Feb 08 2016

The Power of e-Invoicing

The Department of Veterans Affairs Financial Services Center greatly reduced costs and improved service with new system.

The government purchases a lot of goods and services and each one requires an invoice for the vendor to get paid.

For the longest time this process was done manually: an employee got a physical invoice, approved it and sent it through the slow paper trail that eventually ends with a payment to a vendor for services or supplies provided to the government.

Considering the government processes more than 19 million invoices each year, that’s a lot of man-hours, not to mention a chance for human errors to be introduced into the process. The system also provided little visibility into the businesses government used and suffered from late payment fees added when the government failed to pay in a contractually obligated time frame.

Ben Sandlin, a supervisory financial manager at the Department of Veterans Affairs Financial Services Center in Austin, Texas, knows this perhaps better than anyone. The FSC processes more than $13 billion in invoices annually.

“The process was always time consuming,” Sandlin said. “Under the best conditions we still dealt with delays and errors.”

To remedy that, the FSC became one of government’s early adopters in electronic invoicing. The Office of Management and Budget recently issued a directive that by the end of 2018, federal agencies must implement e-invoicing systems that provides visibility into the invoicing process, increases efficiency and drives down costs.

The FSC invested in Tungsten’s e-invoicing solution several years ago to increase it’s own performance. As Sandlin explains, the change was night and day.

“By making everything electronic, we were able to eliminate a lot of the travel time of documents, greatly reducing the speed at which we processed them,” Sandlin said. “We also greatly reduced the number of errors as the Tungsten system would not allow the vendor community to submit an invoice with missing information, allowing us to catch many mistakes instantly.”

All that time adds up. Sandlin said the average claim went from several days to process to just a few hours. It also helped that Tungsten allows vendors to register themselves for processing, something that eliminated work for federal workers and also ensured that all vendor information was entered accurately.

Those increases reduce waste for the federal government, but also help vendors get paid faster. In the end both sides win.

Currently, about only 40 percent of federal invoices are processed through electronic systems. As that number increases as the 2018 mandate approaches, agencies will be able to save more taxpayer money that was going to paying late fees and put it toward critical mission areas.