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Invoicing Processes in the USA

Updated: Feb 6

The Office of Financial Innovation and Transformation (FIT), a public institution operating at the federal level in the USA, determines innovative solutions so that public institutions can become more efficient and transparent in federal financial management. FIT helps to implement solutions as well as identify them.


In this context, FIT’s priorities are:

  • Innovation in federal financial management

  • Transformation

  • Optimization


One of FIT’s primary duties is to manage the state-wide Financial Management Business (FMLoB).


Many government agencies in the US use the following four FIT initiatives:

  • Central Receivable Service (CRS)

  • Intra-governmental Transactions (IGT)

  • Electronic Invoicing (E-Invoice)

  • Shared Services


Electronic Invoicing (E-Invoice)


The use of e-invoices not only increases efficiency and effectiveness but also saves public resources.


In line with the 2015 memorandum to Improving Government Efficiency and Saving Taxpayer Dollars Through Electronic Invoicing, published by the Office of Management and Budget (OMB), which is directly under the President of the United States, public administrations were encouraged to use e-invoicing for intra-governmental purchases. The 2015 resolution stated that the Federal government processes more than 19 million invoices a year as a ‘single purchaser’. It stated that up to 40 per cent of the invoices processed are in the form of e-invoices and that the transition to the use of e-invoices at the federal level will increase efficiency and effectiveness. In this context, OMB has made the usage of e-invoices mandatory in public procurements between the federal government and dealers/suppliers as of the end of the fiscal year 2018. Public administrations and suppliers send and receive e-invoices through the Federal Service Provider (FSSP).


Benefits of the Financial Innovation and Transformation Office’s e-Invoice solution


E-invoicing is part of the solution where FIT assists and encourages public administrations to use FSSPs.


E-invoicing helps public administrations in the following ways:

  • Vendors/Suppliers are responsible for entering invoices correctly.

  • It is more efficient to process invoices without paper invoices or email forwarding.

  • Public administrations do not need to develop individual systems.


On the other hand, the e-invoicing service also helps the federal government.

  • It promotes greater efficiency and transparency and supports it by Executive Order 13576 to reduce waste.

  • It reduces the cost and inefficiency that may arise with the solutions that public administrations will develop on their own.

  • Suppliers do business with the government more easily thanks to the common portal available to them.

  • Saves the government up to $450 million per year (primarily by switching from paper-based to fully electronic invoicing 25%-45% savings per invoice).

  • It centralizes billing information and related payment data, giving agencies earlier and greater visibility into how they spend their money.

  • Improves the Treasury Department’s cash management.

  • It allows for more accurate financial reporting for everyone, including citizens.


G-Invoicing


G-Invoicing is a long-term solution for Federal Program Agencies (FPA) to manage intra-governmental (IGT) Buy/Sell transactions. G‑Invoicing helps public administrations and their commercial partners.


There are two important dates for FPAs to implement G-Invoicing and manage their invoicing process.


Accordingly, FPAs are required to implement G-Invoicing for ‘New Orders’ by October 2022. For “In-Flight” Orders, on the other hand, FPAs must implement G-Invoicing by October 2023.


Benefits of G-Invoicing
  • Better communication between trading partners.

  • G-Invoicing provides transparency by supporting every stage of the government/state buying/selling cycle. The common data pool will reduce the differences between public administrations.

  • The use of a common data standard reduces possible misunderstandings.

  • It supports agreed-upon common processes and error-free accounting.

  • With performance reporting in G-Invoicing, trading partners can pay faster and more efficiently.


Conclusion


The increase of e-invoices in the EU and Latin American countries has led to efficiency and effectiveness in the public and private sectors. On a sectoral basis productivity growth result in reduced invoicing costs and increased savings. Despite all these positive aspects, the USA waited for 2019 for B2G. On the other hand, there is no development in the USA for the transition to B2B and B2C invoices.

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