Bringing Government B2B Payments To The Digital Age

Governments are known for many things but not efficiency. And when it comes to the supply chain, wherein state and local governments deal with businesses to provide everything from paper clips to data security services, there is vast room for improvement.

In the march toward the streamlining of payments processes, using technology, especially eInvoicing, can do much to help the efficiency of government operations and opens up the playing field for a host of small to mid-sized businesses.

In an interview with PYMNTS, Sid Vasili, chief executive officer of Invapay, said that there are a number of markets — most notably, the United Kingdom, Germany and France, as well as Dubai — where governments at both the state and local levels are relaxing at least some of the requirements that have been traditionally in place when dealing with SMBs. One key initiative, said Vasili, has come as governments have eased the application process, with less onerous requests for proposals and other documentation.

The overall result has been that companies of the smallest size, which Vasili said are “microcompanies, with revenues of less than £2 million or €2 million, with 10 employees or fewer,” have now been able to forge relationships as suppliers to governments. The smaller firms, said Vasili, effectively act as consultants to government clients, operating in niche industries with expertise that larger consultancies cannot provide.

Vasili provided a few examples of how innovation can serve governments as smaller firms get a seat at the table. Consider furniture makers who can introduce ergonomic chairs or smaller firms with expertise in energy efficiency. Real change at the government level, said Vasili, “can be huge, but it is usually made up of small events.”

The advantages run both ways, as B2B relationships extend between both parties: Governments get expert advice on how to improve everything from websites to backend functions — in an environment where, as Vasili termed it, “governments have used sledgehammers to crack nuts” — and SMBs get the benefit of large and steady clients with deep pockets.

As Vasili noted, the growth in business for these small players has an additional positive impact on the local economies in which these enterprises operate. As they get more revenues and grow ever-larger, they expand operations and hire more staff.

Better inclusion of SMBs in procurement allows governments to adopt innovation, but they must be willing to adopt standard processes, said the executive. He pointed to studies that have shown that eInvoicing can save governments and their suppliers as much as £2 billion and taxpayers also save money as a result, said Vasili. Liquidity is a happy byproduct of streamlined processes, as cash flow through quicker receivables and payables management can cut turnaround times to a few days, using p-cards, for example.

One roadblock to better payments solutions, said Vasili, may rest with continued concerns over security. Invapay, said Vasili, can help assuage those concerns with what he said is a security platform in place that offers a “three-way match,” where data is cross-referenced between invoices, the buying organization, invoices and the purchasing orders, which guards against fraudulent activity.