On 11 March, the European parliament adopted the directive on electronic invoicing in public procurement. With its vote, the plenary acknowledged the results of negotiations which I managed to achieve as rapporteur with the Greek presidency. Despite the tight schedule, a very good result was achieved.
On 11 February, parliament's internal market and consumer protection committee confirmed the outcome of the trilogue with 37 votes in favour and one opposed. The directive will introduce a practical European standard for electronic invoicing, which urgently needs to be accepted by all local governments.
This means that contracting authorities and entities will be required to receive and process electronic invoices. In contrast, invoicing parties will be free to decide whether they continue to send out invoices in the 'traditional' way or make use of the new standard. This will make invoicing significantly easier for local governments.
Creating a framework to be adhered to when drawing up the standard was particularly important for the parliament in the negotiations, as was defining mandatory content to be included in electronic invoices. The standard is to be technologically neutral and compatible with relevant international standards to prevent unfair competition and take into account principles of data protection, proportionality, and data minimisation.
"The commission estimates that adopting electronic invoicing in public procurement across the EU could generate savings of up to €2.3bn"
The standard will be suitable for use in business-to-business transactions. For this reason, the European commission must ensure that not only is the standard developed for the field of public procurement, but that it can also be used by private operators in business dealings. With regard to the content of electronic invoices, a limited number of standard items have been determined in accordance with the directive on value-added tax.
The parliament insisted on carrying out a test to review the standard before its publication in the official journal and subsequent implementation in the member states for its practicability and ease of use while also setting out necessary implementation costs.
The most difficult part of the negotiations with the council was agreeing on the time period available to contracting authorities and entities before the standard is made mandatory. The compromise that was reached will give local governments sufficient time to implement the standard. For small contracting entities there will also be the option of extending the implementation period by 12 months.
Several member states, such as Denmark, Austria and Finland, have already been won over by the benefits of electronic invoicing and have made it mandatory for public contracts in all or part of the public sector. However, these electronic invoices are based on national standards which are often not interoperable.
For businesses wishing to participate in cross-border tenders, this poses a barrier when entering the market as different requirements result in high costs and increased complexity. This is why electronic invoicing is still not widespread in Europe and only accounts for between four and 15 per cent of all invoices.
The directive takes us another step forward towards efficient public administration in the EU. Switching to electronic invoicing and electronic procurement will make life easier for local governments and businesses active in the internal market. Switching from paper to fully automated invoicing can cut the costs of receiving an invoice from between €30-€50 to just €1. These are good and useful savings in difficult economic times. As the largest spender, the public sector needs to campaign for fast implementation.
It's another important step towards paperless public administration in Europe and is one of the priority objectives of the digital agenda. The digital agenda for Europe, one of the pillars of Europe 2020, identifies eGovernment and the digital single market as crucial elements of a modern and competitive economy. Electronic invoicing offers many economic and environmental benefits. Paper invoices are expensive and the costs of producing, sending, and processing paper invoices add up to billions annually. Therefore, switching to electronic invoicing will lead to huge cost savings. The commission estimates that adopting electronic invoicing in public procurement across the EU could generate savings of up to €2.3bn.
The parliament resolution of April 2012 acknowledged the benefits of electronic invoicing and called for it to become mandatory in public procurement by 2016. It also made reference to market fragmentation in accordance with national regulations on electronic invoicing and highlighted the considerable benefits of electronic invoicing. It also emphasised the importance of more legal certainty, a clear legal environment and open and interoperable solutions for electronic invoicing based on common legal regulations. In 2012, the council also expressed an interest in taking steps to promote electronic invoicing.
In the current context of economic consolidation, the management of public procurement is of primary importance. Public expenditure on goods, works, and services represents 19 per cent of the EU's GDP. Managing it more efficiently can make a significant contribution to improving the overall efficiency of expenditure. Effective public administration is a key element for the competitiveness of the European economy.