Pagero sets sights on Gulf, European Markets as e-invoicing demand rises

Swedish company sees e-invoicing as a catalyst for efficiency, cost savings and economic growth

Pagero, a global e-invoicing service provider, sees promising outlook for its business amid rising demand of e-invoicing in the wake of growing awareness about digitalisation and automation of businesses.

Top Pagero executives pin high hopes on Gulf, Middle East, Asian and European markets as more countries have shown their intentions to introduce e-invoicing in coming years as a catalyst for efficiency, cost savings and economic growth.

Experts estimate that, by 2025, 80 per cent of all organisations in the world will be forced, either by legislation or by requests from key business partners, to exchange invoices only electronically.

The latest Billentis report estimates that 550 billion invoices issued worldwide annually and this number is set to quadruple by 2035 despite an expected 10-20 per cent year-on-year growth in electronic invoices.

"Today, Pagero is one of the few players in the global market that can help companies with both compliance with local legal requirements and a platform built for automation - two needs that we expect will be increasingly intertwined in the future," Bengt Nilsson, Chief Executive Officer of Pagero, said.

Pagero's share is traded on Nasdaq First North Growth Market and it provides a smart business network that connects buyers and sellers for automated, compliant, and secure exchange of orders, invoices, payment instructions and other business documents.

With an open network and a wide range of value-added apps, the Swedish company helps businesses streamline their order-to-cash and purchase-to-pay processes while unlocking the full potential of accurate and reliable business data regardless of location, industry, size or systems.

Pagero Gulf business

Alex Pavel, Managing Director at Pagero, highlighted importance of e-invoicing, digitalisation and automation and said GCC is one of the emerging markets for Pagero due to rising awareness about the benefits of electronic invoicing.

He said Pagero has entered into the Gulf region by establishing its offices in Saudi Arabia and the UAE to cater to the needs of its clients seeking electronic invoicing to meet legal requirements.

"Our commitment to understanding and addressing the unique needs of our clients in the Gulf region, Pagero ensures effective coordination through our two regional offices located in Riyadh and Dubai. These offices serve as local hubs that allow us to establish closer connections with clients, respond promptly to their requirements, and stay alert to the dynamic business requirements to stay compliant in the Gulf," he said.

"Our presence in Riyadh and Dubai reinforces our dedication to providing personalised and region-specific support, ultimately enhancing the overall client experience. Pagero's solutions and services are closely aligned with the digital initiatives pioneered by governments in the region, such as The UAE Digital Government Strategy 2025 and Vision 2030 in the Kingdom of Saudi Arabia," he said.

To a question, he said governments across the Gulf are very active and serious to introduce e-invoicing in their countries in coming few years.

"Saudi Arabia and the UAE have already shared their roadmap for electronic invoicing. Qatar, Oman and Bahrain are also good potential markets and are expected to introduce e-invoicing in line with the other countries of the region," he said.

Why is e-invoicing required

Alex said governments worldwide embrace e-invoicing as a catalyst for efficiency, cost savings, and economic growth.

"By closing the tax collection gap through enhanced transparency, digital invoicing aligns with overarching goals of modernising business processes and fostering digital transformation. Standardisation of e-invoicing formats promotes interoperability, facilitating seamless communication across industries and borders," he said.

Alex said the adoption of e-invoicing in the Gulf region goes beyond regulatory compliance, offering businesses a holistic approach to improving efficiency, collecting payments faster from clients, reducing costs, enhancing cash flow management, ensuring accuracy, facilitating timely transactions, and contributing to environmental sustainability.

"Embracing e-invoicing can position Gulf businesses at the forefront of innovation and competitiveness in the rapidly evolving global business market," he said.

Environment benefits

While highlighting environmental benefits of e-invoices, Alex said paper invoices produce three times more CO2 than electronic version as almost 92 per cent of emissions come from purchased goods and services, which includes data centre web hosting services, printing customer invoices, paper envelope, stamps, shipping, and consulting costs. The remaining eight per cent consists mainly of business travel, car rentals and supplier transport.

"In 2022, Pagero's customers saved a total of 233 thousand trees and avoided 19.3 thousand tonnes of emitted carbon dioxide," he said.

"We will use only fossil-free electricity in all offices and data centres in the countries where this option is available. Pagero will phase out the use of paper invoices and go fully digital for both incoming and outgoing invoices by 2030," he said.

Business network, solutions

Elaborating the company’s smart business network and payment solutions, Alex said the core concept of Pagero is to make buying and selling easier.

"Digitalisation trends are changing the way companies and consumers want to do business, with expectations growing every day in terms of efficiency and reliability. That is why we have designed Pagero to be a cloud-first, open business network where buyers and suppliers can exchange business documents such as invoices, orders, and confirmations, in compliance with regulations set by the tax authorities in the 140+ countries where our clients do business," he said.

"At Pagero, we provide a comprehensive range of solutions that align with current industry requirements. One of our main offerings is our e-invoicing solution, empowering organisations to comply with e-invoicing regulations, streamline their invoicing processes, enhance operational efficiency, and achieve cost savings," he said.

Furthermore, he said Pagero provides solutions that expand these digitalisation efforts towards the full Purchase-to-Pay (P2P) and Order-to-Cash (O2C) processes. In addition, Pagero offers a wide range of value-added services, including e-archiving, integration with e-payment channels, business intelligence, validation, and enrichment services.

"Our ultimate goal is to establish ourselves as the world's largest smart, open business network making buying and selling easy!," he said.

P2P, O2C role

Alex said digitalisation and automation are order of the day and P2P and O2C play an important role in strategic decision making and improve operational efficiency of businesses.

"Absolutely, the digitalisation and automation of business transactions in the P2P and O2C processes are imperative for strategic decision-making in today's dynamic business. Leveraging technology to streamline these processes not only enhances operational efficiency but also provides real-time insights into critical financial transactions," he said.

By automating routine tasks, businesses can allocate resources more strategically and focus on more important activities. The data generated through digital transactions becomes a valuable asset, facilitating informed decision-making, optimising cash flow, and improving overall business agility.

"In essence, embracing digitalisation and automation in P2P and O2C processes is no longer a choice but a strategic necessity for organisations aiming to stay competitive and adaptive in the modern business environment," he said.

One connection, global reach

Alex said Pagero accurately processes data from documents and enterprise systems, validates against predefined criteria, and seamlessly connects with ERP systems, as well as tax authority platforms when required.

Electronic document exchange ensures secure, real-time communication, reducing reliance on manual processes. As a result, Pagero clients benefit from more efficient processes, improved rates of acceptance for AR invoices, faster processing of client orders, and cost savings because manual errors are reduced, he said.

"Compliance with regulations, robust exception handling, and transparent reporting contribute to increased efficiency and reliability, minimising errors and exceptions in critical business operations. Cost control and monitoring by automating AP invoice processing is another area where clients derive value from Pagero," he said.

Overall, he said valuable transaction data is made available for review and analytics in near real time, enabling businesses to become more agile in today's digital-first world, meeting client expectations and supporting strategic decision-making.

Growth journey continues

Nilsson said the company is on the right track and showed exceptional performance during the third quarter by securing trust of more business organisations.

"Pagero continued and increasing growth of 38 per cent in the third quarter of 2023. It's growth journey continued during the quarter with an increasing net sales growth of 35 per cent and we are continuing to win business in a number of industries in all of the company’s regions," he said.

He noticed that the activity level in the organisation is high despite the fact that third quarter is normally a slower quarter and characterised by a holiday period in most of the company's markets.

"The company's ARR shows a growth of 38 per cent and a NRR of 122 per cent. Our targets of SEK1.5 billion in ARR and EBITA of 20 per cent in 2025 stand firm. At the same time, the development in the quarter’s earnings shows scalability in the business model," he said.

"The company has opened an office and launched our local establishment in Japan, a market where we see great potential in the coming years. Legal requirements on digital business communication (such as e-invoicing) continue to be a very strong adoption driver for our market," he added.

Promising outlook

Nilsson sees promising outlook for the company as more countries in its area of operations are expected to introduce legal requirements for electronic invoicing next year.

"In 2024, countries such as Poland, Romania, Greece, Israel, Malaysia and others will introduce legal requirements for electronic invoicing between companies, while countries such as France and Spain have announced legal requirements that will be implemented a bit later," he said.

He said the second major market driver is automation and the efficiency improvement that digitalisation brings, thus a significant value creator for companies.

"A company that achieves 100 per cent digital management of information and automates its processes will be among tomorrow's winners. In an increasingly competitive global market, it is not a matter of data quality but simply of being a relevant supplier and ultimately of survival," he said.

Fintech is future

Alex said the outlook for fintech is highly promising, and Pagero is strategically positioned to harness its positive impact.

"As the fintech industry continues to evolve, it brings about innovative solutions that align with Pagero's commitment to transforming financial processes," he said.

He said Pagero has an active role in the fintech ecosystem by facilitating seamless and secure exchange of business documents and enabling integrations to e-payment channels for our clients.

"This synergy ensures that Pagero remains at the forefront of technological advancements in the financial landscape. Embracing fintech not only streamlines our operations but also empowers our clients to navigate a rapidly changing financial environment with cutting-edge solutions, ultimately contributing to Pagero's sustained growth and success," Alex concluded.

Pagero's environment targets

• By 2025, there should be at least 93% fossil-free electricity used in the company offices

• By 2030, the goal is to achieve 95% fossil-free electricity in offices compared to 90% in 2022

• No more paper invoices after 2030 as Pagero will go for 99 per cent digital invoicing from 90 per cent in 2022

• Increase the number of e-invoices through Pagero Network by 35 per cent annually compared to 20 per cent in 2022

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