More and more countries and companies are finally getting on board the eInvoicing trend. It is an important business practice that can help companies remain competitive in a global business environment.
Following up on the eInvoicing webinar we did together with our partner Jaggaer, we wanted share a summary of the main ideas discussed during the presentation. Our colleagues, Senior Consultant Borja Fontalva Cabeza and Team Lead & Service Owner Ioana Vulturar have shared some great, practical advice on how companies should approach eInvoicing.
Although many businesses are aware of the benefits of using an eInvoicing solution, it is sometimes difficult to get started. Understanding all the implications and getting people to use eInvoicing is the first goal to set.
Electronic invoicing provides a crucial role in the digitalisation of business operations. With eInvoicing, invoices become accessible to both trading partners ensuring the automation of reconciliation and faster payment process. Time saving is also an important aspect – since the whole process is monitored automatically there’s no more time spent on creating, delivering and routing invoices to the accounts payable department.
Last but not least, in a world where pollution is becoming an increasing danger to the environment, eInvoicing can help reduce waste and stationary consumption.
eInvoicing and VAT compliance is one of the most important topics to consider when implementing an eInvoicing solution and for many companies this can be a very complex process.
More than 160 countries around the globe use value added taxation, it being most commonly found in the EU.
Tax authorities control what businesses are reporting and make sure they are claiming the right VAT amounts by using 2 tax control methods: Post Audit and Clearance Model.
When talking about VAT compliance, we must note that VAT registered businesses must issue VAT invoices compliant with the local VAT rules. In most cases there is an obligation to:
Why do companies have to comply with VAT rules? There are many consequences for not complying, some of the most important ones being administrative fines, sanctions under criminal law, loss of right to deduct VAT etc.
VAT rules are decided by each country, however at the EU level these rules are being harmonised. In the EU there are certain criteria by which an invoice is considered a valid VAT invoice. These rules are contained in an EU VAT Directive.
Invoicing adoption, as well as eInvoicing requirements are at different stages throughout the globe. Whilst for some countries and regions eInvoicing is quite widely spread, for others it is still in early stages.
The pioneer in eInvoicing is LATAM. The immediate effect of eInvoice adoption, noticeable by the governments, was an increase in tax collection by 34%. LATAM has also reduced its shadow economy by 4%.
As we previously mentioned, in the EU we have the EU VAT Directive that watches over VAT compliance. In this context of einvoicing requirements, our webinar explores 2 examples from the EU, using 2 different tax control methods: Germany (Post-Audit Model) and Italy (Clearance Model).
Although the benefits of eInvoice adoption are obvious companies are still reluctant. When going through this process, they are usually faced with 2 types of challenges:
If you want to get a better understanding of the global eInvoicing landscape, understand the tax and VAT compliance implications and receive some practical instructions for eInvoice adoption, watch our “eInvoicing: Steps for a practical approach” webinar. We believe that by gaining knowledge about eInvoicing, businesses will be one step closer to adopting best practice process and making it work for their business.
© 2019 Xoomworks Ltd. All Rights Reserved