eInvoicing

This measure was intended as a further contribution from the Public Administration to spreading Information and Communication Technologies to develop Portuguese society and to promote eCommerce, which is crucial for ensuring the competitiveness of the national economy.

In actual fact, the sheer size of the Public Administration means that the adoption of eInvoicing in its transactions will make a sizeable contribution to spreading the practice of issuing and receiving electronic invoices in the scope of the country’s economic activity, galvanising public and private companies to act in the same manner, rising above the fact that use of eInvoicing in Portuguese companies is still in its infancy and thus contributing to modernising the country.

The adoption of eInvoicing, once it has become stabilised, will enable processing costs to be cut, obviating the need for repeated data entry on invoices for the various organisations involved and reducing data entry errors and subsequent correction costs. It will make it easier to archive and access invoices using computers and will result in accountancy and financial management efficiency gains.

Denmark is the only European Union country to have previously adopted eInvoicing across the board in the Public Administration, a process which took place between the end of 2003 and Spring 2006.

Following the Government’s decision, UMIC undertook various initiatives to promote eInvoicing adoption in the Public Administration:

• In September 2005, monitoring of this process was included in the scope of the meetings it holds practically every month with the procurement units of the different ministries organised under the National Programme for eProcurement.
• In October 2005, it set up a working party involving Public Administration bodies and individuals from civil society, including members of the Aliança Digital (Digital Alliance) (text in Portuguese) (a non-governmental organisation whose goal is the adoption of eInvoicing). This working party reviewed draft legislation on eInvoicing and began drafting an Electronic Invoice Guide.
• At the end of January 2006, it issued the different ministries with an electronic survey to format and facilitate the way the information is organised that the different Public Administration bodies have to send it on the timetable for implementation of measures to be taken towards the adoption of eInvoicing.
• In March 2006, it organised an eInvoicing seminar in partnership with FIL/AIP. This was attended by more than 250 people and included sessions on the concept, legal framework, tax-related aspects and economic, organisational and social impacts. A preliminary version of the Electronic Invoice Guide (text in Portuguese) was made available for online consultation at this seminar. The Guide was published at the end of March at the Forum for the Information Society, kick-starting a public consultation period regarding its content.
• Starting at the beginning of July and lasting until the end of October, it promoted pilot projects for the adoption of eInvoicing in the Public Administration, involving dozens of public entities, several eInvoicing service providers and different Public Administration suppliers. The aim of these pilot projects is to provide a tangible demonstration of how several systems for issuing and receiving electronic invoices by the Public Administration operate, together with a philosophy of sharing services, based at the Secretary-Generals' Offices at the different Ministries, thus enabling practical forms of generalising eInvoicing throughout the entire Public Administration.
• On 25thOctober 2006, a new edition of the Electronic Invoice Guide (text in Portuguese) was published, with amendments arising from the consultation process that was launched when the first edition was published.
• On 6th November 2006, the "Adoption of eInvoicing in the Public Administration" Seminar (in Portuguese) was held at the Fórum Picoas, where a presentation was given of the results from the roughly 40 eInvoicing adoption projects in progress in multiple institutions of 12 of the 14 ministries and the Presidency of the Council of Ministers, including 12 Secretary-Generals’ Offices, which now provide pooled public e-Procurement services. The types of solutions found were divulged so as to facilitate speedy generalisation. In the adjacent exhibition space, 10 electronic invoice product and service provider companies from ViaCTT and CODIPOR – Portuguese Product Identification Association staged demonstrations of solutions for receiving, issuing and storing electronic invoices. The projects gave hands-on demonstrations of eInvoicing solutions that have been proved in real-life situations that can be used as pooled services in each ministry, thus enabling the adoption of eInvoicing in all constituent bodies.

The adoption of eInvoicing is a technological modernisation project with relatively low costs (which may well be less than 0.10 €/invoice), and with potentially extremely interesting impacts in such crucial areas as the productivity and competitiveness of the national economy, administrative cost cutting for the State, and promoting technology-based innovation and the resulting development of new business areas. It will also have a very significant secondary impact on questions that are no less important, such as the protection of the environment through major reductions in paper consumption and fuel costs and pollution generation from transportation, the consolidation of transparency and visibility in public procurement, and fiscal justice.

To get an idea of the size of the issue, by way of example, Portugal Telecom issues roughly 42,000 invoices/month to public bodies for the provision of telephone landlines, and an unknown number (for now) for the provision of mobile services, which could in fact be even higher. Going on the basis of estimates, the 42,000 invoices for landline services represent more than 1 million sheets of A4 per year, taking up kilometres of linear archive space. Manual processing of this (collection, transportation, copying, searching, etc.) most definitely consume hundred of man years. UMIC conducted a survey of Central Government public bodies at the end of January 2006. 239 bodies responded and the results show a very significant total volume of invoices (approximately 2.6 million invoices for a total sum of roughly 2 billion Euros). In the case of Denmark, estimates prepared for the respective Ministry of Finance indicated potential annual savings of 100 to 200 million Euros that could be achieved through making received invoices virtual. This equates to an average saving per invoice of some 7 Euros for invoices received by the public administration, which is the only case that has been considered in the country’s legislation. It is self-evident that savings for invoices issued are significantly higher. Some of the biggest Portuguese enterprises have publicly estimated the reduction in costs from making the invoice system virtual to be in the region of 80% to 90%, without taking into account savings arising from secondary effects, such as faster administrative processes. It is believed that the reduction in costs for the Portuguese economy runs to billions of Euros, without factoring in the gains arising from simpler, improved, faster administrative processes, and the creation of more technology-based jobs with high national value added.

The development process for the pilot projects launched by UMIC has itself had very significant results, some of which are:

• The Working Party organised by UMIC agreed on a consensual position encouraging the unique use of internationally recognised "standards" and the exclusive use of one of two standards: UBL 2.0 and/or XML-GS1. This consensus is a noteworthy result of the process in itself.
• Various companies have been qualified and gained decisive experience in the provision of eInvoicing services in structured “standard” formats in the scope of the pilot projects.
• The actions undertaken have resulted in major mobilisation of the eInvoicing solutions market. New partnerships between companies, new solutions and drastic changes to the prices on offer have emerged.
• In the scope of the projects, modules integrating eInvoicing in the information systems serving the Budget Directorate-General and other organisms were developed for the first time. These are provided and maintained by the Ministry of Finance and Public Administration’s Informatics Institute.
• Portuguese experience of using structured "standard" eInvoicing formats was very minimal. There were a few major companies that already provided end consumers with electronic invoices in ".pdf" format, just as there were example of the exchange of structured electronic documents complementing paper-based invoice delivery. However, the more complete example we now have as to the capacity for the use of electronic invoices in structured "standard" format is essentially the result of the pilot projects, standing as an important contribution with a potential economic reach that surpasses that of the Public Administration by far.

Lists of the central public administration bodies with eInvoicing systems, companies providing eInvoicing services and other companies involved in eInvoicing projects in public bodies can be accessed on UMIC’s web pages.