B2B Payments

Taking A Pulse On European Healthcare’s eInvoice Adoption

Government mandates have led jurisdictions like Latin America to become heavy adopters of electronic invoicing while other markets, like the U.S., still lag behind.

Europe is one market catching up to the leaders, though, as regulators look to eInvoicing to combat fraud and promote tax compliance. Initiatives like the 2006 VAT Directive 2006/112/ED and the 2010 Electronic Invoice Directive may be promoting eInvoicing adoption, but they’re adding another level of tax compliance to an already regulated market across Europe: the healthcare industry.

Global Healthcare Exchange, also known as GHX, recently announced news of a service for healthcare suppliers to be able to issue compliant eInvoices to European countries. The EU healthcare industry, GHX Vice President of Product Management Pete Nelson told PYMNTS, has had an interesting journey in terms of digitization of B2B transactions, from eInvoices to payments.

“Especially in the European market, and especially in healthcare, the migration to some sort of ACH or SWIFT payment has already occurred,” he recently told PYMNTS. “The North American healthcare market deals with ACH a bit, credit card and p-card payments and checks. But in Europe, electronic payments have been around for a significant amount of time, and eInvoicing is catching up. It’s almost the reverse of the North American market, where, at least for healthcare, North America began with the automation of POs in the Dot Com era, then moved to automation of invoicing and now, in the last decade, has really focused on payments.”

While many industries across the globe see their suppliers struggle with late payments — with delayed supplier payments an ongoing issue in Europe — the healthcare market is a bit different considering many providers are funded by the government. But because private healthcare exists across Europe, too, payment terms to suppliers can vary wildly — from 20 days, which is common across northern Europe, to as long as a year in some rare cases, Nelson explained.

But suppliers operate with an understanding that payment terms will vary, and in Europe, it’s less common for a supplier payment to be even further delayed because payment is made via paper check.

“Generally speaking — this is certainly subject to specific markets and individual trading partners — payments in Europe have been automated for a decent period of time,” he continued. “Then the market moved to eInvoices, ultimately dragging POs along with them — there are still a lot of manual purchase orders in the European healthcare market.”

Europe is an interesting case when it comes to payment terms, too.

As the industry adjusts to emerging eInvoicing regulations, Nelson explained that the healthcare space may have an opportunity to benefit from efforts among regulators to streamline processes and boost transparency in B2B transactions. While he said he can’t speak for the regulators themselves when it comes to determining the motivation behind some of these regulations, Nelson did say that there are a few objectives that are probably at play.

“Overall, there is a great desire in Europe to be more efficient from a payments point of view,” he said. ”‘Efficient’ is a very large word, but it’s about removing paper. In Europe, there aren’t really checks anymore, so it’s efficiency of cash and of visibility.”

“There is an effort to look at tax fraud,” he added, “and to look at how payments move across and inside each country. There might be other country-specific initiatives at play, where regulators want to have a central repository for all of this data, to look at [what] medical spend is doing. It’s hierarchical. It starts with looking at efficiency, then visibility by market.”

Nelson said the complexity of some of these regulations, though, could trip up some suppliers, especially as they bill their corporate customers across EU borders. The purpose of Global Healthcare Exchange’s new pan-Europe eInvoicing solution, GHX eInvoicing, aims to not only help businesses maintain compliance with EU and country-specific requirements, but to reduce friction that stems from what Nelson described as “a broad level of segmentation” when it comes to customers’ ability to actually accept electronic supplier payments.

“You have some businesses able to deal with super efficient and capable systems, ERP integrations and communication from invoice all the way to payment,” he said. “And there’s the multidimensional complexity of some of the regulations in this space. For a centralized supplier, that can be very complex, dealing with how you send invoices out across Europe.”

Keeping in mind a mix of Europe’s both private and government-funded, single-payer healthcare market, that compliance complexity can increase.

“You have different government entities tied into how you have to send out invoices,” Nelson said. “There is significant interaction from government agencies. Overall, healthcare isn’t too different from other industries, but ultimately there is a bit of a nuance when it comes to regulations in terms of how you bill governments.”

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