What is e-Procurement? Benefits and Requirements
e-Procurement refers to electronic contracting and the automation of commercial transactions, like the purchase of products or services between trading partners (ordering, reception, provision, invoicing, etc.). e-Procurement can be applied to trade relationships either within the private sector (B2B) or between private and public sectors (B2G). However, it is most used to refer to electronic communications and transactional processes with public administrations.
Thanks to e-Procurement, commercial transactions between clients and their providers can be paperless. The benefits are numerous on both sides, which is why many governments have begun to establish e-Procurement strategies.
In the case of public administrations, e-Procurement covers the electronic management of all commercial processes between the public sector and their suppliers.
The system is characterized by process automation and the elimination of paper throughout the entire supply chain. Electronic data interchange is the mechanism used to make those ends meet.
To participate in e-Procurement businesses need to implement an EDI (Electronic Data Interchange) solution, especially when working with a public administration. The communication channels established by EDI solutions guarantee security, and trust is key to well-functioning public procurement. Additionally, EDI is the standardized exchange of files, a fundamental characteristic of the international marketplace.
Benefits of e-Procurement
Electronic contracting provides important benefits for both the client and the supplier. In both cases, cost savings is one of the major advantages that pushes firms to change their contracting processes and to implement solutions that make e-Procurement possible. In the case of public administrations, another key benefit is transparency.
But there are more benefits. e-Procurement makes the following possible:
- Time savings. Supply chain processes are more agile.
- Error reduction. Fully integrating a firm’s internal communications infrastructure allows for complete process automation and minimizes human intervention.
- The electronic system allows users to find out the status of transactions in real time (tendering, delivery, invoice payment, etc.)
- Increased efficiency. Processes are optimized and productivity increases.
- Faster payment cycle.
- More security. This system improves the security and confidentiality of communications.
e-Procurement has become part of the roadmap for many states, and it has various applications in the public sector.
In Europe, Directive 2014/55/EU established electronic invoicing as a key factor in public contracting throughout the European Union. The directive requires member states to implement electronic invoicing systems based on the common European directive. In so doing, the directive brings to fruition the objective of using electronic invoicing in public contracting and foments cross-border commerce.
Electronic invoicing with public administrations simplifies tax compliance and reduces economic costs.
E-Invoicing is the first part of a more complete public procurement process which includes tendering, and passes through all phases of the supply chain up to invoicing and payment. One of the most illustrative examples is the e-Procurement strategy implemented by the British National Health Service (NHS) which mandates the use of electronic procurement for NHS trusts and their suppliers.
The proliferation of electronic commerce due to globalization has made it increasingly easier for companies to operate across borders. Tax and fiscal compliance in line with the local laws is part of e-Procurement.
Most governments have implemented mechanisms to improve tax oversight, simplify processes and automate tracking.
The global marketplace means disparate accounting systems, and standardization is fundamental to the quick and efficient detection of fiscal fraud. For this purpose, many tax authorities have implemented procedures for better information monitoring. In Europe, the use of the SAF-T (Standard Audit File for Tax) stands out. SAF-T is an XML file used internationally for exchanging fiscal information.
This file allows tax authorities to collect valid fiscal information and enables them, or an external auditor, to quickly detect anomalies in a company’s accounting ledgers.
In Europe, SAF-T is widely used to comply with VAT and other electronic accounting requirements. Currently it is used in Portugal, Hungary, Poland, Norway, Lithuania, Luxembourg, France, and Austria.
Electronic invoicing in the private sector spreads as businesses go digital. Latin America is highly advanced in the widespread use of B2B e-invoicing. The tax authorities in Mexico, Brazil, Argentina, and Ecuador have established a system whereby validation and authorization of electronic invoices is a prior step to be taken before delivery to the end user. This process requires firms to establish a connection with the communications hub of the tax authority and to use a solution that guarantees connectivity in real time.
EDICOM Solutions for e-Procurement
The Global e-Invoicing Platform is a solution that allows for the delivery of electronic invoices to any public administration from one single platform. It guarantees that the invoices align with the following principles:
- Connectivity with the relevant public administration hubs.
- Compliance: The invoice will always comply with the technical and legal requirements of the country in question.
- Adaptability: The EDICOM platform will be adapted to all standards and protocols required by the recipient.
The Global VAT Platform is an integral solution especially designed for use by multinationals. It is a B2B2G communications platform with EDI, compliant e-invoicing, and VAT reporting modules available throughout the global marketplace.
The platform is prepared to manage electronic VAT reporting, as well as electronic invoicing, and any other commercial or tax declaration required. It is completely scalable to the needs of your business.
It is a platform for tax compliance in more than 60 countries worldwide, allowing users to centralize all such processes in one single solution.
*The contents of this publication belong solely to EDICOM GROUP and do not necessarily reflect the opinion of the European Union.