E-invoicing mandates and the need for new skills in finance departments

As e-invoicing becomes the default method of invoicing, it introduces new challenges and demands new skills within financial administration departments. This blog post explores the e-invoicing mandates, their impact on various financial processes, and the evolving skill requirements for financial personnel to navigate this complex landscape effectively.

Understanding e-invoicing mandates

E-invoicing mandates are regulatory requirements that compel businesses to generate, transmit, and store invoices electronically. These mandates are part of a broader effort by governments worldwide to enhance tax compliance, reduce fraud, and streamline business transactions. By digitizing the invoicing process, authorities can more easily monitor and verify business activities, ensuring accurate tax reporting and reducing the administrative burden on businesses.

Impact on financial processes

Accounting

E-invoicing mandates necessitate changes in accounting processes. Traditional paper-based invoices and manual data entry are replaced by automated systems that generate and process electronic invoices. This shift enhances accuracy and efficiency, reducing the risk of errors and discrepancies. However, it also may require accountants to become proficient in using e-invoicing platforms and understanding the associated compliance requirements.

Invoicing

Invoicing processes are directly affected by e-invoicing mandates as companies must ensure that their invoicing systems are capable of generating compliant electronic invoices. This often involves integrating e-invoicing solutions with existing enterprise resource planning (ERP) systems and ensuring that all invoice data meets the mandated standards. Invoicing personnel need to be adept at managing these systems and troubleshooting any issues that arise during the invoicing process.

Accounts receivable (AR)

The AR function experiences a significant transformation with e-invoicing. Electronic invoices facilitate faster processing and payment, improving cash flow and reducing the days sales outstanding. However, AR personnel must be able to interpret and resolve possible validation errors, manage invoice disputes, and ensure that all invoices comply with various national and international standards.

Archiving

E-invoicing mandates often include specific requirements for electronic archiving. Businesses must ensure that their e-invoices are stored securely and are easily retrievable for audit purposes. This requires robust digital archiving solutions and an understanding of the legal requirements for document retention in different jurisdictions.

Practical implications of e-invoicing

In practice, e-invoicing mandates mean that electronic invoicing becomes the default way of conducting business transactions. While this shift offers numerous benefits, it also makes the invoicing process prone to systematic and tech-related errors. Therefore, financial administration personnel must develop new skills to handle these errors effectively and ensure that e-invoices are processed correctly.

The need for new skills in financial administration

As e-invoicing becomes business-critical, financial administration departments must adapt to new roles and responsibilities. The following skills and knowledge areas are essential for navigating the complexities of e-invoicing mandates:

Compliance knowledge. Financial personnel must have a basic understanding of e-invoicing mandates and compliance requirements. This includes staying updated on regulatory changes and understanding how these changes impact the company's operations. For example, if a new requirement is implemented in a specific country, someone within the organization must evaluate its implications and ensure compliance.

Technical know-how. Technical proficiency is crucial for managing e-invoicing systems. Financial personnel should understand document flow processes, XML formatting, and system integrations. For instance, if a new mandatory data element is required for invoices in a specific country, personnel must know how to include it in the invoice data, often involving multiple systems and services.

Data format requirements and error management. Understanding technical and business data requirements is vital for creating accurate e-invoices. Personnel must be skilled in managing and enriching data, handling validations, and resolving errors. For example, if invoice validations fail due to discount errors, AR clerks should be able to analyze the invoice XML, identify the problematic rows, and collaborate with stakeholders to resolve the issue.

Managing multiple solutions. Often no single solution can cover all e-invoicing requirements, necessitating additional services to stay compliant. Companies often use a mix of ERP systems, Invoice to Cash (I2C) solutions, e-invoicing provider portals, and tax administration platforms. When an e-invoice fails, personnel must e able to troubleshoot across these platforms:

• • ERP system: Verify invoice data generation.
  • I2C solution: Check data transfer and transformation.
  • E-invoicing provider portal: Interpret error messages and validations.
  • Tax administration portal: Confirm receipt and compliance.

The impact on internal and external roles

E-invoicing is no longer optional; it is becoming a business-critical function. Traditional workarounds such as sending invoices in PDF or paper format will cease to exist under e-invoicing mandates. This makes it imperative for companies to develop in-house expertise to manage e-invoicing processes and solve related issues promptly. Delays in resolving e-invoicing problems can negatively impact a company's cash flow, making it essential to handle these processes internally rather than outsourcing them.

For companies operating in multiple countries, the complexity of e-invoicing mandates increases exponentially. Each country may have its own set of requirements, and businesses must ensure compliance across all jurisdictions. This complexity has led to the emergence of new roles within larger corporations to manage e-invoicing processes effectively.

How larger companies handle the situation 

To navigate the complex landscape of e-invoicing mandates, large companies are creating new roles such as:

• E-Invoicing Process Owner. Responsible for overseeing the entire e-invoicing process across all regions and ensuring compliance with local mandates.
• E-Invoicing Solution Owner. Focuses on the technical aspects of e-invoicing, including system integrations and data management.
• E-Invoicing Program Manager. Manages e-invoicing projects, ensuring that each mandate is implemented correctly and evolves with regulatory changes.
• Compliance Officer. Ensures that the company adheres to all e-invoicing regulations and maintains compliance across all jurisdictions.

Large companies often also seek external help to manage e-invoicing mandates. These external resources include:

• Global E-Invoicing Partners. These partners provide expertise and solutions to ensure compliance with e-invoicing mandates.
• Multi-country ERP Support. ERP providers offer support for managing e-invoicing requirements across multiple countries, though this can be expensive.
• Big Four Consulting Support. Consulting firms like KPMG, Deloitte, EY, and PwC offer specialized services to help companies navigate e-invoicing mandates.
• Experienced E-Invoicing Project Managers. Hiring experienced project managers can help ensure the successful implementation and management of e-invoicing processes.

Challenges for SMEs

But what about smaller companies? Small and medium-sized enterprises (SMEs) face unique challenges when it comes to e-invoicing mandates. The requirements for SMEs are often the same as for larger companies, but with fewer resources and longer timelines for compliance. SMEs must develop the necessary skills and knowledge to meet these requirements, despite having limited personnel and budgets.

How Heeros can help with e-invoicing

Heeros offers knowledgeable support and domain experts to help SMEs manage their e-invoicing processes. Heeros provides a comprehensive solution that covers all aspects of e-invoicing, from invoice generation and error management to troubleshooting and data enrichment. By leveraging Heeros' expertise and solutions, you can ensure compliance with e-invoicing mandates and streamline your invoicing processes.

Conclusion

E-invoicing mandates are transforming many aspects of financial administration landscape, making it essential for SMEs to develop new skills and knowledge areas to navigate this complex environment. By understanding the impact of e-invoicing mandates on accounting, billing, AR, and archiving processes, and by developing the necessary skills in compliance knowledge, technical know-how, and data format requirements, financial administration personnel can effectively manage e-invoicing processes and ensure compliance.

As e-invoicing becomes business-critical, companies must invest in training and resources to handle these processes internally, reducing the risk of delays and negative impacts on cash flow. Leveraging external help and new tools, such as those offered by Heeros, can further enhance a company's ability to manage e-invoicing mandates and stay compliant in an increasingly digital world.