Electronic invoices 2012: What are the current challenges?

Electronic invoices do have a high potential for organizations to save costs. This has been investigated by several current studies: (study Nutzenpotenziale der E-Rechnung in Österreich). Nevertheless—especially within Europe—there do exist burdens and barriers for an organization to introduce electronic invoices. But these barriers should be overcome to realize the high cost-saving potentials.

When I talk with clients about electronic invoices, I currently see the following major application areas:

  • B2B invoices: For B2B transactions, electronic invoices can help in further automating the supply chain process. Nevertheless, this needs a – at the moment – strong cooperation between the different organizations.
  • B2C invoices: Within B2C transactions, electronic invoices can help to reduce the enormous amount of paper that needs to be printed and sent to the customer. Electronic invoices will not only reduce operational costs, but also the ecological foot print.
  • Intra-group invoices (transfer pricing): International groups are facing more and more the challenge of documenting their intra-group services. New agreements are setup and the number of invoices between different organisations within a group of companies is increasing. In order to minimize the increasing operational costs, electronic invoices can help to half-automatically book intra-group invoices.

As already pointed out, there are at the moment certain barriers that need to be faced. This will change in certain points by the end of 2012 as, at that point, local governments have to change the laws to treat paper and electronic invoices equal (council directive 2010/45/EU). Germany has already changed its law, but in Austria the process is still on.

Looking at the application areas of electronic invoices, the following problem domains can be identified:

  • Tax requirements: One of the most difficult barriers for organizations in using electronic invoices is the value-added tax system. Only by following several strict rules will electronic invoices be accepted for the deduction of value added tax on input.
  • Organizational requirements: From an organizational point of view, an adequate workflow needs to be implemented that supports the release (by the issuer) and the acceptance (by the receiver) of invoices.
  • Technical requirements: From a technical point of view, the major challenge lies in building up agile networks between different organizations deep into their systems to connect the “outside world” with their highly protected internal ERP system. Besides the general security issues, a technical environment is required that deals with the integration of different standards on both sides.

Nevertheless, electronic invoices have a high potential for organizations and should be part of every IT Strategy for the year 2012.

Please add your experiences and questions regarding electronic invoices as a comment.

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