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Singapore Budget 2018: A nationwide e-invoice system to link them all
IF a nationwide e-invoicing system that will be rolled out soon succeeds, it will cut costs for businesses, boost productivity, speed up payments, access new financing options and reduce errors.
For that to be achieved, business owners need to get onboard, and there must be integration with currently fragmented service providers, industry players say.
Minister for Communications & Information Yaacob Ibrahim announced the new framework during the debate on his ministry's budget on Tuesday, and described the new framework as "common infrastructure" that will accelerate business productivity and sectoral digitalisation in Singapore.
He said invoices are critical functions for businesses. "Without an invoice, businesses do not get paid. But invoicing can be very tedious and manual, with many inherent errors. E-invoicing can change that."
The electronic invoicing framework will be interoperable and will process payments more efficiently and raise productivity at work.
E-invoicing is the automated creation, exchange and processing of request for payments between suppliers and buyers using a structured digital format. It is different from existing digitised invoices (PDF, word or scanned invoices) that require some level of human input to process.
According to a spokesman for the Info-communications Media Development Authority (IMDA), there are currently "multiple fragmented standards" in use in Singapore, including proprietary e-invoicing solutions used between some buyers and suppliers.
He told The Business Times that IMDA is in the "exploratory stage" of evaluating the existing standards and frameworks used by different countries and businesses, in consultation with industry partners and business associations such as the Singapore Business Federation. No specific targets for the framework have been set.
He added that Australia, New Zealand and some countries in Europe have adopted or are in the midst of adopting an e-invoicing standard.
"We are taking a two-pronged approach towards driving adoption of an e-invoicing standard here. We will engage with potential service providers as well as users to understand their needs and how these can be addressed via a common standard. We will also work with key industry partners - such as large buyers and billers - to leverage their existing networks of suppliers and customers."
IMDA will release its findings and more details later this year.
Ethan Dobson, chief of Singapore-based payments startup iPaymy, said that the framework is "especially exciting" for small and medium enterprises (SMEs) which lack the time and resources to focus on paying or collecting invoices.
"At iPaymy, we've been working on solving payment-related issues for SMEs for the past two years, and we view this initiative as a welcome addition to an SME payments ecosystem that is quickly moving to digital."
Asked what will be needed for the framework's success, Mr Dobson said: "As we've learned, when introducing new technology and processes that fundamentally change how people do business, education is a key factor in success. Business owners will need to understand not just why it's good, but how to practically integrate this into their existing payment and collection processes."
Gillian Tee, chief of Singapore caregiving service startup Homage, said that the biggest challenge for the framework will be to build ability to meet end-to-end payments and financial reporting needs through integration with existing service providers.
"Banks and other financial services are highly fragmented, and most companies will have existing systems as well as tools used in different parts and points of their financial reporting and analytics processes. Making sure there is structured planning and prioritisation of existing service providers and integration partners would help ensure successful adoption of this common infrastructure."
Mervyn Koh, UOB head of business banking for Singapore said that over the last one and a half years, UOB has been working with over 1,000 Singapore small businesses to automate their business processes through the use of UOB BizSmart, a cloud-based integrated business solution.
"Through UOB BizSmart, our customers have experienced the benefits of e-invoicing as they are able to issue invoices more quickly and in turn, receive payments in a more timely manner. This has led to an increase in their productivity and a reduction in manual processing errors."
He added: "We welcome the nationwide e-invoicing framework as it will create a virtuous cycle with more businesses adopting and benefiting from digital solutions. It will also help to add certainty to payment cycles and improve cash flow, which are vital to business operators."
A DBS spokesman said DBS also offers e-invoicing solutions, such as the one launched with New Zealand-based accounting software firm Xero earlier this year, from which SMEs now have a "real-time view of their cash position".
She told BT that DBS recently conducted a survey with over 240 of its SME customers and found that one of their biggest pain points is administrative processes. "The proposed national e-invoicing framework is a step in the right direction. Making payments is traditionally a tedious paper-intensive process that takes up the bulk of SME owners' time. The new national e-invoicing framework will go a long way in helping SMEs reduce costs and free up time to pursue business opportunities."
Gregory Trotter, head of cash management for global transaction banking at OCBC Bank, noted that many SMEs in Singapore still rely on manual invoicing, which can be time consuming, susceptible to human error and hard to track.
"E-invoicing can standardise the exchange of information between sellers and buyers, allowing for faster and easier reconciliation. This in turn will lead to productivity gains as people and time are freed up.
"As SMEs digitise more of their processes, they will be able to improve their cash flow forecasting and with it their working capital requirements."