Unlock the Value Of Digital Transformation by adopting E-invoicing
E-invoicing has now become an imperative for most organizations across Europe. The E-invoicing market in the region is growing at a CAGR of 17.1% and is expected to reach US$ 4217.6 million by 2027, as per a research report by Research and Markets. Primary drivers behind the accelerated need for E-invoicing are the high volume of cross-border trade, market fragmentation, fraud prevention, and Digital Transformation being a top Government agenda.
B2G as a segment is the first to jump on this bandwagon and be followed by B2B and B2C sectors. On the other hand, for mode of deployment, Cloud providers are reaping benefits of the subscription model, occupying greater market share than On-Premise solution providers.
The member states of the EU are implementing E-invoicing on a mandatory basis between the public sector and its suppliers. This market can be segmented either based on End User or Mode of Deployment.
E-invoicing allows an organization to automate its invoice processing. Thus all the stakeholders, including buyers, suppliers, and finance departments, can achieve various tactical and strategic benefits.
Few key ones are listed below:
Faster Payment Execution:
E-invoice processing will lead to speedier invoice delivery, reducing time to the payment cycle. This will lead to an improved cash flow.
E-invoicing has developed a safe system reducing the chances of fraud or document forgery. Unlike printed invoices, E-invoices are PDF invoices issued with unique and unrepeatable seals and certificates.
E-invoicing will lead to greater transparency and more compliant processes at an organizational level.
With the introduction of PDF invoices, firms can curtail their expenses under the heads of print, post, and storage. In addition, there will be a reduction in processing costs as PDF invoices can be directly fed to the company’s ERP system.
The deadline for European countries to include Directive 2014/55/EU into their national laws and follow the standard on E-invoicing was 18th April 2020. Therefore, countries are gradually adopting the standards, with Italy, France, and Germany leading the pack. In addition, industry bodies, tax authorities, and all public administrations are supporting the growth of E-invoicing that will facilitate ease of operations for all the parties involved.
Few important pointers in the mandate that applies across European territories must be noted:
- The method to generate, send, transmit, receive & process should be fully automated. Thus, invoice formats must be machine-readable PDF invoices and not image files. Since invoices contain personal data, they must abide by data protection principles by design, proportionality, and data minimization.
- It must be user-friendly to ensure the inclusion of medium-sized enterprises and smaller contracting authorities & entities.
- It should be technologically neutral and compatible with relevant international standards on E-invoicing.
- Invoices issued in different business sectors may require the inclusion of information specific to those sectors.
However, a limited number of common standard elements should be included in all invoices.
Europe’s E-invoicing market is highly fragmented. Based on vendor offerings, there are both point solution providers as well as suite solution providers. Invoice Digitization is the only offering that all solution providers offer. Global Compliance is a field in which few vendors specialize, so they are often found partnering with other solution providers.
Process Augmentation and Supplier adoption are the two key areas where solution providers are trying to develop competency to create a competitive edge in the market. In addition, mature organizations are trying to achieve E-invoicing along with OCR(Optical Character Recognition).
Christiaan van der Valk, VP of Strategy for the tax software provider Sovos, writes:
“It is interesting to look in the rear mirror and observe what has created a huge distance between the leaders and the laggards in the European E-invoicing market to date.”
So, embracing E-invoicing is a well-thought-out plan to create a competitive advantage for an organization and at the same time contribute to sustainability goals.
References: Research and Markets, The Insight Partners
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