E-Invoicing: The search for AP/AR automation and legal compliance

By Adam Beldzik, Comarch Group

Many enterprises have already included the increase in e-invoicing rate and processes automation in their strategies. Most of them decide to hire a regional or global provider to achieve the synergy effect. This is a very good decision but currently organisations face the challenge of dynamically changing e-invoicing legislation in every country.

A few years ago, Council Directive 2010/45/EU was expected to unify the legislation regarding e-invoicing, at least within EU Member States. There were slight differences among the countries, for example the approach to obligation to Buyer’s consent or the required retention period.

But member states, like Portugal, Spain, Hungary or Poland implemented their own methods to increase the control over invoicing process to decrease the VAT gap which has been estimated in EU Member States at around EUR 151.5bn in 2015.

Beforementioned countries implemented the obligation of reporting the invoice data to tax authorities in a specific format – with each country deciding on its own requirements regarding the data format and deadlines.

The challenge for companies with subsidiaries, for instance in Hungary or Spain, is to provide the proper data content in the invoice (modifications in ERP system) to the e-invoicing/ERP provider to generate and send the proper report to tax authorities . In each country a separate approach is required to handle the types of statuses received from the tax authorities after submitting the report.

Will the 2014/55/EU Directive be the e-invoicing game-changer?

The legislation requiring public administration entities to handle structured e-invoices will, most likely, increase the e-invoicing penetration rate, as 30% to 40% enterprises (depending on the country) deliver the goods or services to these entities. The trend is to oblige the delivering entities (e.g. in France or Italy) to place only structured e-invoices. But the challenge for international companies is to handle the interface with governmental platforms (like Chorus in France) – thus PEPPOL should be EU-widely used.

Using Italy as an example, from B2G e-invoicing to B2B tax control being almost there, we can expect the trend that more and more EU countries will follow and implement the B2B or B2C exchange of invoices via the governmental servers to have a better tax control .

Designed to reduce errors and prevent VAT fraud, the mandatory electronic invoicing will be extended to all economic operators in Italy with the 1th of January 2019 deadline. However, for taxpayers operating in certain business sectors, the compulsory e-invoicing regime will be effective starting from the following dates:

  • 1 July 2018 for B2B supplies of gasoline or diesel fuel intended for use as motor fuel and for services rendered by subcontractors under a contract the PA
  • 1 September 2018 for invoices issued to non-EU consumers of tax free shopping (amount above EUR 155),
  • 1 January 2019 for all other transactions between individuals.

What about global business?

Companies having business partners worldwide cannot focus on EU states only. The “old fashioned” ways like paper or e-mailed PDFs should still be handled via OCR technology ( Accounts Payable ) or with postal partners ( Accounts Receivable ) to handle the 100% invoicing process worldwide. Depending on an individual company’s approach to e-invoicing, it is highly recommended to choose a provider with wide scope of functionalities offered and is able to cover the legal compliance issues.

In case you have already made up your mind on e-invoicing strategy, remember that sooner or later the buzz words like machine learning, robot process automation (RPA) or artificial intelligence (AI) will become reality. Your company needs to think about them in advance in order to implement the best optimization programme available.

Adam is a Director of the E-INVOICING Business Unit in Comarch Group