Treasury to process all invoices electronically

This story has been updated

ATLANTA – The Treasury Department is leading a governmentwide effort to reform federal financial management through a 12-initiative program. But Treasury is doing more than just managing the effort, it’s among the first agencies to begin enjoying the fruits of change.

Treasury announced today it will implement the Internet Payment Platform (IPP), an electronic invoice processing system, by the end of fiscal 2012. It also is requiring all Treasury vendors to use the invoice portal starting in 2013.

“What we are trying to do is gain some consistency to [the invoice process] and publish an invoice standard,” said Mark Reger, deputy assistant secretary for accounting policy in Treasury’s Office of the Fiscal Assistant Secretary. Reger spoke to Federal News Radio at the annual Association of Government Accountants conference. “There would be a standard invoice that would be acceptable to every agency. This doesn’t relieve the vendor from the burden of making sure the agency has whatever they need to accept the invoice on the long end, so the acceptance process doesn’t change. It does revolutionize the invoice submission process itself.”

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Treasury expects to save $7 million a year and improve processing time by as much as 50 percent. The agency also expects vendors to receive payments more quickly, to have immediate online access to their invoice status and to be assured that Treasury received their invoices and is processing them.

Among the first Treasury offices to implement IPP will be:

  • Alcohol and Tobacco Tax and Trade Bureau
  • Bureau of Engraving and Printing
  • Bureau of Public Debt
  • Financial Crimes Enforcement Network
  • Financial Management Service
  • Inspector General
  • Treasury Inspector General for Tax Administration
  • Internal Revenue Service
  • Office of the Comptroller of the Currency
  • Office of Thrift Supervision
  • U.S. Mint
  • departmental offices

“We all like to think we are unique, and we tend to be unique, but we are unique at the margins,” Reger said. “The core processing activities of a lot of federal actions are pretty consistent.”

Several agencies already are using IPP, including the Department of the Interior, the Social Security Administration and the Forest Service.

Treasury said the Justice Department, the Executive Office of the President and the Commerce Department also are evaluating the IPP program. Treasury said IPP is available to all agencies and vendors across the government.

“What we find they are seeing is the kind of improvements we’d hope for,” Reger said. “Our independent review by an external CPA firm said that if we could implement this for 80 percent of the invoices in just 80 percent of the agencies – so now we are down to a lesser group – we could save $450 million a year over the cost of submitting invoices.”

IPP is part of a larger effort to reform federal financial management. Just more than a year ago, the Office of Management and Budget created the Office of Financial Innovation and Transformation (FIT) within Treasury’s Fiscal Service to lead this initiative.

Based upon work performed by FIT, Treasury will soon publish invoice processing data standards to submit data electronically to IPP.

Additionally, Treasury and the Defense Department are working together to identify a single-entry point for vendors to electronically submit invoices based on the governmentwide standards.

DoD has been using one such system, called Wide-Area Workflow, which is used by more than 92,000 vendors to submit more than seven-million invoices a year. The Pentagon estimated Wide-Area Workflow saves more than $250 million annually.

“We have led the federal government in using shared services,” said Mark Easton, DoD deputy chief financial officer at the AGA conference. “Through economies of scale, we are seeing significant benefits from rationalizing the number of systems and places that provide us accounting services. I think Treasury and OFIT are trying to leverage the shared services model we have shown works well.”

Along with the invoicing portal, Treasury’s Financial Innovation and Transformation Office is working on five other short term initiatives.

Reger said OFIT is trying to determine the best way to take accounting systems to the cloud.

“We have 49 instances of major accounting systems in the U.S. government being operated,” he said. “But there really are only a handful of actual systems. It’s just agencies are operating a slight variety on their systems. So far we have been successful in getting a couple of contractors to provide their services in the cloud. Then agencies can use the exact same copy of the software, use it as they want, but they don’t need to own the system to own the data.”

Reger said the goal is for every major financial systems provider to offer cloud-based services.

“We are trying to come down to a single instance, maybe not operated by the agency or even a government shared service provider,” he said.

The other initiatives will focus on intergovernmental transactions, consolidating accounts receivable, non-Treasury disbursement organizations and benchmarking of financial performance.

OMB made fixing intergovernmental transactions a focus for sometime. Reger said the government spends about $70 million a year to reconcile transactions between agencies.

“This is not as hard as we thought,” he said. “We break these into two groups. One is transactional where just by altering some definition and rules in how agencies deal with each other, we can solve 90 percent of everything, except buy-sell. Buy-sell is volumetric, millions of transactions. We need a way to do that.”

Around accounts receivable, he said Treasury is looking at pilots to see if the government can consolidate how it pays its bills into a handful of sites or into one site.

Treasury is analyzing the 35 non-Treasury disbursement organizations to see which agency no longer needs this authority.

Reger said the CFO Council took on the benchmarking effort and is developing 12 areas where agencies can compare themselves on.

“We see lots of examples by just benchmarking people against each other or benchmarking those cross service provides to agencies who are looking for services, we could find ways to lower costs,” Reger said. “You would be surprised when you tell a CFO where they rank versus another agency, how hard they will work to figure out why their costs are higher.”

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