In an increasingly interconnected global economy, suppliers, providers, and vendors of all revenue sizes must adhere to numerous regional compliance requirements and electronic invoicing mandates. These measures are crucial for maintaining efficient business operations and serving customers in a complex global supply chain. It’s also of particular importance that supplier organizations comply with these regulations. I highlight six instances of regional or country-specific e-Invoicing and compliance mandates you should know about as they may eventually impact your accounts receivable practices and how you engage international clients.
Why Adhere to Regional Compliance Requirements?
Legal consequences
Non-compliance with regional regulations can lead to severe legal consequences, such as fines, penalties, and potential legal action. Supplier organizations can avoid costly and time-consuming legal disputes by adhering to these requirements.
Customer trust
Compliance with regional laws and regulations demonstrates a company’s commitment to ethical business practices. This fosters customer trust and vendor credibility, essential for suppliers’ long-term business success. Compliance with laws and regulations also solidifies a supplier organization’s place in their customer’s global supply chain.
Market access
Compliance with regional requirements and mandates is often necessary to access specific markets. Failure to adhere to these regulations may result in limited market access, affecting a company’s ability to expand and grow.
Streamlined operations
Standardizing processes and adopting electronic invoicing mandates can lead to more efficient operations, reducing errors and saving time for the business and its customers. When supplier organizations adopt automated and digital invoice submission methods, they help customers increase straight-through processing initiatives. This is a win-win for suppliers and customers.
Six countries going all in on electronic invoicing
While the United States has not mandated electronic invoicing, U.S.-based companies should consider other countries embracing mandates. It will impact segments of their business or relationships with customers operating in these countries.
Mexico
Mexico mandated electronic invoicing for large organizations in 2011 and extended that requirement to all businesses in 2014. Electronic invoices submitted in Mexico are configured around the Comprobante Fiscal Digital por Internet (CFDI) electronic invoice, consisting of an XML file and a PDF readable version. An electronic invoice in this format is digitally certified by the Mexican Servicio de Administracion Trinutaria, SAT.
France
France implemented electronic invoicing for all public procurement contracts (B2G) in 2020. As of January 1, 2023, suppliers to public sector organizations must use the Chorus Pro, a French electronic invoicing platform, to submit their invoices electronically. By July 2024, all companies in France must accept electronic invoices. This measure aims to simplify the invoicing process, reduce errors, and increase transparency in public procurement.
Greece
Greece updated its mandatory electronic invoicing for B2G transactions in September 2022. The myDATA (my Digital Accounting and Tax Application) platform is used to submit invoices electronically. The Greek government plans to extend mandatory electronic invoicing to B2B (business-to-business) transactions in the near future.
Portugal
Portugal implemented mandatory electronic invoicing for B2G transactions in 2019. The government has extended the mandate to B2B transactions, requiring all businesses to issue electronic invoices through the AT (Autoridade Tributária e Aduaneira) portal starting January 1, 2023. In addition, Portuguese authorities have extended the deadline requiring PDF invoices to include a digital signature to be considered truly electronic until January 2024.
India
India introduced electronic invoicing requirements in October 2020 for businesses with an annual turnover of over INR 500 crore (approximately USD 67 million). The system has since been expanded to include companies with an annual turnover of more than INR 20 crore (approximately USD 2.4 million) as of April 2022.
South Africa
While South Africa has not yet mandated electronic invoicing, it is implementing a pilot project launched by the South African Revenue Service (SARS) in 2021. The initiative aims to standardize electronic invoicing nationwide and enhance tax compliance. Electronic invoicing remains voluntary, but mandates are expected to be implemented soon.
What must your organization do to prepare?
The recent implementation of electronic invoicing in countries such as Mexico, France, Greece, Portugal, India, South Africa, and others illustrates the growing global trend towards standardizing and digitizing business transactions. By embracing these changes, businesses can position themselves for success in an increasingly complex and interconnected global supply chain.
In addition to the six countries mentioned, many other nations have implemented, are in the process of implementing, or are considering the adoption of electronic invoicing to improve tax compliance, reduce fraud, and increase efficiency.
Key Strategies for Navigating Compliance
Stay informed
Keep abreast of the latest regulatory developments and electronic invoicing requirements in the countries where your business operates. To remain informed, subscribe to relevant newsletters, attend webinars, and join industry forums.
Leverage technology
To automate and streamline the invoicing process, utilize advanced technological solutions, such as cloud-based invoicing platforms and compliance management tools. This can help ensure adherence to regional requirements and reduce the risk of errors.
Organizations such as Pagero, Tungsten Network, and Tradeshift, to name a few, are excellent resources positioned to help supplier organizations prepare for regional electronic invoicing mandates.
Engage with experts
Collaborate with legal and tax advisors, consultants, or other experts who can provide guidance on compliance and electronic invoicing requirements. This ensures that your business remains compliant and minimizes the risk of non-compliance.
Train staff
Ensure your team is trained on the latest regulatory requirements and electronic invoicing mandates. This will help create a culture of compliance within your organization and reduce the risk of non-adherence.
Communicate with customers
Maintain open lines of communication with your customers to ensure they know your company’s compliance efforts and electronic invoicing capabilities. This will help foster trust and facilitate smoother business transactions.
Properly navigating regional compliance requirements and electronic invoicing mandates is crucial to doing business in the global economy. By staying informed, leveraging technology, engaging with experts, training staff, and communicating with customers, supplier organizations can ensure adherence to these requirements and maintain a competitive edge. As more countries adopt electronic invoicing and enforce stricter compliance measures, adapting and staying ahead of regulatory developments will be essential for businesses of all sizes to thrive in the global supply chain.
Ernie Martin is Founder and Managing Director of Receivable Savvy. He brings over 25 years of experience in financial supply chain management, marketing and communications and draws upon his extensive experience to share knowledge and best practices with AR professionals. He previously chaired the Vendor Forum of the Federal Reserve Bank of Minneapolis and his resume includes time at several well-known brands and companies such as Tungsten Network, Delta Airlines, CIGNA Healthcare and Georgia Pacific as well as a number of years as an independent consultant.
