Benefits of e-procurement for the cross-border supply chain

Blog Compliance September 15, 2017

In response to the coronavirus pandemic, businesses have adapted digitally all over the world. The need to buy and sell freely without trade barriers is vital for the economy’s survival. Luis Ortega, Managing Director for Pagero Middle East, Africa & Asia, takes a look at the benefits of e-procurement and what it means for cross-border trade in the Middle East.

What is e-procurement?

Electronic procurement, otherwise known as e-Procurement, is the process of sending purchase orders and receiving correspondence electronically no matter how your business partner operates. With cross-border trade and digitalisation of the supply chain increasing, let’s take a look at how the Middle East are responding to the changing economic landscape and the benefits e-Procurement can provide to maximise the value of an existing ERP and/or purchase-to-pay system.

E-procurement in the Middle East

Governments in the GCC are implementing digitalised processes in pursuit of reducing the tax gap and tackling fraud. This includes integrating VAT with post-audit reporting and real-time initiatives to avoid reporting and compliance burdens to businesses.

“Interoperability and ensuring local compliance throughout the e-procurement process is key.”

With paperless strategies coming into place, initiatives such as Smart Dubai are being implemented to achieve 100% digitalisation of internal process from 2021. This includes moving from paper invoices to e-invoices to facilitate the digital management of data, supporting both government and private sector efforts to drive efficient supply chain processes.

As a region where businesses rely on cross-border trading, interoperability and ensuring local compliance throughout the e-procurement process is key.

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Benefits of e-procurement

According to Billentis, by 2025 we expect a much stronger integration and automation of procurement and invoicing processes. With this in mind, there are several benefits to highlight when adopting an e-procurement process:

  • Standardisation of e-invoicing models
  • Real-time control on transactions to facilitate indirect taxes, cross-border trading, and compliance with global indirect taxation and regulations
  • Validation of buyers and sellers in markets like the GCC
  • Transparency and an opportunity to connect with other businesses not only within the country of operation, but across borders around the world

Standardisation and interoperability

Given the high volume of cross-border trade in GCC countries, initiatives such as e-invoicing should be standardised if driven by tax or commerce regulators in the region. Interoperability with other global standardisation initiatives should also be taken into account.

“Connecting your business to an open, cloud-based network allows you to reach any business anywhere in the word.”

Peppol, for example, is a set of specifications enabling domestic and cross-border e-procurement. Starting in the Nordics as a public procurement digitalisation initiative, it later expanded throughout Europe, and as of 2019 became a worldwide business standardisation initiative. Peppol sits within the business-to-government (B2G), business-to-business (B2B) and business-to-customer (B2C) space. Currently, 28 European countries, Singapore, Australia and New Zealand use Peppol as their common framework for digital business.

Reasons to consider Peppol as an e-procurement model

Organisations in countries that are importing, exporting and dealing with European trading partners who use Peppol now find it easier and cheaper for cross-border trading.

As well as supporting GCC government goals to simplify and increase the visibility of indirect taxes, it also provides businesses with enough flexibility to operate under standardised frameworks and facilitate the flow of trading documents digitally, accurately and across borders.

Some of the key drivers of adopting an e-procurement model such as Peppol are:

  • Global interoperability

  • Existing infrastructure and rules of engagement, decreasing governmental investment and governance effort
  • Efficiency – several studies demonstrate cost savings of 50-90% per transaction in invoice processing depending on levels of e-invoice adoption

  • E-invoicing improves and facilitates automation of data validation – better data makes for better decisions
  • A clear, standardised and compliant format
  • A fully-digitalised flow of trading documents (like orders, dispatch advises, invoices, payment instructions, etc) provides tax authorities and governments better control of data
  • A single connection to reach all public and private business partners

Why choose an open network?

Connecting your business to an open, cloud-based network allows you to reach any business anywhere in the word – no matter how many borders your operations cross.

Companies who partner with leaders in this space benefit from all technical and regulatory requirements being taken care of across the entire order-to-cash, purchase-to-pay and freight process, to provide data accuracy, security, transparency and real-time visbility. This helps organisations streamline the flow of business documents, making it possible for them to reach as many other companies as possible in both the private and public sectors worldwide.

At Pagero, we want to support your business on its digitalisation journey. Let’s discuss the benefits of e-procurement for your cross-border supply chain process, and how we can collaborate on initiatives to achieve a paperless economy. Please contact me directly at the link below.

Contact Luis Ortega

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