Businesses are constantly faced with new global regulations, stricter requirements and harsher fines anytime such regulations are not followed correctly. With legislations like the GDPR mandating that businesses protect the data of EU citizens otherwise incur at the very least, a penalty of up to €10 million, or 2% of the worldwide annual revenue of the prior financial year, whichever is higher. This can be a bit excruciating to your bottom line.
Many global trade partners find themselves in the crosshairs of compliance and the need to comply with strict e-invoicing requirements. This significantly increases the need for greater accountability and reliability than traditional paper-based invoices did in the past. For any business that has goods and services exchanged over the internet or even in physical stores, this e-invoicing phenomenon has proven to be quicker, more convenient and more efficient to conduct business around the clock. According to business network, organizations are required to meet government compliance regulations for sending and receiving electronic invoices. Many involve electronic invoicing and business-to-government (B2G) scenarios where governments require that invoices be submitted to the tax authority or their approved agent before being sent to customers. E-invoicing solutions eliminate the complexity of varying country regulations in global business and shield users from the risk of the increasing number of regulations impacting Procure-to-Pay and Order-to-Cash business processes.
E-invoicing in practice
e-Invoicing is a form of automation, that allows businesses to manage the exchange of the invoice document between the supplier and the buyer electronically without sacrificing attention to data and details. An e-invoice contains structured invoice data issued in Electronic Data Interchange (EDI) or XML formats. It can also be structured invoice data issued using standard internet-based web forms. Reducing processing cycles and costs associated with printing, mailing and waiting for the returned document, an e-invoice removes the manual labor and complexities associated- moving the entire invoice process online. This also minimizes the risk of fraud as well as adheres to tax requirements imposed by the government. According to this blog, the trend toward a “digital government” has shifted the emphasis away from optional to mandatory electronic tax compliance. All around the world, tax administrations are using technology more than ever before to collect and analyze more data from taxpayers, often in real-time or near real-time. Instead of being an optional “facility”, the use of e-invoicing is now a mandatory obligation in many countries, with severe penalties for non-compliance.
Ernst & Young conducted a worldwide electronic invoicing survey in 2018 that showed the following:
While paper invoicing is not going anywhere, there is a need to transition to the modern-day digital world. Companies need to embrace digital transformation and process automation as the new standard and figure out the best blueprint for their business. As Billentis states, “Digital transformation is no longer an option, it’s the imperative. It is rather the question of how to unleash the power of digitalization while maintaining a healthy business.” In the end, e-invoicing is nearly identical to traditional paper invoicing as it contains key information such as customer invoice number, shipping or service address, goods sold or service rendered, price, quantity, PO details, payment information, dates of the transaction and supplier information. The major difference with an e-invoice is that it stays with you wherever you go - whether it’s stored online in a supplier portal or cloud-based. It is more easily accessible than a paper invoice and, in most cases, is paid far quicker.
The 2017 Ardent Partners study shows that the Best-In-Class buyers only spend 3.5 days and $2.74 per invoice—all thanks to e-Invoicing software. They’re spending less time manually managing printed invoices and are, instead, automating the process with electronic invoices. On the other hand, paper-based invoice processing can cost up to $22 to process one invoice. The average buyer spends $15.02 and 12 days processing one invoice. So, where do you start? What do you do first? Quadient is the driving force behind the world’s most meaningful customer experiences. We help organizations deliver exceptional experiences through our core business lines, with Business Process Automation being one of them.
As the Digital Marketing Institute states, “Like anything in business, there are no foolproof methods to ensure total success. However, when it comes to digital transformation, the best results come from a strategic step-by-step process.” Change management can be difficult to deal with, plan for and implement properly, however, this blueprint can serve as a guide and a starting point. While it may not work in every country, every business type, or every industry and customer, it is an excellent place to start.
The world is moving towards e-invoicing, which means less manual handling and more digitalization. If you're looking to join the digital revolution, now is the time to consider partnering with a top-quality service provider. If you need assistance in getting started or expert advice on the best options for your business, get in touch with us here.