Digital suppliers are struggling with the process for invoicing government departments and risk losing out on payment due to the length of time it takes to get a purchase order for the work, research has shown.

Invoicing can be a complex and frustrating process for suppliers – Photo credit: Flickr, cybrgrl

A discovery project carried out by the Government Digital Service’s Digital Marketplace has indicated that there are a number of barriers hampering the smooth payment of suppliers for government services.

The government wants to encourage small businesses to provide services for the public sector – part of the drive to cut down on long-term, high value contracts awarded to the big suppliers and increase innovation in government.

However, in a blogpost, Cath Rooney, a senior product manager in the Digital Marketlace team, said that in order for this to happen, small businesses need to be confident they will get paid for their work.

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Her team carried out a six-week discovery project involving small and large central government departments, agencies and local authorities as well as buyers, finance teams and suppliers, earlier this year to assess problems in the process.

The results show that getting a purchase order – which is a confirmation that the government will pay for the service – “can take months”, particularly in central government.

“If a supplier starts work without one then they are at risk of not getting paid,” Rooney said.

In addition, variations in the process for invoicing different departments means suppliers have to devote a lot of time to understanding what information needs to go on the invoices, and where it should be sent, and then keeping track of the individual contracts.

Some departments also request that suppliers send invoices by post – a process described by one supplier as “nerve-wracking” because there is no automatic confirmation of receipt and as going against another’s commitment to work in an environmentally friendly way.

There was also a problem with receipting – even in departments or agencies whose systems are thought to work well, there is a hold-up in this part of the process. In some, teams spend a lot of time unblocking receipts, the blogpost said. 

On a positive note, the team found no evidence that there was a delay in paying supliers once the invoice had been receipted.

However, Rooney said that, for buyers, “the systems in place often feel overwhelming. This leads to frustration and can have a negative impact on their relationship with suppliers who are struggling to get paid”.

The project also found that the way the process is handled can be a problem: “Some of the people we spoke to who are in charge of the processes tend to focus more on the practicalities of their systems, as opposed to the people who will be using them,” Rooney wrote.

“As they often told us, ‘The process is fine, it’s just the humans who are the problem’.  This clashes with the GDS design principle: ‘start with user needs’.”

The Digital Marketplace has now said it will investigate how it can help when an invoice is due on its procurement platforms G-Cloud or Digital Outcomes and Specialists, and make it simpler and faster for buyers and suppliers.

It also plans to feed invoicing data into departments’ systems, open up contract data to the wider market and look at new payment methods.

It is also working with its Australian counterpart, which is working on innovating payments to suppliers.