The UK government could save at least €1 billion (£852 million) in just a year and half if it adopted an open standards based e-invoicing platform, according Tradeshift’s CEO Christian Lanng.
Tradeshift is an online platform that allows businesses to easily transact with each other, through invoicing, payments and apps. The platform is based on open standards and, unlike other traditional platforms, is free for businesses to use.
Lanng’s comments come after he headed up a project in Denmark, which saw the government move to an open standards based invoicing platform. The platform is now used by 95 percent of businesses in the country and the Danish government saved €1 billion in its first year and a half – a figure that Langg said that UK government could easily match, considering its scale.
“The way companies usually do business is by receiving thousands of paper-based invoices from a bunch of suppliers. They may then scan these and ship them to India, where 500 people type it in. It’s so manual, it’s almost impossible to believe,” said Lanng.
“What we do is give businesses the platform, which they can then roll out to the whole supply chain and suppliers can then create their invoices electronically – everything goes into SAP, for example.”
He added: “There are less than 3 percent of companies today connected to any type of e-invoicing platform.”
Langg said that that Tradeshift and other open-standards based platforms should appeal to government and companies because they are free and don’t result in forced costs.
“Most of the solutions out there work on the premise that you are just going to force your supplier to use them. Take Ariba for example – they take 0.15 percent off an invoice just to send it from A to B. So if I invoice my customer £100,000, they will take £150 for that single invoice,” said Lanng.
“If you look at the whole supply chain that can be millions of pounds. We have a very different model, it’s completely free for suppliers to join, it’s based on open standards, and they can do business with anyone.”
Tradeshift makes its money by operating the platform as a managed service for very large companies.
Lanng urged the UK government to consider moving to a platform similar to Tradeshift, even if they don’t use Tradeshift as their preferred choice. He said that the cost savings would be dramatic and it would make it easier for SMEs to work with government.
“Most of the UK central government is paper based. I was the guy in the Danish government that changed this, and we saved €1 billion there. We had 50,000 people spending 20 minutes each typing up invoices – its massive numbers when you start to multiple it out,” he said.
“David Cameron is talking a lot at the moment about how he can make the government more efficient, about how it can work better with suppliers – well, pick a solution that doesn’t cost suppliers money and helps them get paid faster. I think there’s a tremendous opportunity here.”
When asked if he thought the UK government could save a similar amount to the Danish government, Lanng responded by saying: “Absolutely, if not more”.
“Of course I would love it if everyone used Tradeshift, but that doesn’t have to be the case. What we really advocate is government’s using open standards, so that everybody can participate,” said Lanng.
“This is what we did in Denmark and it created an explosion of companies adopting it. I think it’s the government’s job to ensure that everyone can do business with the government.”
He added: “It’s very important that the government picks solutions that are open, free for suppliers to use, and don’t lock people in.”