The Rise of E-Invoicing in the Digital Era
In the current fast-paced company environment, maintaining a competitive edge needs ongoing innovation and optimising operations. Improving invoicing can provide organisations with a competitive advantage. E-invoicing removes paper and inefficient digital invoices, providing advantages to enterprises of all scales.
E-invoicing provides substantial benefits to organisations, including enhanced productivity, cost savings, and improved connections with suppliers and consumers. Optimising your invoicing process can result in a time and cost savings of more than 60%, enabling you to reallocate resources to other company activities.
As e-invoicing becomes mandatory in more nations globally, businesses need to adopt an e-invoicing system to avoid non-compliance. Both governments and businesses can gain advantages from enhanced openness in transactions. Businesses should anticipate transitioning from conventional paper documents to digital ones.
The Journey of E-Invoicing From Papper to Digital
In order to understand the future direction of e-invoicing, it is essential to know its origins. Here are some significant events in the history of electronic invoicing.
1965 — The first electronic invoicing
The first electronic invoices were delivered nearly 50 years ago in 1965 utilising electronic data exchange (EDI).
1975 — FTP introduced
File Transfer Protocol (FTP) was created in 1975 and facilitated simple file transfer via the internet. In the 1980s, major retail and automobile manufacturing corporations started promoting the use of Electronic Data Interchange (EDI) among their suppliers.
In 2001 — Chile implemented voluntary electronic invoicing
Chile was the pioneer in implementing voluntary e-invoicing. This helped to establish further electronic invoicing systems throughout Latin America. Currently, Chile, Argentina, Brazil, Ecuador, Mexico, Peru, and Uruguay possess advanced e-invoicing systems.
Following the successful implementation of e-invoicing in Latin America, European countries adopted the practice.
2008 — Portugal implemented the SAF-T system
SAF-T system is an international standard designed to facilitate the transmission of information between tax authorities and enterprises. Portugal was the first jurisdiction to mandate that enterprises must transmit a standard audit file for tax reasons.
Today, SAF-T criteria have been mandated by legislation in seven countries: Portugal, Luxembourg, France, Austria, Poland, Lithuania, and Norway.
2008 — Implementation of PEPPOL
The Pan-European Public Procurement Online (peppol) paradigm was launched in 2008 to streamline electronic procurement internationally. The model established technology standards and accredited suppliers that were available to all European governments.
The main goal was to facilitate electronic communication between enterprises and European government institutions during the procurement process to enhance efficiency and lower expenses. OpenPeppol has members in 40 countries, including 32 European nations as well as Australia, Canada, China, Japan, Mexico, New Zealand, Singapore, and the USA.
2014 — Italy was the first European country to require e-invoicing
This event was crucial in the history of electronic invoicing. Italy mandated e-invoicing for B2G transactions to decrease the VAT gap. The decision led to a widespread e-invoicing requirement in Europe, affecting both B2G and B2B transactions.
Currently, 83 countries have implemented e-invoicing legislation. In five years, most European countries are expected to have done the same.
2017-2022 — witnessed the widespread adoption of e-invoicing and emerging technologies on a global scale.
The e-invoice has undergone significant changes since the 2000s. Authorities have devised innovative methods to digitise taxation, simplifying payment for taxpayers and increasing transparency for tax authorities. For example :
- Utilising QR codes for efficient and rapid data retrieval
- Implementing real-time reporting to improve tax collection
- The gradual replacement of the conventional VAT return with pre-filled e-returns generated from transactional data.
The Future of E-Invoicing and Beyond
The future envisions more intelligent, secure, and interconnected e-invoicing solutions with advancements such as blockchain, AI, IoT, and the growing open Peppol network. Blockchain-enabled smart contracts have the potential to transform the way business messages are utilised and transactions are carried out, guaranteeing improved security and transparency.
Several countries are transitioning from post-audit to clearing or alternative e-invoicing approaches. Poland is anticipated to use a clearing model by July 2024. In 2025, countries like Latvia and Spain are expected to adopt e-invoicing and e-reporting. Belgium, Germany, Croatia, and France, along with other countries, are currently working on introducing compulsory e-invoicing, scheduled for completion in 2026. Certain dates may be delayed, while others remain undetermined as of January 2024.
Furthermore, sustainability is a critical factor that involves minimising paper usage and implementing automated digital procedures to support worldwide eco-friendly efforts, ultimately contributing to the development of a sustainable company environment.
Embrace the Future of E-Invoicing with Kollect
The digitization of tax will extend beyond e-invoicing. Businesses must be proactive and act promptly to guarantee they can meet new standards.
Our company provides an e-invoicing solution named KeiL, which aims to streamline your company's management processes using dependable modules from Kollect. We also offer a free consultation appointment.
References
https://www.onyxcentersource.com/blogs/the-rise-of-e-invoicing-worldwide/
https://www.avalara.com/blog/en/europe/2022/11/the-e-invoicing-journey-now-and-beyond.html
https://qvalia.com/the-history-of-e-invoicing/
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