E-invoicing soars, with potential to improve fiscal transparency – survey
The market for electronic billing and invoicing is set to grow annually by 10-20 per cent, with 2016 volumes reaching around 30 billion invoices globally, according to a recent e-invoicing report.
Several broad trends emerged from the report, including the role that digitisation can play in error handling, regulatory development that will change invoicing in Europe and the increasing use of e-invoices in creating a transparent fiscal environment.
Scandinavia and Latin America lead the way
Billentis's Market Report 2016: E-Invoicing/E-Billing also highlights how the uptake of electronic forms of invoicing and billing varies greatly around the world, with strikingly different levels of maturity in different countries and regions. In the graph below, Billentis shows that Scandinavia and some central and south American countries – Chile, Brazil and Mexico – are leading the way when it comes to market maturity for electronic invoices/bills.
A new EU invoicing landscape
The regulatory environment in the EU is set to change. Directives 2014/24/EU and 2014/55/EU were introduced in 2014 and Billentis estimates that more than 100,000 public administrations in EU member states will be affected by 2018. The modernisation of the EU's public administration e-procurement and e-invoicing practices will force the public sector to support e-invoicing standards and automated processing, as well as adopting electronic procurement procedures. Bruno Koch, author of the Billentis report, writes: “Although the obligation is valid just for the public sector it is obvious that it will have a major impact on the public sector as well as on all suppliers to the public sector.”
Digitisation is not enough
Next-generation technologies will also change invoicing, in particular Billentis found that companies will be moving more invoice activity onto Cloud-based applications and allow more functionality on mobile devices. “Cloud computing allows scalability and adjustable costs per transaction, while mobile devices enable employees to work more easily away from traditional office environments, as well as providing a new form of interaction between people and machines.”
While most western businesses and governments have legacy paper-based processes and systems, there is incremental change to adopt digital processes. But some countries are choosing to take a more sweeping approach: “A number of Latin American and Asian countries are instead developing disruptive models that are optimised for a fully digital world on a broad scale. These developments on a national level also make sense on a company level. The time is right to critically question the use of traditional models and shift to disruptive technologies.”
However, the report also notes that the digitisation of invoices alone will not be sufficient for achieving “zero-touch and automated invoice processing”. Poor data quality is still a considerable barrier to the automated processing of invoices, meaning that most organisations still have a high proportion of exception handling. Koch writes: “Inaccurate information in B2B invoices is a major reason for payment delays.”
Invoices and tax transparency
The report also outlines the case for pushing invoices to the fore when it comes to auditing: “it is the invoice that provides the most complete information for tax authorities.” It suggests that in future authorities, where possible, will require companies to use e-invoicing only and for e-invoices to be shared with tax authorities. The emphasis is also on sharing the documents with authorities in near real-time, hence the concept of the 'real-time audit'. “All data of fiscal relevance will be reported to the tax authorities electronically in the future. Real-time or near real-time audits will become a matter of course,” writes Koch. He adds: “Most countries in Latin America, as well as some in Asia and Southern Europe (Portugal, and Spain from 2017) are forerunners with respect to this development.”
Trends and changes ahead
The report also identifies these key topics for the next two years:
- Many new government initiatives resulting in B2B and B2G e-invoicing, e-reporting and e-auditing requirements are forcing large international invoice issuers in particular to act.
- The business models and IT systems of most organisations evolved in decades characterised by the use of paper-based processes. Businesses are required to become more agile. They are recommended to replace their traditional models with disruptive innovations and to re-engineer the processes.
- Pure e-invoicing services are no longer sufficient. The demand to support additional documents, processes and value added services is increasing substantially.
- Accurate data build is the pre-requisite for automated processing of invoices and other business documents. Improving the data accuracy is also increasingly required to be fully tax compliant.
Survey on e-invoicing developments
Amid these trends and developments, the Euro Retail Payments Board, which was set up by the European Central Bank to replace the SEPA Council, has launched a survey on e-invoicing and e-bill payment solutions. The aim of the survey is to get a better overview of existing or planned solutions as well as barriers that may prevent the development of pan-European e-invoicing solutions.
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