An initiative to develop a common electronic invoicing (e-invoicing) framework for businesses here is in the works, and Minister for Communications and Information Yaacob Ibrahim said during his ministry's Committee of Supply debate on Tuesday (Mar 6) that this would help enable quicker payments for businesses.
"Invoices are critical functions for businesses - without an invoice, businesses do not get paid. But invoicing can be very tedious and manual, with many inherent errors," he said in his speech in Parliament.
"E-invoicing can change that. It can help businesses cut costs, ensure companies are paid faster, and open up new financing options."
According to a separate MCI press release on Tuesday, the Infocommunications Media Authority of Singapore (IMDA) will be working with relevant Government agencies, industry partners and businesses associations such as the Singapore Business Federation to explore various e-invoicing standards and, by doing so, develop a common framework that businesses can adopt.
E-invoicing is defined as the automated creation, exchange and processing of request for payments between suppliers and buyers using a structured digital format.
This initiative was first announced by Finance Minister Heng Swee Keat during his Budget 2018 speech earlier this month, when he said the framework can help support companies improve productivity and enhance cash flow.
Shedding more light on this, MCI said e-invoicing will be a starting point for businesses looking to digitalise all aspects of their operations, and the gains to be had include helping them be more competitive by reducing operating costs, speed up transactions, minimise disputes and reduce errors.
It is different from existing, digitised invoices in PDF, Microsoft Word or scanned invoices that require some level of human input to process, the ministry elaborated.
Using electronic invoicing would also spur more on-time payments. MCI cited a 2017 US Federal Reserve Bank of Minneapolis study that indicated that about 92 per cent of e-invoices were paid on time compared to 45 per cent of paper invoices.
It also pointed to SPRING Singapore’s SME (small- and medium-sized enterprises) Financing Survey in 2017 that revealed delay in customer’s payments was the top finance-related concern in the coming year, and three in five SMEs faced delayed payments from customers.
With e-invoicing, companies can also have more insight on their payment cycles and this means better cash flow management, leading to better sustainability and growth, the ministry said.
One local company it said benefitted from e-invoicing is Alps Group, a supplier of bamboo-based tissues.
The SME initially used a manual record-keeping system that often led to inadequate stock levels or excess stock, and this led one of founders, Ms Angela Sim, to lament that it did not dare to take on more customers as they foresee more problems if they continue growing, according to an interview it did with MCI last year.
It was only when they adopted an order management and inventory system from service provider PracBiz that the problem subsided, as the system would automatically generate e-invoices that tallied against existing stock when an order was made, update inventory and keep track of outstanding payments.
The system was also used by its supplier, NTUC FairPrice, which gave added ease for them to track stock availability and purchase orders, the company said.
MCI said the ideal framework should meet both Singapore’s domestic needs while having an international outlook, and more details will be shared when ready later this year.