E-invoicing. E-reporting. E-volving: A global perspective

The global adoption of e-invoicing

Governments around the world are recognizing the benefits of e-invoicing. Some Latin American countries, such as Brazil, have long been pioneers in this space, demonstrating better tax collection. Currently, more than 60 countries worldwide have implemented or are in the process of implementing digital reporting obligations. On e-invoicing specifically in Europe, Italy led the way, with other countries, such as Poland, France, and Belgium, set to join by 2026. In the Asia-Pacific region, countries such as India, Malaysia, and Taiwan have also fully embraced e-invoicing.

Challenges in e-invoicing implementation

Despite its advantages, e-invoicing may also present several challenges for organizations:

• Lack of harmonization – Different countries have varying e-invoicing and reporting requirements, leading to a complex and evolving regulatory landscape.
• Cross-functional impact – E-invoicing affects multiple functions within a company, including finance, tax, vendor and customer relations, accounts payable (AP), accounts receivable (AR), and IT. Coordinating these stakeholders toward a unified strategy can be challenging.
• Increased tax compliance scrutiny – E-invoicing enables tax authorities to detect noncompliance more efficiently, leading to automated audits and penalties. It is therefore key for organizations to update current compliance processes to allow these to benefit fully from the e-invoicing data and processes.
• Data inconsistency – Inconsistent and poor-quality data from multiple sources and systems as well as sub-par tax determination can hinder compliance with e-invoicing and reporting obligations.
• Tariffs and cost management – Tariffs affect the cost of goods and services in international trade. E-invoicing can help businesses manage these costs more effectively by providing real-time data on transactions, enabling better decision-making and cost management. Accurate e-invoicing data can also facilitate compliance with customs regulations and reduce the risk of penalties.

Strategic considerations for e-invoicing

Many organizations will need to develop a comprehensive strategy to address e-invoicing. Here are some key considerations:

• Develop a clear strategy – We recommend that companies recognize the growing complexity and scale of e-invoicing as leveraged synergies. A well-defined strategy should consider whether to adopt a global provider, use point-to-point solutions, or opt for a hybrid model.

• Consider both outbound and inbound invoicing – The strategy should account for the impact on both outbound and inbound invoices, as formats and rules can vary by country. In some business conversations, the AP discussion does not get enough focus, although it is also important that a business can properly receive and accept e-invoices. In this context some countries have introduced additional requirements regarding self e-invoice, acknowledgment of receipt, and reception of goods and services.

• Clean up data – High-quality data and proper tax determination is crucial for compliance and to withstand increased audit activity. Companies should reconcile their data with other tax reports and processes, or integrate their process, allowing reconciliation to be a straight-forward control.

• Leverage technology solutions – The market offers various technology solutions, including those from major ERP systems and specialized tax technology companies. Companies should evaluate these solutions based on their specific needs and regulatory requirements.

The future of e-invoicing

Current and announced regulations seem to indicate that by 2030, e-invoicing will become the standard model for invoicing globally. Tax authorities are increasingly collaborating and sharing information across borders to ensure compliance. This trend underscores the importance for companies to stay ahead of the regulatory landscape and prepare for the impending wave of e-invoicing obligations. If e-invoicing is even more widely adopted and covers all in-coming and outgoing transactions of a company, it may be the ideal source for indirect tax compliance turning it into a mere controlling activity, potentially making the preparation and filing of indirect tax returns obsolete.

Conclusion

E-invoicing and e-reporting are transforming the way many businesses handle indirect tax compliance. While the journey toward implementation can be challenging, a well-thought-out strategy, high-quality data, and the appropriate technology solutions can help organizations navigate this complex landscape and help future-proof business processes. By embracing e-invoicing as a value driver, companies can not only drive better compliance but also generate internal transformation and efficiency.