In recent years, e-invoicing has gained unprecedented significance due to the digitization and modernization of economic transactions.
Moreover, e-invoicing is currently required by law in many countries in various forms and schemes. This imposes a great challenge on businesses to achieve full compliance in each region they operate in. How do you stay up to date with all the regulations? Is it effective to do it on your own? Here’s what you need to know.
Before we get into the specific steps you can take to make e-invoicing legally compliant, let's explain what the term actually means. In this case, compliance with the law means acting in accordance with the rules, laws and procedures of the country or jurisdiction. The supplier or buyer acts legally when they comply with the relevant laws in their countries when sending and receiving e-invoices in many areas such as communication with a specific government platform, e-invoice exchange model, type of relationship for which it is used (B2B or B2G), format, the need to ensure the integrity of the authenticity of invoices, e.g. providing them with an electronic signature, and ensuring their storage for the period specified by law.
What’s more, there are also country-specific invoice exchange models. Canada, some European countries and some parts of Asia apply the post-audit model, while in Italy, Turkey and Latin America, e-invoicing is mandatory in the clearance model. Hungary uses real-time reporting, a hybrid of the two.
In these circumstances, maintaining legally compliant status can be difficult – especially for companies that carry out transactions internationally, both in countries where e-invoicing has already become obligatory (such as Italy, Serbia and Turkey) and places where this obligation is soon to be introduced (France, Spain, Poland, Germany, Romania and many others).
Managing legal changes in this field independently can be burdensome and ineffective. Fortunately, there is a way to exchange electronic invoices in accordance with regulations that doesn’t require constant following of ever-changing standards. But before we jump into it, take these three important things into consideration.
Examine the laws and regulations of the country in which your business operates, as different ones have distinct requirements regarding e-invoice formats and associated platforms.
Determine whether it is necessary to exchange structured invoices with any trading partners in order for them to be accepted.
Consider whether you require a specific e-invoicing platform to facilitate the document exchange process, particularly if you are trading with multiple countries.
If you’re not sure about the answers to these questions, take a closer look at the benefits of a dedicated e-invoicing solution.
First and foremost is meeting legal requirements worldwide. Using a reliable e-invoicing tool is like having a group of experts whose task is to always know what format and platform should be used to exchange documents legally. You just issue an invoice and don’t worry about what’s next.
How does compliance with regulations work in detail? With a reliable, certified document exchange platform, you can run e-invoicing processes within the territories where your clients operate (it’s essential for your provider to be, for example, a PEPPOL Access Point in countries of relevance).
It is also important to be able to integrate the e-invoicing solution with existing ERP or financial systems in a way that does not interfere with their current operation or require any unnecessary changes to them. Functionalities include the ability to add digital signatures to processed documents, when required by regulations, and to archive e-invoices for the period specified in these regulations. That’s not to mention such functionalities as document monitoring, data views, downloads and user dashboards for easy handling and performance reporting.
If your e-invoicing platform has all these features, security and increased process efficiency coupled with a short implementation process are additional business benefits. The best platform providers constantly improve their solutions based on the requirements of each client, encrypting sensitive data to prevent possible misuse and ensure seamless invoice processing.
E-invoicing via a partner platform also brings significant cost reductions and stronger business relationships with business partners. With one vendor implementing a platform worldwide, final costs are lower. Meanwhile, safe and fully transparent data exchange with all partners translates into reduced invoice processing time and faster payments for suppliers.