Government must accelerate small business adoption of e-invoicing to avoid UK falling further behind competitors on economic digitalisation

The government must accelerate, not delay, small business adoption of e-invoicing if it is going to prevent the UK falling further behind the rest of the world when it comes to economic digitalisation, business groups have warned.

In a response to the consultation on e-invoicing from HM Revenue and Customs and the Department for Business and Trade, small business support platform Enterprise Nation and think tank The Entrepreneurs Network argued that widespread adoption of e-invoicing would be transformative for small businesses and for the entire economy.

E-invoicing is a structured electronic invoice that is automatically generated in real time. It contains data from the supplier in a machine-readable format, that means it automatically syncs with the buyer's account payable (AP) system without requiring manual entering - and payment can be scheduled effortlessly.

According to a report by Sage, a partner of Enterprise Nation's Tech Hub, e-invoicing can lead to annual savings of over £11,000 for small businesses by almost halving the time spent processing invoices.

But there are also other gains to adopting technology such as e-invoicing. It increases the likelihood that they will also adopt other digital tools, such as customer relationship management software and cloud computing, that studies suggest can have a positive impact on productivity.

But a focus group of small businesses reported that they had very little or no knowledge of the government's current plans for the future of e-invoicing, causing concerns about how a move towards greater adoption of e-invoicing would be implemented, and in particular the costs and time this would involve.

Polly Dhaliwal, COO of Enterprise Nation, said:

"There are very clear benefits to adopting technology for things like e-invoicing. Firstly, it's a very important step closer to the automation of being paid accurately and on time, something almost half of our members say they struggle with currently. Secondly, it will help to encourage universal adoption of productivity-enhancing technology and boost our digital economy.

"These are excellent and compelling reasons to push ahead and not to delay e-invoicing until the very last minute.

"Evidence from around the world shows that where governments commit to a policy and proactively work with businesses to drive uptake, high rates of e-invoicing adoption are attainable. Learnings from our focus groups demonstrate that information is key, so making sure small businesses understand what is happening, how to resource it and how to use it, will be crucial to long-term success."

Eamonn Ives, research director at The Entrepreneurs Network, said:

"From slashing administrative burdens for entrepreneurs to eliminating the scourge of late payments, widespread e-invoicing adoption could transform life for Britain's small businesses and strengthen our entire economy.

"As ministers consider the next steps for the e-invoicing agenda, the Government must genuinely partner with, listen to, and learn from the private sector, ensuring e-invoicing becomes an opportunity for growth and not just another obligation to fulfil.

"A well-communicated, phased implementation that frontloads the benefits of e-invoicing adoption will incentivise smooth uptake and minimise disruption for the small businesses that form the backbone of Britain's economy."

The groups suggested a so-called 'hybrid' approach for implementation could work, where for example, mandatory e-invoicing could be limited to business-to-government transactions, or done on business size or phase it in, for instance for newly registered businesses.