New insights on public sector e-invoicing and e-procurement

Om e-fakturering och e-handel i offentlig sektor

The adoption of e-invoicing and e-procurement is accelerating across public administration in Europe. As governments and institutions move towards digitalization, automation, and data-driven decision-making, these technologies are critical for efficiency, transparency, and cost savings.

A recent study conducted in Sweden by DIGG, the Swedish Agency for Digital Government, offers valuable insights among municipalities, regional administrations, and central government agencies. With a response rate of 72%, the study provides insights into trends, challenges, and future needs in digital procurement and financial transaction management.

What is e-procurement?

In the Swedish public sector, e-procurement (referred to in the report as “e-handel”) is the digital handling of purchasing processes between public sector organizations and suppliers. The goal is to increase public purchasing efficiency, transparency, and control. DIGG provides this definition:

E-procurement refers to conducting the purchasing process digitally, from ordering to invoice management. It includes the use of standardized electronic messages to exchange, for example, orders, order confirmations, delivery notifications, and invoices.”

The growth of e-procurement

According to the study, e-procurement is becoming a standard practice within the public sector, driven by the need for better financial control and efficiency in large-scale purchasing.

70% of public sector organizations have implemented e-procurement, a 5 percentage point increase since the last measurement in 2021.
The adoption rate correlates with organizational size—larger entities are more likely to have fully implemented e-procurement systems.
Consumables, food supplies, IT equipment, expert reports, and healthcare-related equipment are the most common e-procurement categories.
Adoption is significantly lower in social services, personnel-related procurement, vehicle purchases, transportation, and construction projects.

Organizations utilizing e-procurement are expanding their supplier networks, sending electronic orders to an increasing number of vendors. This demonstrates a broader shift towards structured digital procurement frameworks.

E-procurement benefits

Public sector organizations overwhelmingly recognize the benefits of e-procurement. On a 5-point scale, regions and municipalities rate its value at 4.6 and 4.5, respectively, while central agencies rate it at 3.9. The most valued benefit is improved financial control, followed by enhanced efficiency and better tracking capabilities.

Additionally, the implementation of pre-approval workflows before orders are placed has increased across all levels of government, further strengthening financial governance.

E-invoicing and standardization

E-invoicing is a well-established practice in European public administration, particularly following the EU Directive 2014/55/EU mandating structured electronic invoices.

Key findings from the study:

82% of all supplier invoices received by public entities are e-invoices, maintaining the level seen in 2021.
Automated invoice posting and approval is growing—over 80% of organizations automate cost allocation, while more than 60% apply automatic approval workflows for recurring invoices such as utilities and subscriptions.
The share of outgoing e-invoices to businesses has increased from 24% to 50%, showcasing a strong upward trend in digital invoicing adoption across B2G and B2B transactions.

However, despite overall progress, some municipalities and regions still have significant gaps in e-invoicing adoption, pointing to continued challenges in full-scale implementation.

Peppol in digital transactions

Peppol, the international business messaging network, is playing an increasingly crucial role in digital financial transactions:

85% of public entities use Peppol for supplier invoices, up from 54% in the last measurement.
Adoption is lower at 58% for outgoing invoices, though this represents an increase from previous years.
The main drivers for Peppol adoption are vendor and customer requirements, legal compliance, and the need for a standardized, structured approach to e-invoicing.

The growth of Peppol highlights the importance of international interoperability and seamless digital procurement across borders.

Challenges and support needs

While progress is evident, public sector organizations still report significant challenges in advancing their e-invoicing and e-procurement capabilities.

41% of respondents indicate a need for additional support to develop digital procurement and invoicing processes further.
The most significant barriers are financial and human resources, followed by the need for education and training on digital procurement best practices.
Larger government agencies and regional administrations express the most significant demand for support, particularly in supplier communication and regulatory compliance.

Key takeaways for the future of digital procurement

The report underscores a steady shift towards fully digital and automated financial workflows in the public sector. However, several key trends and priorities have emerged:

Continued e-procurement expansion – More organizations integrate digital procurement workflows, but adoption is uneven across categories and sectors.
Greater reliance on AI and automation – Automated invoice validation, classification, and approval workflows reduce manual processing times and improve financial governance.
Interoperability and standardization – Peppol is becoming essential for seamless, cross-border e-invoicing.
Investment in resources and training – Addressing financial and knowledge gaps will be critical in ensuring full-scale adoption across all levels of government.

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