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Organisations with international supply chains need to implement Accounts Receivable automation software in order to comply with global eInvoicing mandates.
Billentis*, predicts that the volume of electronically transmitted and automated processed invoices will quadruple by 2035. In addition, this is supported by the enactment of eInvoice legislation by governments and public sector organisations across the globe.
This blog dives deeper into why this is occurring and how the automation of the Accounts Receivable (AR) function can help organisations stay on top of this significant change.
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Stay on top of changing regulatory compliance with Accounts Receivable automation software
In this article, you’ll learn about:
eInvoicing to close the VAT gap
Why is it happening? As mentioned above, there has been a growing need for organisations to comply with eInvoicing regulations introduced by governing bodies around the globe.
A key reason for this new legislation is to close the VAT gap. This is the difference between VAT revenue forecasts and what is actually collected. In fact, in Europe alone, the annual VAT gap was reportedly ~€93 billion in 2020.**
Legislation and requirements across countries can vary, which means organisations might need to follow a range of different eInvoicing protocols. However, governing bodies and service providers are increasingly working together to enable interoperability via standardised frameworks. This is especially the case for countries and regions across the European Union, where distinctions are disappearing and making way for an EU-wide standard. We explain further below…
International invoice requirements
To better understand the situation at hand, it is best to explore cases where this is occurring. We run through the recent developments across the globe below…
UK
The UK government implemented an EU directive on eInvoicing in public procurement. It requires contracting authorities and suppliers to comply with an EU technical standard.
Even among private business transactions in the UK, the electronic submission of VAT is increasing as trading partners respond to greater regulation.
Mainland Europe
Spain: Following several years of discussion, in September 2022 the Spanish Congress announced plans to introduce a country-wide eInvoice requirement for B2B transactions applicable to all Spanish organisations. The mandate forms part of the “Crea y Crece” (Creation and Growth) law. This will be implemented once enshrined in a Royal Decree – following the review and analysis of suggestions from affected companies and service providers (deadline 10th July 2023). Once announced, organisations with revenue above 8 EUR million will have 12 months to comply, and others will have 24 months. The mandate includes requirements related to the issuance and receipt of eInvoices, provision of invoice status information, and archiving.
Germany: Since November 2022, all suppliers to public authorities (B2G) have been mandated to issue eInvoices. This is due to be expanded to B2B transactions from January 2025. This announcement stems from the same motivations as France and Spain’s eInvoice mandates, regarding the closure of the VAT gap. The implementation will follow a phased process, to initially mandate the issuance of eInvoices and subsequently e-reporting to the government.
Norway: eInvoicing is mandated for companies that supply public/governmental entities (B2G). This can be adhered to via a Peppol connection.
Denmark and Sweden: Both countries operate systems of ensuring ‘Integrity and Authenticity’ (I&A). This begins from the issuance of an invoice through to the end of a mandated storage period. For example, in Denmark I&A can be established through an audit trail. This is based on business controls which link the processing of the invoice with the supply of the good or service. Denmark is also in the process of implementing a new Bookkeeping Act to make eInvoicing capabilities mandatory. Organisations that are obligated to comply with this new regulation are determined by annual turnover.
Finland: Since April 2021, eInvoicing is mandated for government entities in line with the EU’s technical standard. Since April 2022, all Finnish companies with turnovers above €10,000 have had a legal right to receive a structured eInvoice from their suppliers upon request.
South America
Brazil: The Brazilian government tax authority requires invoices to be issued before goods are shipped. The authority sends the signed invoice back to the supplier and checks that the goods or services have indeed been shipped or supplied following invoicing. Brazil has seen a $58 billion uplift in tax revenue by moving away from conventional paper-based invoicing models.
Chile, Mexico and Columbia: Have all reduced their VAT gaps by up to 50% through eInvoicing mandates.
eInvoicing regulations summary
Furthermore, here is an overview of some European countries that have announced the implementation of eInvoicing…
| Country | B2G/B2B/B2C | Year implemented |
|---|---|---|
| Austria | B2G | 2014 |
| Belgium | B2G | 2022-23 |
| Croatia | B2G | 2019 |
| Denmark | B2G, B2B | 2005, TBA |
| France | B2G, domestic B2B & B2C | 2017-20, 2024-26 |
| Germany | B2G & B2B | 2020-24 |
| Greece | All | 2020-2021 |
| Hungary | All domestic | 2020 |
| Italy | B2G, B2B & domestic B2C | 2015, 2019-2022 |
| Norway | B2G | 2019 |
| Poland | B2G & B2B | 2024 |
| Portugal | B2G | 2021 |
| Spain | B2G, B2B | 2015, 2023-2025 |
| Sweden | B2G | 2019 |
| Turkey | B2B, B2G | 2014, 2021 |
Across the globe, countries are realising the benefits of eInvoicing. Hence, it is essential for businesses with international supply chains to implement Accounts Receivable automation software for more compliance and efficiency.
Compliant invoicing solution
Here at Transalis we have our own Accounts Receivable automation software, called Transalis AR Automation.
This solution digitises the Accounts Receivable processing across the entire trading network, ensuring compliance with eInvoice mandates.
At Transalis, we provide total price transparency and flexibility. Our prices start from £3,999 per annum. Plus, to ensure you are meeting your exact requirements, you can even use our calculator. Simply select the features that suits your needs, and then you’ll be given the total cost. Alternatively, you can speak to our friendly team.
eInvoice Software
AR Automation
Scalable digital compliance for outbound invoice processes. Build the ideal solution for your AR team.
AP Automation
Convert & integrate inbound files with 60-80% ROI. Ideal for AP teams manually processing 2,000+ invoices per month.
Ensure compliance with AR automation. To learn more, contact us at 0845 123 3746 (UK callers) or +44 1978 369 343 (international callers), or email our Customer Success team via sales@transalis.com.