Local authorities face an enormous challenge to balance budgets while trying to avoid cutting services or raising charges. With central government support to single tier and county councils (STCCs) falling by 12% and district councils (DCs) by 16%, the Audit Commission has issued recommendations to local authorities to review their financial planning and management arrangements accordingly.
One way spending can be reduced with a minimal impact on the service user is by improving efficiencies.
To better understand local authority efficiency, ReadSoft recently compared financial teams to the number of invoices processed within 285 UK STCCs and DCs. This data was used to gauge how local authorities rank against a standard corporate benchmark where a top performer would exhibit a cost per invoice of less than 79p, and a non-top performer would show costs of greater than £2.41 per invoice processed.
The research indicated the important role the finance department plays in the annual operations of these STCCs and DCs, with more than 21 million invoices being processed per year. But on average UK local government is still spending £2.61 per processed invoice above the industry benchmark cost.
Invoice processing represents the major function for ensuring successful cash flow within authorities and should be viewed as critical for accurate and meaningful budgetary decision making. Unfortunately the data suggests that only a small number of authorities demonstrate high levels of efficiency. Only 7.4% of local authorities actually achieve cost per invoice at sub 79p. The UK’s 404 STCCs and GCs process an estimated 30.6 million invoices, and with the application of improved efficiency within the invoice processing function alone would represent a total potential reduction in costs of close to £80m which need not be cut from frontline public services.
Faced with tightened budget, local authorities need to consider how to adopt technology to help drive these efficiencies without the capital expenditure. For once, the timing could not be better, as local authorities have the chance to deploy cloud computing based variants of invoice and document processing with low to no cost set up. These fully scalable opex offerings represent a real world alternative for STCCs and DCs struggling with traditional, costly manual invoice management.
ReadSoft Online is a cloud-based AP automation service. With all invoices immediately made available on the internet, straight-through processing can help local government to minimise manual work and improve cash-flow. With ReadSoft automation in place, not only will local authorities see immediate savings, but there are considerable implications for the AP staff. At a time when frontline services are massively threatened, drawing council staff from other, more forward looking service delivery activities to support AP drudgery is simply unacceptable.
Click to watch a short video explaining how ReadSoft Online can enhance government and local council invoice processing in the cloud.