Automotive & Manufacturing

Why e-Invoicing has become a global superhero

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 Compliant E-Invoicing for Global Manufacturing from OpenText,™ which provides companies with a single, global enterprise e-Invoicing platform to facilitate trading with its community of partners and suppliers worldwide.

Tom Leeson

Tom is Industry Marketing Strategist for the Manufacturing Sector globally. An Engineer by Trade, and Mathematician by Education, Tom’s entire career has been spent in Engineering, Manufacturing and IT helping customers digitally transform their business and their manufacturing sector. With Industry 4.0 and the Industrial Internet of Things, Manufacturing lives in exciting times, so there is much to talk about.

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