Governments all over the world are pushing forcefully for unified tax collection and paperless data exchange. One of the biggest shifts is related to the e-invoicing regulations, which are becoming obligatory in an increasing number of countries.
Why are so many countries going paperless? The main benefits of embracing e-invoicing include:
- Reduced tax fraud and increase revenue for governments
- Cost optimization, given e-invoicing can cut costs by as much as 60% to 80% compared to paper invoices
- Facilitate automation
- Minimize risk of human errors by eliminating manual tax reporting
- Environmental concerns
However, the process of moving towards electronic invoices is quite complicated and lengthy, with different countries embracing different formats, mandates, integrations with governmental platforms, and – most of all – dates for when the new approach to data exchange will become mandatory.
Staying on top of these changes is crucial, as not abiding by the new rules may pose a serious problem – not only due to disrupted communication with your clients and partners but also because of the penalties that certain countries plan to impose on taxpayers who issue incorrect invoices.
How to avoid e-invoicing penalties
Due to the number of different e-invoicing mandates, governmental guidelines, and potential fines, there’s unfortunately no “one size fits all” approach to avoiding e-invoicing penalties. But these tips can help your organization reduce the likelihood of e-invoicing non-compliance – and adopt some optimal solutions going forward.
1. Generate your e-invoices on time
One of the more universal penalty instigators is late e-invoice generation. Understand the country or countries in which your invoicing mandates apply – and generate your e-invoices as soon as feasibly possible after producing a taxable supply.
2. Ensure e-invoicing accuracy
Whether it’s from negligence or on purpose, governments will treat inaccuracies the same. While many countries may have a “slap on the wrist” policy for first-time offenses, these can still be costly errors. Thoroughly review e-invoices for accuracy, and make sure the format and information are in accordance with the governing body.
3. Stay ahead of potential changes
E-invoicing mandates are on the rise, and governments around the globe are quickly adapting to digitalization and modernization to reduce their indirect tax (e.g. VAT) gaps. Be aware of upcoming changes and give your organization time to adapt and adjust your systems to remain compliant.
4. Utilize dependable e-invoicing partners
As mandate adoption continues to spread, organizations (especially those with a global footprint) will find e-invoicing to be a massive headache. The growing complexities will only lead to increased penalties.
Take a proactive approach to the global shift in e-invoicing requirements by choosing the right platform and getting ahead of upcoming regulations.
Interested in learning more about the global landscape of e-invoicing mandates? Download the new white paper, “Mandatory e-Invoicing Penalties Around the World (And How to Avoid Them),” available for free HERE.
