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Since the very start of the Covid-19 pandemic, millions of workers across the globe have made the transition to home working. This single shift has driven a forced digital revolution – and not just for business.
With this in mind, the old adage that necessity breeds invention has never been more true. It’s time now to drive digitalisation forward so that we can continue to reap its many benefits – from increased productivity and transparency to lower costs and carbon emissions - long after the crisis ends. We simply cannot go back to old ways of working – the wheels are now well in motion.
Communication platforms that allow people to work effectively from home have existed from some time. And, now, as workers and employers alike increasingly recognise the productivity, cost savings and wellbeing gains it can bring, it is likely that remote working will be very much part of the new normal. As Winston Churchill once said, "Never let a good crisis go to waste"; entrepreneurs are already exploring how this new working environment can create new opportunities. Estonia’s reputation as a digital pioneer has faded somewhat over recent years, and it’s time to reawaken this national trait: we are now on the cusp of fully automating our financial processes and purchase transactions and making private sector electronic invoicing the standard, just like in the public sector.
Sending sales invoices to customers via electronic channels increased by 3% in March compared to February, and by as much as 22% compared with 2019. Paper invoicing is sharply declining. In today’s socially distanced reality, people are afraid to physically handle paperwork, which means this growing demand for contactless invoicing will drive a more thorough and accelerated digitalisation of financial processes.
We’re already seeing this through the growing volumes of electronic invoices being processed in Estonia, which, at the same time, is cementing its position in the real-time economy. In fact, according to Billentis, a billing and invoicing research organisation, businesses issued 550 billion invoices across the world last year, of which just 10% were paperless. In Estonia, almost 90% of sales invoices are now issued digitally, which demonstrates our leadership on this front.
In our experience, real-time daily business transactions and operations save time, money and manpower. At present, the cost of general business accounting is estimated to be around 0.9% of Estonia’s GDP – a significant burden on company profitability. But, in the real-time economy, digitalisation increases productivity and export capacity, helping to drive growth. It also has a positive impact on the overall satisfaction across the business by replacing administrative labour with the exchange of high-quality data, freeing up time and skill for further innovation across the business.
We have been the Estonian State’s leading partner in managing the delivery and receipt of its sales invoices for three years now. The state's decision to accept only e-invoices has increased B2B e-invoicing between companies significantly, but there is still a long way to go before it reaches 100 per cent across the entire business community.
The case for e-invoicing is clear. Numerous expert studies have shown that automated e-invoice processing can reduce costs by between 60 and 80 per cent, while the European Commission's expert group on e-invoicing has estimated it could save up to €15 per invoice. Furthermore, with e-invoicing, you can pay faster, reduce human error, prevent fraud and improve cash flow across supply chains. In Europe, the average payment period is around 30 days, which, for many businesses, is too long. If e-invoicing becomes ubiquitous across the European Union, the economic savings may be as much as €2.3 billion, according to the Real Economy Action Plan.
So, what does the future hold? In May, Fitek will launch a new payment service that will enhance outgoing invoice processing by enabling the customer to pay immediately upon receipt. This is a crucial step forward for both companies and customer experience.
E-receipts are also expected in the coming years. This structured, standardised machine-readable document contains payment information in addition to e-invoice information. For example, when buying petrol, the paperless receipt is sent directly to the vendor, who then logs the sale to its business software. In Finland, it has been suggested that the transition to e-receipts could save around EUR 900 million a year. I dare say that in Estonia, the savings could be around a third of this. A standard for e-receipts is now in development by the Estonian Association of Information Technology and Telecommunications in collaboration with the Banking Association, the Association of Estonian Accountants and a range of other organisations.
Leaders will of course be welcoming of cost savings, but they may be wary of potential downsides linked with digitalisation. But in my opinion, there aren’t any. Yes, it may reduce workload for some within the accounting industry, but as we handle increasing volumes of data, demand for deeper analysis will certainly keep the workforce busy.
We fully support the popularisation of e-invoicing currently being spearheaded by the state, and we believe financial support should be given to the companies that have taken their first steps towards embedding it their business. By offering support, businesses would be better placed to invest in e-invoicing systems. The transition could also be accelerated by following the example set by Finland which has now requires suppliers to issue e-invoices by law.
At Fitek, we’re optimistic about the benefits this digital revolution will bring to Estonian businesses. It could unlock growth, increase productivity, reduce emissions and free up time for innovation and business improvement – what’s not to like?
Andrus Kaarelson - CEO Fitek AS, part of Banqup Group