In a perfect world…
In a perfect world technology would always increase efficiency.
In a perfect world making government smarter would make life easier.
In a perfect world going electronic would reduce complexity for everyone.
But this isn’t a perfect world.
On July 17, 2015 the United States Office of Management and Budget took action. In memorandum M-15-19 they mandated that all government agencies must move to an approved electronic invoicing system by the end of fiscal year 2018 for all federal procurements. Why? As stated in the memorandum, the goals are “reducing fraud, waste, and abuse; modernizing citizen facing services; and strengthening Federal acquisition practices to reduce red-tape, and provide greater benefit for taxpayer dollars.”
Without a doubt, this makes sense.
The U.S. Federal Government is the largest single purchaser of goods and services in the United States. It processes over 19 million invoices per year about 60% of which are still processed in paper. You can only imagine the complexity and the opportunities for things to go wrong!
The business case for moving to electronic invoicing is unquestionable.
The government will need fewer resources to process and verify the invoices and suppliers will gain visibility into a very frustrating and opaque administrative process. Questions like, “was my invoice received? or how far along the path to payment is it?” will become trivially easy to answer – a mouse click away.
Or so the theory goes.
Unfortunately, corporate America has already proven this fallacy wrong.
For over a decade large corporations have been implementing procure-to-pay (P2P) systems with the exact same goals.
And the results?
Simply put, they mostly succeeded in shifting the burden onto the shoulders of suppliers.
And this is what the new government mandate will undoubtedly do to as well.
You see, in a perfect world the government would implement a unified system based on open standards. All government contractors would need to do is integrate with this system and reap the rewards of electronic invoicing.
This, however is not the case.
In the mandate, which says absolutely nothing about suppliers, each individual government agency must choose one of two paths. First, they can outsource their procurement systems to an outside Federal Shared Services Provider (there are several already in existence) or they can implement a P2P system already approved by the OMB.
Instead of one unified system, there will be a selection of several to choose from.
To make matters worse, each FSSP may maintain multiple distinct systems if it determines that this is most cost effective.
And so, history repeats itself.
Clearly, moving to electronic invoicing will improve government efficiency. Just avoiding the manual processes of inputting and routing paper invoices through the bureaucracy will provide significant savings.
However, the burden for this step forward has been squarely placed on your back!
If you wish to be paid for your products or services, you will need to interface your accounts receivables processes with the new government electronic procurement systems.
This, in itself, will not be trivial.
However, what if you work with multiple government agencies? What if you work with a hundred?
It is entirely possible that you will need to interface your IT systems with multiple systems.
Even worse, you’ll need to maintain these integrations as they evolve over time.
Remember, this is not a perfect world.
Fortunately, just as we’ve seen this problem blossom in the private sector a solution has also come forward.
Instead of assuming the burden of adapting to multiple P2P systems from your customers, you can choose to implement a single integration that handles your entire order to cash cycle. This way, you can activate specific delivery channels for each individual customer you may have.
For example, does the DOD require connecting to Ariba? And DOJ to Tungsten? And HUD to their own network?
Instead of implementing and maintaining three separate integrations (and more as you close new clients) you can connect your ERP to Order2Cash.com.
This way, you will be prepared for any and all changes the future may bring,
Order2Cash is the world’s only fully integrated system that streamlines internal processes, connects with clients and external networks while guaranteeing global AR compliance.
This online SAAS solution not only connects you to over 700 ERPs and B2B and B2G networks, but it also provides contract signing with electronic signatures, enterprise level credit management, international payment processing and automatic reconciliation of payments.
So, if you do business with the Feds here’s what the new electronic invoicing mandate means to you:
In order to continue to do business with the Federal Government you will need to establish and maintain some level of integration with the individual IT systems of each government agency that you do business with. As these systems come online and evolve you will also need to adapt and verify each connection.
Thus, basically the choice for you is to either become a very specialized IT company yourself or deploy a standardized solution like
Order2Cash that does all of the integration work for you.
What do you think?
Are we getting closer to a perfect world? Share your thoughts in the comments below.