Appendix 1b
Pagero consumer impact calculations and sources
Total consumer impact: EUR 126.3m
Our methodology is guided by Harvard Business School’s Impact-Weighted Accounts (“IWA”) methodology for capturing consumer impact. Key to this methodology are “impact pathways,” the logical connection between a business activity and the change in the wellbeing of a client or consumer which is then monetized. Impact pathways are generated for each company’s product and/ or service, with company data used wherever possible and assumptions used to triangulate data and estimate monetary values.
Assumptions driving this year’s Consumer IWAs for Milarex and Pagero are more granular than last year’s pilot. We also acknowledge that there is an inherent trade-off between the accuracy and scalability of impact monetization analysis and have therefore prioritized a moderate scope of impacts and stakeholders. As impact monetization is more widely adopted and quality industry data becomes more widely available, we and other practitioners will continue to refine assumptions to increase accuracy and generate insights for strategic decisions. Appendix 1a and 1b provide a simplified overview of the calculations underpinning the monetization of impacts for Milarex and Pagero.
For Pagero, there are slight differences in how "reach" was defined between the pilot year (FY21) and this year (FY22). We expect that this year's methodology will lay the foundation for year-over-year comparisons.
Affordability impact #1: Freemium model
Free access to order-to-cash and purchase-to-pay services creates cost savings for users. Monetization captures the cost savings to consumers using freemium services on Pagero’s platform who would otherwise use an alternative platform.
Sources: Pagero
Underserved impact #1: Supporting domestic technology infrastructure
Research supports that development of domestic technology infrastructure is correlated with GDP growth. Monetization captures estimated GDP growth from Pagero e-invoicing penetration across markets.
Sources: Pagero, World Bank, Motor Intelligence, World Bank Broadband, Research and Markets, Auxis, Billentis, GlobalNewswire
Effectiveness impact #3: Cost savings to clients from reduction in DSO
Shorter days sales outstanding (DSO) enables companies to collect payment from customers sooner and therefore deploy capital more quickly. Monetization captures the cost savings for active order-to-cash clients as a result of the reduction in accounts receivable balance.
Sources: Pagero, U.S. Census Bureau, World Bank, J.P. Morgan Working Capital Index, KPMG, Supply Chain Management Review
Effectiveness impact #4: Tax recovery from VAT compliance (developed countries)
Improved VAT compliance can increase the resources that governments can deploy to provide goods and services to citizens. Monetization captures the value of a reduction in the VAT gap across Pagero’s markets.
Sources: Pagero, VATCalc, VAT gap in the EU (2021), Auxis, Billentis, GlobalNewswire
Note: Due to a lack of quality, publicly available VAT data beyond EU member states, we estimate VAT gap and VTTL figures using regional GDP for scale. Additionally, given lack of data on the size of the global e-invoicing market, we use known e-invoicing volumes for Latin America and global e-invoicing market maturity indicators (Billentis, 2019) to estimate Pagero’s e-invoice market share across countries.
Effectiveness impact #1: Cost savings in order-to-cash cycle
Access to electronic order-to-cash services generates cost savings for users who would otherwise compile and send paper invoices. Monetization captures the cost savings for users switching to Pagero’s online platform.
Sources: Pagero, European Central Bank
Effectiveness impact #2: Cost savings in purchase-to-pay cycle
Access to electronic purchase-to-pay services generates cost savings for users who would otherwise receive and settle paper invoices. Monetization captures the cost savings for users switching to Pagero’s online platform.
Sources: Pagero, European Central Bank
Effectiveness impact #4: Tax recovery from VAT compliance (emerging economies)
Improved VAT compliance can increase the resources that governments can deploy to provide goods and services to citizens. Monetization captures the value of a reduction in the VAT gap across Pagero’s markets.
Sources: Pagero, VATCalc, VAT gap in the EU (2021), Auxis, Billentis, GlobalNewswire
Note: Due to a lack of quality, publicly available VAT data beyond EU member states, we estimate VAT gap and VTTL figures using regional GDP for scale. Additionally, given lack of data on the size of the global e-invoicing market, we use known e-invoicing volumes for Latin America and global e-invoicing market maturity indicators (Billentis, 2019) to estimate Pagero’s e-invoice market share across countries.
Health and safety impact #1: Cost of data breaches
Stolen personal data frequently results in negative financial impacts for the individuals jeopardized. Monetization captures the value of stolen personally identifiable information.
Sources: Pagero, IBM Security