steps, timeline and the roles and required responsibilities, in the administrative and legal process to transpose the Directive. Member State legislation procedures and processes typically involve contributions from a range of stakeholders. This implies an iterative process to review drafts and several sequenced levels of sign-off necessary to prepare, submit and obtain the approval of proposed legislation and regulations. Having visibility of this process and the stakeholders involved can help to manage the policymaking process and deliverables to identify dependencies and potential risks and issues and facilitate early action to mitigate against or resolve them.

The scope of the legislation

While the provisions of the Directive are mandatory for the Member States to transpose into national law, precluding any substantive change, there are some areas where the Directive permits policy and implementation model choices. It is important to decide on the scope of legislation in relation to those areas. For example:

• Will it apply to invoices related to public procurement contracts that are below EU thresholds?

• Will it compel suppliers to submit eInvoices to the public sector now or at a future date?

• On what basis shall public bodies be classified as central or sub-central for the purposes of the Directive?

• Will it refer to a national strategy to which eInvoicing implementations must adhere?

• Will any additional national scope beyond the obligations of the Directive apply to all level of administrations? (e.g. central; sub-central; federal only; etc.)

• Will any additional national scope beyond the obligations of the Directive apply to direct procurement, in a Business-to-Business (B2B) context and/or to foreign suppliers?

Areas exempt from the obligations of the Directive

The Directive states that requirements to receive and process eInvoices “shall not apply to electronic invoices issued as a result of the performance of contracts falling within the scope of Directive 2009/81/EC, where the procurement and performance of the contract are declared to be secret or must be accompanied by special security measures in accordance with the laws, regulations or administrative provisions in force in a Member State, and provided that the Member State has determined that the essential interests concerned cannot be guaranteed by less intrusive measures”

The Member States must decide on the scope of their procurement activity to which this exemption applies and how it will be provided for in the transposition.

The option to postpone the deadline for compliance for sub-central government

Member States may postpone the application of the laws, regulations and administrative provisions for sub-central contracting authorities and entities until 18 April 2020.

• In the event that this option to postpone is used, then an explicit provision shall appear in the national law which the Member States adopt in the field covered by the eInvoicing Directive.

• To minimise confusion in terms of implications for public bodies, provide a clear basis on which public bodies shall be classified as sub-central for the purposes of the Directive.

The legal deadlines for each stakeholder group to comply with legislation

Consider the legal deadlines (if any) that will be applied by national legislation to the different stakeholder groups (i.e. central, regional and local authorities vs. suppliers) and the potential inter-dependency and implications for each date on all affected stakeholder groups. For example, if a date is set for mandating suppliers to submit eInvoices, public bodies will need to have the appropriate systems, processes and resources in place by that date.

Compliance with other legislation at national and European level

• Consider the compatibility of proposed eInvoicing legislation and regulations with other existing legislation at national and European level (e.g. public procurement, tax, archiving, data protection, etc.).

Incentives to promote eInvoicing and sanctions for non-compliance

Consider providing incentives to promote the uptake of eInvoicing among suppliers:

• Examples of incentives include:
  • improved payment terms for invoices submitted electronically,
  • additional marks awarded in public procurement competitions to supplier bids with eInvoicing capability.

Consider sanctions for non-compliance with the legislation and the type of entities that may be sanctioned:

• Examples of sanctions include:
  • fines,
  • modified payment terms.
• Examples of the type of entities that may be sanctioned include:
  • public entities,
  • suppliers.

Foster a favourable disposition towards eInvoicing

The benefits of eInvoicing, in terms of cost savings and efficiencies, have been widely recognised for some time now. While it is important to communicate these benefits to stakeholder groups, in order to gain support and enhance eInvoicing adoption.  The Member States should also consider policy leadership and "champion" roles within senior management to create a favourable disposition towards eInvoicing among operational management at contracting authority and entity-level within the public sector.

Consider the requirements and good practices of Business to Business (B2B) eInvoicing

In addition to the public sectors, there are also many role models for success in eInvoicing in the private sectors in the EU Member States and across the globe. The Member States should build on the experience gained in the private sector from implementing B2B eInvoicing and where appropriate re-use successful approaches, building blocks and capabilities.

Many private sector companies have the proven capability to successfully implement eInvoicing for businesses of all sizes, from SMEs to multinationals, to receive, process and settle compliant eInvoices from their suppliers. This is expertise is especially relevant in the area of supplier onboarding which is a critical success factor in reaping the benefits of eInvoicing.

Member States should engage with stakeholders in the B2B eInvoicing community to help understand their views and consider their requirements as part of an overall public and private sector approach to eInvoicing.

Define the national legislation and regulations

Once the scope of the transposition and the policy goals have been set for implementing eInvoicing in public procurement, Member States should define the national laws and regulations to give effect to the eInvoicing Directive and support any national objectives. This step helps to provide more certainty on the implications of the Directive for all affected parties.

Practical steps

While the administrative and legal process to transpose the Directive differs from Member State to Member State, below is a sample of practical steps in that regard to consider and apply as appropriate:

• Determine the appropriate Ministry and office that is deemed to be competent in and responsible for the area of the given policy for eInvoicing (e.g. Finance, Procurement, Tax, Digitisation)

• Publish an eInvoicing Statement – A concise outline of proposed legislation, policy & implementation approach that can be used as a quick reference guide to inform all stakeholder groups

• Seek and maintain Ministerial and Government level agreement and support for proposed legislation, policy goals and the national strategy

• Engage in consultation to obtain the views of public bodies, suppliers, service providers and other interested parties to help inform decisions on choices in policy and implementation models (e.g. Targeted and/or public consultations; fora; events; publications; market research)

• Refer to and review the transposition text of the Member States that have already transposed the Directive into national law

• Consider potential observations, issues and challenges that may be encountered by the Member States in transposing the Directive into national law, for example:

  • Items raised by the views submitted by interested parties via consultations

  • Questions asked by national parliaments when considering the legislation for approval (e.g. policy goals - costs – benefits – expected outcomes - implications for SMEs)

  • Comparisons with law, policy and national strategies in other Member States?

• Consider how to measure the level of progress and success that has been achieved towards policy goals - What and how?

The legal process – establish a plan and timeline

Set out a plan that clearly defines the steps, timeline and the roles and required responsibilities, in the administrative and legal process to transpose the Directive. Member State legislation procedures and processes typically involve contributions from a range of stakeholders. This implies an iterative process to review drafts and several sequenced levels of sign-off necessary to prepare, submit and obtain the approval of proposed legislation and regulations. Having visibility of this process and the stakeholders involved can help to manage the policymaking process and deliverables to identify dependencies and potential risks and issues and facilitate early action to mitigate against or resolve them.

The scope of the legislation

While the provisions of the Directive are mandatory for the Member States to transpose into national law, precluding any substantive change, there are some areas where the Directive permits policy and implementation model choices. It is important to decide on the scope of legislation in relation to those areas. For example:

• Will it apply to invoices related to public procurement contracts that are below EU thresholds?

• Will it compel suppliers to submit eInvoices to the public sector now or at a future date?

• On what basis shall public bodies be classified as central or sub-central for the purposes of the Directive?

• Will it refer to a national strategy to which eInvoicing implementations must adhere?

• Will any additional national scope beyond the obligations of the Directive apply to all level of administrations? (e.g. central; sub-central; federal only; etc.)

• Will any additional national scope beyond the obligations of the Directive apply to direct procurement, in a Business-to-Business (B2B) context and/or to foreign suppliers?

Areas exempt from the obligations of the Directive

The Directive states that requirements to receive and process eInvoices “shall not apply to electronic invoices issued as a result of the performance of contracts falling within the scope of Directive 2009/81/EC, where the procurement and performance of the contract are declared to be secret or must be accompanied by special security measures in accordance with the laws, regulations or administrative provisions in force in a Member State, and provided that the Member State has determined that the essential interests concerned cannot be guaranteed by less intrusive measures”

The Member States must decide on the scope of their procurement activity to which this exemption applies and how it will be provided for in the transposition.

The option to postpone the deadline for compliance for sub-central government

Member States may postpone the application of the laws, regulations and administrative provisions for sub-central contracting authorities and entities until 18 April 2020.

• In the event that this option to postpone is used, then an explicit provision shall appear in the national law which the Member States adopt in the field covered by the eInvoicing Directive.

• To minimise confusion in terms of implications for public bodies, provide a clear basis on which public bodies shall be classified as sub-central for the purposes of the Directive.

The legal deadlines for each stakeholder group to comply with legislation

Consider the legal deadlines (if any) that will be applied by national legislation to the different stakeholder groups (i.e. central, regional and local authorities vs. suppliers) and the potential inter-dependency and implications for each date on all affected stakeholder groups. For example, if a date is set for mandating suppliers to submit eInvoices, public bodies will need to have the appropriate systems, processes and resources in place by that date.

Compliance with other legislation at national and European level

• Consider the compatibility of proposed eInvoicing legislation and regulations with other existing legislation at national and European level (e.g. public procurement, tax, archiving, data protection, etc.).

Incentives to promote eInvoicing and sanctions for non-compliance

Consider providing incentives to promote the uptake of eInvoicing among suppliers:

• Examples of incentives include:
  • improved payment terms for invoices submitted electronically,
  • additional marks awarded in public procurement competitions to supplier bids with eInvoicing capability.

Consider sanctions for non-compliance with the legislation and the type of entities that may be sanctioned:

• Examples of sanctions include:
  • fines,
  • modified payment terms.
• Examples of the type of entities that may be sanctioned include:
  • public entities,
  • suppliers.

Foster a favourable disposition towards eInvoicing

The benefits of eInvoicing, in terms of cost savings and efficiencies, have been widely recognised for some time now. While it is important to communicate these benefits to stakeholder groups, in order to gain support and enhance eInvoicing adoption.  The Member States should also consider policy leadership and "champion" roles within senior management to create a favourable disposition towards eInvoicing among operational management at contracting authority and entity-level within the public sector.

Consider the requirements and good practices of Business to Business (B2B) eInvoicing

In addition to the public sectors, there are also many role models for success in eInvoicing in the private sectors in the EU Member States and across the globe. The Member States should build on the experience gained in the private sector from implementing B2B eInvoicing and where appropriate re-use successful approaches, building blocks and capabilities.

Many private sector companies have the proven capability to successfully implement eInvoicing for businesses of all sizes, from SMEs to multinationals, to receive, process and settle compliant eInvoices from their suppliers. This is expertise is especially relevant in the area of supplier onboarding which is a critical success factor in reaping the benefits of eInvoicing.

Member States should engage with stakeholders in the B2B eInvoicing community to help understand their views and consider their requirements as part of an overall public and private sector approach to eInvoicing.

Define the national legislation and regulations

Once the scope of the transposition and the policy goals have been set for implementing eInvoicing in public procurement, Member States should define the national laws and regulations to give effect to the eInvoicing Directive and support any national objectives. This step helps to provide more certainty on the implications of the Directive for all affected parties.

Practical steps

While the administrative and legal process to transpose the Directive differs from Member State to Member State, below is a sample of practical steps in that regard to consider and apply as appropriate:

• Determine the appropriate Ministry and office that is deemed to be competent in and responsible for the area of the given policy for eInvoicing (e.g. Finance, Procurement, Tax, Digitisation)

• Publish an eInvoicing Statement – A concise outline of proposed legislation, policy & implementation approach that can be used as a quick reference guide to inform all stakeholder groups

• Seek and maintain Ministerial and Government level agreement and support for proposed legislation, policy goals and the national strategy

• Engage in consultation to obtain the views of public bodies, suppliers, service providers and other interested parties to help inform decisions on choices in policy and implementation models (e.g. Targeted and/or public consultations; fora; events; publications; market research)

• Refer to and review the transposition text of the Member States that have already transposed the Directive into national law

• Consider potential observations, issues and challenges that may be encountered by the Member States in transposing the Directive into national law, for example:

  • Items raised by the views submitted by interested parties via consultations

  • Questions asked by national parliaments when considering the legislation for approval (e.g. policy goals - costs – benefits – expected outcomes - implications for SMEs)

  • Comparisons with law, policy and national strategies in other Member States?

• Consider how to measure the level of progress and success that has been achieved towards policy goals - What and how?

Mandate eInvoicing through public procurement contracts

An example of a non-legislative approach to driving adoption is to specify eInvoicing as a mandatory requirement for suppliers in public procurement contracts. In order to qualify for participation in some or all public procurement tendering processes, suppliers may be required to adopt eInvoicing.

Integration of eInvoices with national payment methods and financing practices

A key business function of an invoice is to trigger the payment from the buyer to the supplier for received goods and services. Any opportunity arising from eInvoicing to create efficiencies in the payment process will provide an incentive to suppliers to adopt eInvoicing. Examples of developments in this area include Factoring and SEPA.

Information and communication actions targeted at suppliers

The provision and communication of information that details, in an accessible way, the goals of the national strategy from a supplier’s perspective is key to facilitating on- boarding of suppliers. What eInvoicing means to suppliers, how suppliers can connect to public sector eInvoicing solutions, guidance on specifications (e.g. CIUS), what tools are available and what testing is required are all areas that should be covered by this information.

Support and training available to ease on-boarding process

While relevant to all technical implementation models, this is particularly relevant to a centralised model where the public administration may take ownership of the supplier on-boarding process. The provision of support and training, and in some cases applications, to initiate and guide suppliers through the actions needed to adopt eInvoicing can be very beneficial in terms of driving the adoption of eInvoicing in line with the national strategy and infrastructure model.

Mobilising public bodies

While public bodies have an obligation arising from the Directive to establish an eInvoicing capability, there is still a challenge to motivate and create commitment in those organisations in the context of competing priorities for resources. A plan of activities is required to raise their awareness and understanding of eInvoicing and mobilise them to plan and act to achieve compliance with the Directive and leverage the benefits of digitisation.

• Which Ministry/office will have ongoing responsibility for policy?
• How will eInvoicing be supported/promoted/governed/developed beyond the transposition? (e.g. roles and responsibilities and functional areas)
• How will eInvoicing be positioned/aligned with eProcurement and broader eGovernment policies and practices?