The Government’s adoption and promotion of PEPPOL e-Invoicing presents an invaluable opportunity for councils to automate their accounts payable processes and transform their finance functions.
A decade of change in months
COVID-19 has accelerated digitisation in businesses across society. In 2020 Prime Minister Scott Morrison said, “Many businesses moved online quickly when the pandemic hit, undergoing a decade of change in months, finding new customers or new ways of doing things.”
Local government authorities (LGAs) were no different: many adapted quickly, using technology to continue to deliver community services in a safe, contactless way. And just as customers could engage increasingly with their LGA online, many council employees could also work from home.
While the increased use of cloud-based platforms enables offsite work and collaboration, council staff can only achieve so much when the use of digital technologies is not fully integrated into all operations.
Digital transformation a priority
Inefficient, error-prone manual processes and legacy systems make it hard for councils to provide the customer and employee experience they strive for. In many local government authorities, digital transformation has been a priority for many years, but has been hard to achieve. Councils have been held back by many factors including cost, fear of disruption, and a conservative culture favouring the status quo.
However, the health crisis of 2020 brought a new urgency to modernise and digitise. In May and June 2020, KPMG conducted the ‘Local Government Transformation Series’ in partnership with the Public Sector Network. With respect to digital transformation, they found the pandemic had:
Source: KPMG and Public Sector Network 2020, ‘Local Government Transformation’
The top 3 benefits of transformation, according to the councils surveyed, were:
– Improved customer experience – 34%
– Improved collaboration – 25%
– Productivity savings – 20%
For local government, e-Invoicing means councils can build on the digital progress they have already made, unlock further efficiencies, and deliver a better customer experience.
Labour-intensive manual payment processes can slow the circulation of cash in the economy, impeding its growth. As a result, the Government has adopted the PEPPOL e-Invoicing standard and is strongly advocating for its widespread use.
PEPPOL e-Invoicing allows the exchange of invoices between a supplier’s and buyer’s finance systems, which is significantly quicker and more cost effective than manually entering data into a system. With e-Invoicing, data arrives in real time, complete and ready for processing.
According to the ATO, e-Invoicing could result in savings in the costs of issuing and processing invoices of around $20 per invoice. Across the economy, these savings could amount to $28 billion over 10 years, helping businesses optimise their working capital to grow and create jobs. Increased efficiency also releases capacity to focus on customers and deliver an improved experience.
Local government plays an important role in incentivising its many suppliers to adopt PEPPOL e-Invoicing. This is because the success of the initiative depends on many businesses being on the network and able to exchange invoices with multiple trading partners; if firms can only trade with a few partners, they may not feel it’s worth the cost and effort of transitioning. And with less take up, the transformative effects on the economy cannot be realised.
How will e-Invoicing work in local government?
While many suppliers may immediately adopt PEPPOL e-Invoicing to benefit from shorter payment times, other businesses may only transition if they are required to by a government mandate. Any legal requirement would be phased in to allow smaller businesses time to prepare for the change.
As a result, it’s likely that local government will continue to receive a mix of paper and PDF invoices for the next few years. In adopting PEPPOL to do away with slow, inaccurate, and expensive manual processes, local government will not want to maintain these practices to manage paper and digital invoices. Therefore, councils need systems and processes in place that can handle all invoice types.
For local government, an automated accounts payable solution that can process e-Invoices alongside printed and emailed invoices may be the answer. Automating accounts payable achieves the following and more:
- increases productivity
- shortens payment times
- decreases costs
- ensures compliance
- improves security
- provides transparency
- allows reporting and analytics
- prevents duplicate payments
- enables early-bird discounts
- avoids late payment fees.
RapidAP is an out–the–box, automated accounts payable solution that can be configured to accommodate the complex business rules and structures that many councils require. It’s also highly flexible so can adapt to local government’s changing needs; for example, it’s scalable to manage larger invoice volumes and offers add-on modules for further functionality across procure to pay.
With built-in Optical Character Recognition (OCR) technology and a PEPPOL access point for invoice receivers, RapidAP can process data from either source. Its intelligent business rules engine will administer the exception management and approval process, before integrating seamlessly with the council’s ERP for posting and payment.
This means that when suppliers choose to e-Invoice, data transfers from their finance system via PEPPOL’s Universal Business Language (UBL) to RapidAP. Here the solution performs its intricate matching process to ensure compliance thresholds are met, council has a complete audit history, and that it pays the correct amount for the goods and services it receives.
Here’s how RapidAP works:
While the council’s ERP may also offer buyer access point services, ERPs do not specialise in accounts payable. Therefore, there are likely to be gaps in their offering. Local government, of course, needs to be extremely thorough in meeting accounts payable compliance requirements, so would benefit enormously from a PEPPOL access point provider with specialist expertise.
Key features & benefits
– Web-based solution enabling offsite work
RapidAP is web-based and can be accessed via any device or browser. Its cloud infrastructure allows communication and collaboration between business users in different locations, enabling off-site work, business continuity and increased efficiency in accounts payable. Note: RapidAP is also available on-premise, if required.
– Accurate and reliable data collection
Using OCR, RapidAP has a straight-through processing rate of 67%. With PEPPOL e-Invoicing offering a more efficient data collection process, Efficiency Leaders anticipates an even higher rate of touchless processing, quicker payment times and lower costs. Better quality data leads to fewer exceptions and reduced costs as there are less invoices that staff need to get involved with.
– An efficient storage system
The digital invoice library stores all invoices that arrive in the business, whether they enter RapidAP through OCR or UBL. All council’s invoices can be searched, retrieved and reports can be run, providing management greater transparency and enabling better financial control. The library logs every interaction with each invoice, recording a complete audit history. When paid, invoices remain stored in the system for their required term.
– Automated workflow
RapidAP apportions tasks to specific individuals that have approval or exception management responsibilities. These items are highlighted on a personalised task list until they are actioned.
This functionality ensures accountability, so invoices keep moving through the workflow. With both traditional invoicing and PEPPOL e-Invoicing, there will always be exceptions to manage to ensure the council pays its suppliers the correct amounts.
– Data exchange with ERP
RapidAP can use a number of methods to integrate with any ERP currently on the market. This seamless data exchange ensures that councils can get the most out of their existing technology, while complementing it with enhanced accounts payable processing functionality.