The community for leaders in finance shared services

Invoice processing costs vary dramatically between councils

NewsSarah Feurey, Head of Research13.08.2012 Comments (1)Bookmark

Invoice processing can represent a major cost for private and public sector organisations and reducing expenditure in this area is often one of the major motivators for moving to e-invoicing.

While some are spending just a few pence per invoice, others may be spending several pounds, and this is putting them at a severe competitive disadvantage.

In the case of local authorities, high invoice processing costs can eat away at shrinking budgets and mean that taxpayers get less for their money.

It's therefore quite worrying that some UK councils are spending 100 times more per document than others, according to Freedom of Information research gathered by Readsoft.

According to Computer Weekly, the study shows that Broadland District Council is paying an average of almost £30 per invoice.

This is substantially more than the average cost across the 285 local authorities examined of £3.40.

Even this, Readsoft claims, is far too high. It reckons invoices should cost no more than 79 pence to process.

Some councils are doing better than this though. Birmingham City Council, for example, spends 71 pence per invoice, while Hammersmith and Fulham Borough Council spends just 25 pence.

Interestingly, the latter is one of three London councils that have been used as an example of good practice in shared services by the government.

The trio are set to save £7.7m this year, rising to £33.5m by 2014-15 and £40.3m the following year, and Communities Secretary Eric Pickles has urged other local authorities to follow their lead.

Speaking to Computer Weekly about the research, Sarah Burnett from analyst firm NelsonHall, which carried out the research on behalf of Readsoft, said: "My initial impression is that perhaps all haven't answered the same question, but putting that issue aside, it seems councils need to optimise processes to the right level of automation."

She added: "They also need to have the right number of staff so they are not stretched, as well as having the right system support so people have the capabilities to minimise errors."

electronic invoicing, e-invoicing, einvoicing, Readsoft, invoice processing, Broadland District Council, Hammersmith and Fulham Borough Council

Please login to rate this news.

Your Comments

Login to add a comment

john vasili invapay 14.08.2012

Invoice processing cost is only a very small part of the actual process to settle an invoice, and the quoted costs are fully dependant an where in the process cycle do you actually include the costs.

The quoted £30 might include the full Purchase 2 pay cycle where as the quoted 79pence may just be to open & scan, the average of £3.40 may include some all or none or may just be efficient vs inefficient processes?

Is einvoice alone the answer?

One UK council (not mentioned in the article) has reconfigured process & managed to achieve sub £5.00 for the total purchase & pay cycle, including vendor set up and AML validation , PO generation , Invoice processing , archiving and settlement including the ability to achieve early settlement discounts &/or to extend DPO

The quoted figures seem disproportionate to sub £5.00 when you include the full cycle process elements but again what is included in the quoted prices?