In our national context, electronic invoicing is now an established and almost taken for granted reality. But what about electronic invoicing around the world?
The action of the legislator, starting in 2019, has extended e-invoicing to almost all operators. Some categories still remain excluded from the regulation, including professionals under the flat-rate regime, small agricultural producers, or even doctors, pharmacists, and healthcare professionals.
However, this may soon change, as Italy has already indicated its intention to extend the obligation to those falling under the flat-rate scheme in the near future.
Beyond these cases, the fact remains that e-invoicing is now widely used in Italy and the regulatory requirement has certainly acted as a driver for the progressive digitization of billing processes, from invoicing to payment, not to mention the recent introduction of electronic order.
The early adoption of e-invoicing has made it possible to appreciate its benefits sooner, prompting other countries to consider its mandatory introduction and helping provide a strong argument for the spread of electronic invoicing around the world.
The advantages of electronic invoicing
The advantages of e-Invoicing, which some companies see (and perhaps are still seen) as an awkward and cumbersome regulatory constraint, are in fact diverse and concern businesses first and foremost, and then extend to public administrations and, ultimately, to the entire community of citizens. So, what are the advantages that are attracting the interest of an increasing number of businesses and government authorities around the world?
- Faster execution of payments: Data from the MEF (Ministry of Economy and Finance) show that the introduction of the electronic invoice has led to a reduction in average payment times, which have gone from 74 days in 2015 to 48 days in 2019. This is a significant gap, which has certainly benefited supplier companies;
- Reduced errors and more efficient processes, thanks to the automation and sharing of standards and procedures, which also make relations with foreign business partners much easier;
- Savings from various points of view: Not just time and financial resources by companies, but also savings in terms of better management in the area of public spending;
- Reduced tax evasion, thanks to more extensive monitoring that has allowed the recovery of around 2 billion in VAT in 2019, the first year that the B2B obligation was introduced;
- Optimization of the customer billing experience: the digitization of the invoice allows companies to have large amounts of data at their disposal that can be used to create targeted and personalized communications to customers, structuring the moment of sending the invoice as a real experience.
The electronic invoice, therefore, is able to trigger a series of virtuous mechanisms that involve all business processes.
Our European Neighbors: What to expect
It’s no surprise that many European countries (and others) have also begun to consider extending the e-invoicing regulatory requirement to the B2B sector.
While many EU countries have limited themselves to transposing EU Directive 55/2014, which mandates the implementation of e-invoicing in the context of public procurement and binds public administrations to be able to receive and manage e-invoices, others have already begun to lay the groundwork for expanding the audience of actors involved in e-invoicing processes.
Some countries, including, for example, France, Germany, and Austria, just to mention our closest neighbors, have already extended the e-invoicing obligation to the entire B2G sphere, thus already going beyond the mere fulfillment of Directive 55/2014. Others have yet to introduce this constraint, but have stated their intention for the near future.
In addition, it is the intention of many European states to continue along this path, introducing the electronic invoicing obligation also for transactions between private individuals. (Source: B2B Observatory – Milan Polytechnic)
France has already defined a roadmap that foresees a gradual introduction in three progressive steps, based on company size. According to this plan, from 2023 the obligation will be progressively introduced in the B2B sphere, starting with larger companies, until full deployment in 2025. Finland has also set the same deadline for introducing the obligation in transactions between private individuals. Slovakia, Belgium, and Germany, although they have not yet declared precise deadlines, have expressed their willingness to follow the same path.
The benefits expected from introducing the B2B e-invoice requirement are essentially those we mentioned above:
- Incentivize the digitization of businesses, with all the advantages that follow;
- Increase VAT revenues by combating tax evasion;
- Encourage and improve collaboration between businesses and public administrations,
- Promote and achieve a greater level of simplification of administrative and fiscal processes.
Developments in electronic invoicing around the world
In examining the state of electronic invoicing around the world, one can only begin by considering Latin America.
LATAM countries have been true pioneers in the sector and the state of progress of e-invoicing is already remarkable. Even with some sector-specific exceptions, the e-invoicing requirement has already been widely extended to all economic operators in Argentina, Brazil, Mexico, Chile, Bolivia, Colombia, and Peru. In addition, the obligation to draft and manage electronically is also extended to other documents with fiscal relevance.
This model has amply demonstrated its validity over the years, especially since it has significantly contributed to reducing tax evasion. (Source: Billentis)
More recently, in late 2020, Saudi Arabia also issued a law to this effect, stipulating that by the end of 2021, e-invoicing will be mandatory for all B2B transactions. While the United Arab Emirates have not introduced any obligation, the use of electronic invoices is permitted and encouraged.
It is worth mentioning that until 2018, Saudi Arabia, as well as the UAE and the state of Bahrain, never had a VAT obligation, which was introduced for the first time at the beginning of 2018.
In this case, it can be said that the e-invoice is certainly seen as an effective tool for monitoring the level of compliance regarding the new tax obligation represented by the introduction of VAT.
Many other countries, while not introducing formal obligations at the moment, are increasingly encouraging the adoption of e-invoicing. This is the case, for example, in Singapore, which has decided to award bonuses to companies that decide to “convert” to electronic invoicing, abandoning paper in favor of paperless processes. Australia, New Zealand, and China have also moved in the same direction, where special projects and policies have been implemented to support the widespread adoption of e-invoicing.
In many of these countries, the adoption of e-invoicing has gone hand-in-hand with PEPPOL membership.
PEPPOL, the electronic invoice highway
The PEPPOL network is configured as both an instrument at the service of the electronic invoice and as an incentive to its use. Born within the European Union, PEPPOL (Pan European Public Procurement Online) is configured as a real network, based on precise standards and technical specifications shared between actors, which supports the exchange of data and documents in commercial transactions at the transnational level and characterized by maximum interoperability.
PEPPOL was born as a tool to support the creation of the European Single Market, but thanks to its characteristics has aroused the interest of several countries outside the Union.
Many of the countries mentioned above, which are moving ever faster towards the full adoption of e-invoicing, have decided to proceed along this path by using PEPPOL. In particular, Singapore, Australia, and New Zealand are among the non-EU countries that have shown the greatest push in this direction, identifying their respective PEPPOL Authorities and accrediting the first Access Points.
The shared language on which PEPPOL is based and the electronic documents managed within it contribute to facilitating commercial transactions between partners operating in the network, with significant advantages for the companies involved. Just as a major highway is able to connect the most distant countries, PEPPOL connects distant and different commercial actors.
The relationships between economic operators of all the world travel on the same road of the electronic invoice – towards new opportunities.