Electronic invoicing helps municipalities and provinces pay their suppliers faster
As an entrepreneur, you should be paid within thirty days when you send an invoice to governments such as municipalities and provinces. However, that does not always happen. This may be because their processes are not yet set up for this, or because civil servants nowadays often work from home, which means that invoices remain outstanding for longer. Switching to electronic invoicing can significantly speed up the process from invoicing to approval and payment.
“We see that the purchasing processes at many municipalities have been the same for ten years,” says Nick Hoek of NCN Capital, which, among other things, supports municipalities with optimizing their purchasing and invoice processing processes. “An order is often first placed with a supplier, who sends an invoice after delivery, which then goes through all kinds of approvers before it can be made payable. This often leads to the payment term being exceeded.” Nowadays there are all kinds of contemporary purchasing systems that make it possible to reverse that process, allowing the invoice to be paid much faster after receipt.
With most of these digital purchasing systems, employees who need something can place orders via a kind of internal webshop with suppliers with whom the municipality or province has already made purchasing agreements. “Once an official has entered an order in our digital system, the approvers can give their approval before the order goes to the supplier. Then the invoice that he sends after delivery no longer needs to go through the entire approval process and can be made payable immediately. What you must pay attention to as a supplier is that you send an invoice that has been drawn up exactly as agreed, for example with the correct purchase number, otherwise there will still be a delay.
Although all governments are required to process electronic invoices, in practice they often still receive invoices in the form of PDF files. Hoek: “If you send the invoice as a PDF, use a writeable PDF so that the software can easily read the data. This prevents you from having to enter them manually because the PDF is only readable.” He also advises suppliers to ensure that they know in advance who to contact if payments regularly take too long.
Electronic invoicing: faster and safer
Even better than emailing PDFs is to invoice electronically. That is not only much faster, but also safer. Sending PDFs by e-mail is very susceptible to fraud. An e-invoice is a digital file (usually XML) that you do not send via e-mail, but with a digital connection from one accounting system to another, via a network such as Peppol, the European e-invoice network where the Dutch authorities also work. make use of. “These connections are provided by so-called providers,” says Johan Schaeffer of eConnect, one of those providers. “They ensure that e-invoice networks such as Peppol are connected with each other, so that they can exchange e-invoices. When sending invoices, the identity of the sender and the recipient is verified via a network such as Peppol and the data is exchanged in encrypted form. That makes it much more difficult to commit fraud.”
Errors then hardly occur anymore, Schaeffer explains: “With e-invoicing, validation is performed on a few hundred calculation rules. It is actually not possible to send an e-invoice with errors.” Of course, it remains important to enter correct information, because the system does not go so far as to automatically correct an incorrectly entered order number, for example. “If you make a mistake, you will not yet receive a notification of what is wrong, but nowadays there is the option - e-retour called – to automatically exchange status messages about the invoice.”
Almost all ERP software packages already include the option to send e-invoices as standard. “Entrepreneurs who do not have such a package can also use, for example, a free online invoice portal,” says Schaeffer. In order to be able to e-invoice, all customer data required for verification must be in order. “If there are problems with parties that are just starting to use e-invoicing, it almost always concerns the lack of Chamber of Commerce or VAT numbers of their customers, for example.”
Average payment term of 3.92 days
Following the example of the national government, other governments are also switching completely to e-invoices. “Since the beginning of this year, we have started only accepting e-invoices, except in very specific cases,” says Eelke Blonk of the province of North Brabant. “Our objective of paying invoices within 20 days was achieved in 93.67% of cases throughout 2020, with an average payment term of just over 7 days. Since the beginning of this year until now, we have managed to pay 98.22% of all invoices within 20 days, with an average payment term of 3.92 days. This is entirely caused by e-invoices. We can process these much more efficiently than 'normal' invoices, which also means we can pay more quickly. As far as we are concerned, it is a win-win for the province and the province's suppliers.”
“E-invoices ensure fast shipping. They do not remain in someone's mailbox or on the pile for a while, but always arrive in our central administration," adds his colleague Dirk Booltink. The data exchange takes place in real time, he explains. “As soon as the invoice is sent, it is immediately received by us. At a later stage we will further roll out the possibility that the supplier can also see the status of an invoice in real time.”
Instructions to suppliers
Large companies are very enthusiastic about this and often ask whether they can do e-invoicing, says Booltink. “Smaller companies without advanced accounting software are less interested in this and experience this as an additional administrative burden. We offer these companies the option of e-invoicing via an online tool. They pay a one-off fee of €0.30 to check whether the identity of the bank holder is correct and to see if the person is allowed to act on behalf of the organization; After all, secure shipping is one of the basic principles of e-invoicing. They can then send all their invoices to us via e-invoicing, but also to other companies on Peppol.”
The latter will come in handy if the statutory payment term from large to small companies also becomes a maximum of thirty days. To make this payment term feasible, it is expected that several large companies will require e-invoices from their smaller suppliers. North Brabant is trying to lower the threshold for entrepreneurs who have yet to switch to e-invoicing. Booltink: “We have sent instructions to suppliers by email and there is a web page with explanations. In addition, we have an e-invoicing consultant available to help suppliers if they experience difficulties submitting an e-invoice.”
In addition to various small companies, there are also municipalities that have not yet fully embraced electronic invoicing. “This is often due to a lack of knowledge about how to approach it,” says Johan Schaeffer of eConnect. “I have seen that municipalities can receive e-invoices, but still process them in the traditional way.” The organizations that Schaeffer has assisted in digitizing their processes mainly see benefits, such as time savings, increased safety and cost savings.
Municipalities and GIBIT
“Because almost all ERP and accounting packages have – possibly optional – solutions for e-invoicing, it could be said that the vast majority of municipalities can receive electronic invoices,” says spokesperson Ruud Koerts of the Association of Dutch Municipalities, “but in We do not know to what extent this option is actually used.
Koerts points out that suppliers who supply IT in accordance with the Municipal Purchasing Conditions (GIBIT) have been obliged to send invoices electronically since 2016. The Municipal ICT quality standards at GIBIT describe the requirements. “Municipalities can impose additional requirements,” says Koerts. “These quality standards only apply to agreements to which the GIBIT has been declared applicable; this will mainly concern agreements with an ICT component. To our knowledge, there are currently no current plans to require electronic invoicing within the municipal domain.”