Be prepared! The future of e-invoicing mandates

As 2023 draws to a close, now is an opportune moment to consider what the next year has in store for tax professionals. And e-invoicing mandates are sure to be high on the agenda for tax jurisdictions everywhere in 2024.

Over 50 countries, including Italy and Greece, have already introduced business-to-business (B2B) e-invoicing mandates, and more are being announced on an almost daily basis. EU member states have witnessed something of a domino effect in relation to e-invoicing; Romania is the next EU country to introduce mandatory domestic B2B e-invoicing, due to come into effect on January 1 2024. Additionally, Belgium looks highly likely to follow suit later in 2024. Conversely, some other EU countries – including France and Spain – have announced a delay to their implementation of B2B e-invoicing (France has already implemented business-to-government e-invoicing).

However, any delay in implementation should not deter businesses from delaying their transition to e-invoicing. This is especially true in Germany, which will introduce e-invoicing in January 2025. There is no doubt that e-invoicing will ultimately become mandatory across all EU member states, as it already has in some regions, including in Latin America. This delay is increasing the pressure on businesses to be as prepared as possible, to ensure a smooth transition to e-invoicing that will allow all transactional processes to continue to run efficiently.

E-invoicing is not just about going paperless in a digital age; e-invoicing represents much more than this and can be seen as a fundamental shift in how businesses handle their financial transactions.

Continuous transaction controls – involving real-time validation, monitoring, and reporting of business transactions – are giving tax authorities greater capabilities to effectively combat VAT fraud and improve tax collection. This is encouraging the move to e-invoicing, enabling businesses to enhance their compliance capabilities, but also providing the added benefits of e-invoicing, which are well documented. From streamlining processes, expediting payment cycles, and accelerating cross-border trade, to improving supplier relationships, the benefits are clear. But when to start the implementation is something that businesses across the world are grappling with.

The transition to e-invoicing is happening fast, yet despite this, the process should not be rushed. Ensuring that all stakeholders – partners, employees, suppliers, and vendors – are aligned with invoicing processes, in order for interoperability to be retained, is vital. The key is time – time is needed to ensure testing can be carried out and that business-critical operations will be maintained.

However, the issue with many multinational businesses is that, historically, their approach to new tax obligations has been reactive – driven by regulatory need on a country-by-country basis – as opposed to a strategic operation that is future-proofed. The current system can often result in a web of disparate systems and solutions using misaligned data and running across overlapping software. This can be complicated for tax teams to manage and costly to continually have to update.

Being able to ensure continuous indirect tax compliance within one centralised returns and reporting platform affords businesses the streamlined processes they crave. And because regulations differ between jurisdictions, businesses will need to adopt agile systems that are capable of handling both e-invoicing and traditional invoicing, and have the capacity to scale as your business grows, coping with increased demand.

There is no escaping the fact that e-invoicing is the future. It is incumbent on forward-thinking businesses to be prepared and to plan to implement changes now to future-proof themselves.

You can read more about Vertex e-Invoicing, partnering with Pagero, here.