Economic Policy Review ISSN 1313 - 0544

E-Invoicing In Denmark - The Right Way!

Author: Metodi V. Metodiev / 29.08.2007
Rate This Article:

Electronic invoicing became mandatory in Denmark on February 1st, 2005. All former paper-based invoices sent to government on all levels, from large agencies to nursing schools, are now managed electronically.

Before February 2005 every business would get a paper invoice by post that had to be handled by a number of people in the organization – for approval, entry and filing. Only one person at a time had access to the invoice and for future reference you had to go and find it in the basement archive.

However, e-invoicing in Denmark is the result of a public/private partnership that makes use of successful and established technology. The set-up for e-invoicing is based on proven market solutions, including the infrastructure and the systems that can receive and process e-invoices. The solution is independent of the companies’ IT sophistication and is highly flexible.

Furthermore e-invoicing is essential part of the Danish national strategy for e-government which aims to create a more effective and coherent public sector. The strategy behind digitalization is that investments must pay off, which means that digitalization projects must either increase the quality of public services (better products, faster case-processing times, fewer errors etc.) and/or supply the same service using fewer resources. E-invoicing is a step towards public procurement that is digital from start to finish. This will mean further efficiency benefits for both the public and the private sector.

The development in the amount of e-invoices received by public institutions shows fast implementation - from zero to 95% within the first 10 month since February 2005.

What are the steps to ensure propriety utilization of e-invoicing?

  1. There is special online-based user-friendly electronic platform especially for creating e-invoices;
  2. When placing an order, the employee states the specific electronic address of the institution, the EAN number. This ensures that the invoice arrives directly into the electronic invoicing system of the institution, and is subsequently approved online via the employee’s PC;
  3. When state administration receives e-invoice, now it should proceed the second part of the process;

Companies can send their invoices in different ways, according to their level of IT readiness:

  1. Through an electronic invoicing system, by sending an OIOXML digital invoice directly from their own system to their public-sector customer via the VANS network;
  2. Through a digital invoice portal, which resembles an Internet bank where companies compose their invoices using a login and password, and then send it electronically;
  3. By sending a paper invoice with an EAN number to a Read-In bureau. Here it is converted to an electronic invoice and forwarded to the correct public institution. This solution ensures that foreign companies and companies without the necessary IT can still do business with the public sector;

 

What are the benefits of the system?

  1. better public services;
  2. reducing compliance costs  for so-called “old-fashion” procedure;
  3. reducing bureaucracy;
  4. optimization of working processes;
  5. more transparency in public spending;
  6. and last but not least reducing corruption practices;

The efficiency benefit of the conversion to e-invoicing itself is estimated at about EUR 120 – 150 million a year. Part of this saving is earmarked for the national treasury. In addition to this comes significant savings in internal administrative processes. E-invoicing contributes to building a digital infrastructure that will benefit the efficiency of society as a whole, in much the same way that railroads and telephone cables have done in the past.

So, that is the right way – be sure!