United States Mandates Use of e-Invoicing by 2018

November 6, 2015

More and more organizations are seeing the benefits of e-Invoicing: even the United States government.

The federal government will officially be moving towards e-Invoicing, after the Office of Management and Budget (OMB) issued a deadline to do so by the end of 2018.

Currently, only about 40% of the 19 million invoices that the federal government receives annually are processed and managed electronically. With this mandate, agencies will be required to use a shared service provider for e-Invoicing.

Dave Mader, the controller and acting deputy director for management at OMB, clearly understands how simply transitioning to an e-Invoicing system could be hugely beneficial for the government. In an interview with Federal News Radio, he confidently stated that “electronic [invoices], obviously, give you the heightened accuracy, the prompt payment and the quick movement of payment of invoices from invoicing to cash in the bank.”

It’s also a smart move in this time of economic hardship to adopt this easy solution to cutting costs and increasing efficiencies. Mader recognizes the “clear savings to the government from moving from paper to electronic,” estimating “significant” annual savings of “anywhere between $150 million and $260 million.” With e-Invoicing’s elimination of manual data entry and the time-consuming routing of hard-copy invoices, there’s no doubt that those estimates will be achieved.

What’s particularly refreshing about the government’s move to e-Invoicing and Mader’s statement is that the benefits to the suppliers aren’t being forsaken. “I think as important, or maybe more important,” Mader noted, “[is] the benefit there is to vendors moving this process to electronic, especially for small businesses who are very concerned about cash flow.” Not to mention, with speedier processing and approval cycles, the government can consider solutions like dynamic discounting or supply chain finance that enable their suppliers to be paid even faster.

The OMB mandate follows a four year pilot of the Invoice Processing Platform at the U.S. Department of Treasury. While OMB isn’t requiring the use of IPP, it will prohibit agencies from building their own e-Invoicing system.

80 U.S. agencies are already using IPP, and so far in 2015, they have electronically processed 500,000 invoices through the system. We can’t wait to see those numbers rise—along with the savings!—as the rest of the government agencies follow suit.

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