Who’d have thought the humble invoice was a superhero? Yet, slip a digital cloak on it and it becomes the scourge of tax fraud. Governments worldwide have recognized this; today there are more than 50 e-Invoicing mandates worldwide, and many more coming into force over the next few years.
The day is fast approaching when, if a manufacturer doesn’t have an effective and compliant enterprise e-Invoicing solution, it will be extremely challenging to continue conducting business – and may not be possible at all in some countries and regions. If this sounds alarmist, it’s worth noting that Italy has already imposed mandates that all business-to-government and business-to-business invoices be digital.
The VAT gap – the difference between what a country is owed in tax and what it receives – can stand at more than 30% in some areas of the world. During the pandemic, the EU VAT gap grew to €164 billion. Yet the EU reports it has been able to reduce its gap by 10% over the last decade. With revenues stretched, it’s no leap to assume governments will double down on their attempts to use e-Invoicing as a fiscal weapon.
The complex global environment for e-Invoicing
Today, the world’s top manufacturing hubs are in a state of flux. Normal economic changes have been exacerbated by the fall-out of the pandemic. The supply chain vulnerabilities it exposed have made every manufacturer re-consider the resilience of its operations and markets. While manufacturers still readily engage with major hubs, re-shoring and near-shoring are growing trends, which are likely to accelerate as companies look to establish supply chains that are shorter, simpler and more sustainable.
Against this backdrop, effective e-Invoicing – especially for global manufacturers – becomes a major challenge. The amount of regulations and mandates continue to rise but is not being mirrored by a growth in common formats or standards. In the current environment, almost every country and region interprets e-Invoicing in a slightly different way and stipulates different formats and standards.
Recently, I was talking with a representative from a large European manufacturer that was working to create a single e-Invoicing platform. I was struck by not just the many different ways the company currently trades with partners, but also the number of different e-Invoicing standards and iterations of the same standard it has to support.
Compliant E-Invoicing for Global Manufacturing
Most large and global manufacturers have implemented what could be described as ‘first generation’ e-Invoicing. This is a series of point solutions addressing electronic trading on a market-by-market or even a customer-by-customer basis. Given the complexity already involved in global e-Invoicing and the need for modern manufacturers to be fast, agile and resilient, the limitations of this approach are very clear.
The success of governments using e-Invoicing to tackle tax fraud and close the VAT gap will see the rapid growth of compulsory e-Invoicing mandates. E-Invoicing reduces operating costs and increases efficiency. With improved cashflow, better supplier relationships and global regulatory compliance, it’s easy to see why e-Invoicing really is the superhero of the business document world.
Learn more about how the E-Invoicing compliance solution from OpenText™ provides companies with a single, global enterprise e-Invoicing platform to facilitate trading with its community of partners and suppliers worldwide.
