Rafał Mazur, Business Solution Manager at Comarch on how to approach global e-invoicing and gain maximum profit for a business, based on global companies’ experiences
With governments around the world revising tax systems and preparing to implement new national solutions, it is clear that e-invoicing will become not only a possibility but also an obligation in many countries. It is also worth pointing out that such an approach to invoicing has become a global trend, and it is predicted that mandatory e-invoicing will be dominant all over the world in less than a decade (according to Billentis reports).
In view of the above, global companies are becoming increasingly aware of the necessity of implementing changes to their invoicing systems. Imagine a situation (based on a real case study) where your company is operating in 44+ countries, sending around 400 000 invoices per year to 17 000 final business partners. With an e-invoicing system, all of this can be automatically integrated with an ERP system as a data source and status receiver. In addition, documents can be created automatically according to local legal requirements, and there will be no need for human action to deliver them to the final receiver. Compare this level of automation with traditional methods, by which invoices are created or amended manually, adjusted by hand to address local legal requirements, and finally distributed via individual emails. The workload difference, the potential for human error, and the drawn-out delivery time have an obvious impact on business operations and profit, both of which could be improved with the use of automated e-invoicing.
There are numerous reasons why governments implement mandatory e-invoicing, from making complete document flow transparent for everybody, to making the whole process easier and more accessible. The driving force behind mandatory e-invoicing, though, is that governments want to ensure VAT flows and prevent tax fraud. Looking at this picture globally, the company on which the above example is based realized how rapidly things are changing. With Latin America having a very popular clearance model for invoicing, Italy opting for mandatory e-invoicing for transactions with government institutions (similar to the system in Turkey), Portugal already implementing mandatory B2G e-invoicing, and other countries planning to make some form of e-invoicing mandatory in the B2B or B2G sectors (Denmark, France, Austria, Belgium, Spain, Sweden, Taiwan, Vietnam… and the list continues to grow), there can be no doubt that we are witnessing a global trend.
Our example company, an international manufacturer, decided to implement an e-invoicing project with a provider operating globally. The obvious question was how to adjust to - and benefit from - such implementation. The company had to become compliant with legal requirements in a number of countries with their own, varying e-invoicing regulations. In some of these countries it was enough to create a special structure file according to local e-invoicing requirements, but in others the company had to provide a certified e-signature or special identification number. Additionally, a dedicated e-invoicing communication channel with a governmental institution was required in many cases.
The need to meet the requirements of different regulations (which can change rapidly), and at the same time to avoid the need to maintain huge and costly legal department within the company was a further driver of e-invoicing implementation. The real problem emerged for the company when it became clear that there are not many global service providers on the market, and having a local provider for every country in which the company operates didn’t address the need to avoid huge workload and extra costs.
The best solution was to find a provider able to supply both global e-invoicing and EDI (Electronic Data Interchange) because it could automate invoicing process not only in countries with e-invoicing obligation but also where such an exchange is only allowed but not mandatory. Exchanging invoices and other documents in electronic format makes it possible to automate business and significantly reduce costs connected with manual processing, physical posting, printing, and human error. According to Comarch’s calculations, global electronic invoicing can be significantly cheaper in long term perspective, than processing documents manually. Rapid data exchange and immediate dispute resolution lead to faster payments, and more transparent processes for both: client and its business partner.