Practical guide on preparing for e-invoicing regulations
How to prepare for European e-invoicing regulations? Make sure that you have sufficient invoicing systems but also knowledge to meet the future needs.
October 17, 2023 |
6 minute reading time
If your company is still issuing and receiving invoices in PDF or paper format and you are operating in Europe, this is a must-read for you. Significant changes are needed as new e-invoicing mandates are under way in many countries. In this article, we’ll take a practical look at the topic and what the changes mean for companies. Furthermore, we will discuss how this “necessary evil” can be turned into an opportunity to automate and digitalize your company’s processes.
A mandate is basically a formal order from the authorities to do something. In the case of e-invoicing mandates, this means that invoicing is required to be managed electronically by all companies operating within the mandate scope.
A mandate will require at least:
A certain format for e-invoices
The company’s outbound invoices should be generated in a predefined XML format. The invoices should meet the minimum data content requirements, and the validation criteria defined in the mandate specifications. These are largely based on the European norm although some country specific differences do apply.
Ability to receive e-invoices
Companies also need to be able to receive and process these electronic invoices coming from their suppliers. E.g. in Belgium and France all companies will need to be able to receive e-invoices starting from July 2024, while only the largest companies are required to start the issuing at this time. This means, not only accounts receivable, but also accounts payable processes are very much impacted.
Possible additional requirements:
Delivery to national e-invoicing platform
Once the e-invoices have been created according to the requirements, they are likely required to be delivered to a national e-invoicing platform, which usually is managed by the tax authority. The details of the delivery process and technical integrations between the three parties (supplier, buyer and tax authority) depend on the mandate model. In some cases, like in Italy and Poland, also the invoice delivery to receiver is managed via the same government platform.
Sending and receiving status messages
In addition to new invoice delivery requirements, companies might also need to be able to send and receive invoice status messages (reception acknowledgements, rejection notifications, and even payment info).
Electronic signing and archive
Depending on the e-invoicing mandate details, the e-invoice may need to be signed and archived electronically in a certain way.
How to get started with invoicing digitalization
The first thing every company operating in Europe should do, is to evaluate the potential impact of mandates. Start by checking the existing and forthcoming mandates and countries where you have currently operations and countries where you possibly will have operations in the future.
After this, the technical capabilities in each country should be evaluated. For example, verify if your company’s country unit is issuing and receiving e-invoices. The next step is to do a gap analysis between the current e-invoice data contents and the EU norm, and if the company’s accounts payable is able to receive and process e-invoices.
Another extremely important aspect to consider is the availability of skilled resources within the company. It is good to keep in mind that an e-invoicing project not only impacts the Accounts Receivable and Accounts Payable processes and tools, but also ERP, accounting, procurement system and master data can be affected.
If your business has a country unit managing only PDF or paper invoices and the company lacks experienced personnel, there is still plenty to do. Preparations should be started as soon as possible.
In summary, start preparing for future e-invoicing regulations in Europe by
mapping forthcoming mandates and locations of both current and planned own operation,
checking if business entities are already issuing e-invoices and a gap analysis against the EU norm,
checking if accounts payable is able to receive e-invoices,
ensuring you have sufficient skills and resources in your company, also outside financial operations.
If the outcome of your analysis is that there is a need for actions, Heeros team can support you. Our experts help in defining any possible gaps for complying with the mandate requirements, the scope of needed changes in the systems and integrations that best fit your business needs.
If your business has both AR and AP sides covered – with existing e-invoicing capability – and you have personnel that have already previous experience from managing e-invoicing mandate changes in some country, you are on a right track. Check the capabilities and support for the forthcoming mandates of your current e-invoicing provider and if yes, clarify what add-on service is needed and what kind of project is expected. However, if your existing provider cannot support you with the mandates, then you should look for a partner that can do this.
The right partner will help you develop e-invoicing beyond individual mandates
No vendor has a fully ready service for these upcoming mandates and completely new e-invoicing model. This despite the prevalence of e-invoicing mandates around the world. That’s because a lot of changes are often done until the last moment by the local authorities. It helps if there is a voluntary model running well before e-invoicing is made mandatory, but it is not always the case.
In other words, companies are aiming at a moving target which further increases the distress of financial administration leaders. So, instead of waiting until the last moment, the preparations for the forthcoming change should start as soon as possible with making sure the basic capabilities are in place. If you build the capabilities for your business in that way, it will help you meet any upcoming regulations.
There's a possibility to seize competitive advantage by acting quickly and taking a more holistic approach beyond individual mandates.
Furthermore, a mandate should be seen as an opportunity to automate and digitalize your company’s invoicing and financial processes. By not only doing the minimum for complying with the mandate requirements and instead taking a more holistic approach, an e-invoicing mandate can be turned from a threat to an opportunity. Improved AP and AR automation and increased efficiency can help your company to be more agile and even ahead of competition.
Hence, we recommend looking for a partner that is committed and reliable but also flexible. In the midst of changes, ability to act quickly with enough resources is important. That also includes the access to partners that can support with ERP side. At Heeros, we collaborate closely with OpenText.
In summary, make sure your partner
is flexible and reliable
has experience and resources to act quickly
has extended capabilities with ERP through partner network or collaboration
Next step is to get in touch with Heeros team, that can offer you just that.