e-Invoicing: get ready for the new rules
We live in the ‘Internet Age’, the ‘Information Age’, a ‘Connected World’, on a ‘Small Planet’.
In our offices, we’re surrounded by technology that makes our lives easier, saves us money, makes us more profit, makes us greener and improves efficiency.
Yet simple, straightforward functions like sending an invoice – it seems - are still so apparently complex that they have to be carried out in a way they that hasn’t changed for a hundred years. “I want you to pay me. Here’s a piece of paper asking for the money”.
Why is this? And why do we require new initiatives, agreements and laws in order to stop sending bits of paper through the mail in order to get paid?
Isn’t it just a simple matter of getting the technology systems in place to replace paper invoices with invoices sent by email and fax?
The answer is partly to do with the legal frameworks that govern anything to do with finance. They are complex, particularly when they involve cross-border trade.
But it’s also to do with the fact that some people prefer to stick with the ‘old ways’. There’s nothing like an original signature on paper to make it real.
E-invoicing (or electronic invoicing) is not new. In fact, there are plenty of B2C companies – telecoms, utilities, financial services - that now send invoices and statements electronically.
In the B2B world there are more options, because invoices and statements can be sent automatically using software that integrates seamlessly with accounting systems such as Zetadocs for Microsoft Dynamics NAV.
These types of systems have flourished because of the inherent inefficiencies and enormous cost of preparing and printing thousands of paper invoices, statements and reminders and then stuffing them in envelopes, franking and mailing them.
E-invoicing offers time savings, cost reductions, efficiency improvements – and, more than ever in these environmentally conscious times, a distinctly green benefit. Electronic archiving also means faster search and retrieval for faster resolution of disputes and queries.
So if e-invoicing is so easy, so efficient and better for the planet, why are 90% of invoices globally still sent by mail? The answer lies not in our ability to generate or send invoices electronically, but in the development and adoption of legal standards.
The good news in Europe is that there is now progress towards such a standard. The European Commission announced in December 2010 that: “...the potential benefits of e-invoicing still remain to a large extent unexploited", and went on to say it not intended to “...focus its efforts on removing barriers to the broad-scale adoption of electronic invoicing in Europe.”
The Commission also said that the biggest hurdles will be making sure the legal environment for using e-invoices is consistent; convincing SMEs to use them; and standardising them so that invoices work together.
The European directive will ensure that tax authorities accept e-invoices under the same conditions as paper invoices. In so doing it will remove the legal obstacles to the transmission and storage of e-invoices.
The imperative for businesses, then, is to ensure that they, their people, their systems and processes are ready to take advantage of the new rules.
Electronic invoicing solutions like Zetadocs for NAV and fax software like Zetafax from Equisys come with built-in functions that make production and delivery of invoices easy and fast – and also have electronic archiving features for quick and easy storage and retrieval.
Even better news, when getting paid is such a pivotal part of business, ready integration with standard Microsoft Dynamics systems like NAV also means that invoices are received – and therefore paid - more promptly, thereby improving cash flow.
How refreshing to find a new EU directive that will help improve cash flow!