Get Your Invoice-to-Cash Operation Ready for E-Invoicing

As we covered in our first blog post on e-invoicing, every business must get to work to develop a comprehensive e-invoicing strategy. Those who fail to do this risk increasing Days Sales Outstanding (DSO) and can even be prevented from doing business in certain countries.

But what exactly does this mean for your invoice-to-cash processes, especially if you can’t predict which countries your organization might expand into?

Many organizations have already made process adjustments to continue doing business in countries with these requirements. The problem is that they’re relying on traditional, short-term approaches that aren’t resilient to the many complex and dynamic aspects of the e-invoicing global landscape.

How can your business modernize its e-invoicing strategy so it’s resilient, sustainable, and scalable?

To develop an e-invoicing strategy that takes your business into the future, it’s important to look at how we got to where we are today. While electronic invoicing goes back to 1965, the e-invoicing global phenomenon didn’t start until 2001, when e-invoicing was leveraged in LATAM economies. EU countries jumped on board soon after. In 2008, the Pan-European Public Procurement Online (PEPPOL) model was adopted, which set standards for cross-border electronic data communication.

In 2014, Italy became the first European country to mandate e-invoicing in business-to-government (B2G) transactions. This was to reduce the “VAT gap” when tax authorities realized they weren’t collecting anything close to what they were due in value-added taxes (VAT) due to tax errors and fraud. Soon, e-invoicing mandates for B2G transactions started being implemented across Europe and were expanded to include business-to-business (B2B) transactions.

Here’s a snapshot of what the e-invoicing landscape looks like today:

• More than 80 countries in the EU, LATAM, APAC, the Middle East, and Africa have B2G and B2B e-invoicing mandates in place.

• There are OpenPeppol members in 40 countries, including some in Europe, Australia, Canada, China, and the US.

• Approximately 50 countries have announced plans to implement new or additional mandates for both B2G and B2B transactions. 

Businesses need only look at the exponential growth of e-invoicing to see that this phenomenon has become the way of the world and it will continue to expand and evolve. What’s more, nothing is getting simpler, as the rules around e-invoicing keep changing. Only last May, the Council of the EU published a new set of VAT protocols as part of its VAT in the Digital Age (ViDA) proposal.

But there’s another theme surfacing that all businesses must take seriously. In their quest for improved efficiency, governments are seeking quicker and more direct access to invoicing data. The way many tax authorities look at it, the more transparent the data is, the better. As a result, they’re choosing from a varied menu of e-invoicing protocols.

For example, some tax authorities have adopted real-time reporting requirements in which a vendor electronically transmits VAT data directly to the tax authority. Some require businesses to receive a QR code from a tax authority before it can invoice a customer. Others send the invoice directly to the customer.

This makes the challenges for businesses needing to remain compliant even bigger and more complex. After all, few IT departments can keep up with these whiplashing changes, and the learning curve that comes with mastering mandates of new countries coming online is incredibly steep.

Until now, businesses have been scrambling to keep up with mandates by addressing them in a piecemeal, country-by-country fashion. But this methodology is simply no longer tenable. Consider a company that does business in 25 countries. It might have been manageable in the past when only a few of those countries were mandating protocols. But what if 20 of those countries are now mandating e-invoicing? Setting up a different invoice-to-cash operation for each one would be nearly impossible. 

These challenges are made even more difficult when invoice-to-cash processes aren’t fully automated and teams rely on inefficient, manual methods. At a time when businesses are trying to shorten DSO, sticking with outdated systems is clearly counterproductive.

There’s only one conclusion that companies can arrive at: They must pivot away from traditional approaches and embrace a centralized, sustainable, and scalable e-invoicing-readiness strategy.

The shift to a fully digitized and centralized, invoice-to-cash e-invoicing strategy may seem intimidating, but it needn’t be. There are many third-party resources that can help businesses navigate this journey, and companies can experience huge payoffs on the other side, since they can reap the same kinds of benefits as governments do from digitizing and automating processes.

Making your invoice-to-cash operation e-invoicing-ready translates into positive business outcomes. Here’s what that can look like:

• Your business will be resilient to changes happening globally, across the e-invoicing landscape.

• You gain unprecedented efficiencies and visibility that speed up payments, increase cash flow, and improve the customer experience.

• You’re assured of remaining tax and e-invoice-compliant when doing business in EU countries.

• Your teams are freed up to focus on value-added, strategic decision-making so retention isn’t as big of a challenge.

• Your business can scale quickly, using the most efficient use of resources. 

One thing that’s becoming more and more clear is that modernizing e-invoicing strategies requires expertise that goes beyond what companies have in house. So, to move forward with confidence, businesses should partner with a solutions provider that specializes in the many different facets of e-invoicing compliance.

BlackLine eInvoicing & Payments accelerates is designed to keep track of all processes from invoice generation to delivery status — enabling automation and AI-powered features — so you’re ready to meet all requirements, regardless of which countries you’re doing business in. What’s more, we have a vast network of international partnerships, ensuring seamless compliance in any geography.

The benefits of embracing a sustainable, comprehensive e-invoicing strategy go far beyond simply ensuring that your invoice-to-cash processes comply with global standards. It gives your business a chance to seize control of invoice-to-cash processes, improve the buyer-seller relationship, and grow your business with maximum impact.