![]() And even the most secure storage is not foolproof. Paper can easily get lost on the way from the finance team to your long term archive – whether that’s a set of filing cabinets on your premises or offsite at a secure location. While it’s true that paper based processes are “tried and tested” they are inherently problematic from a tax audit perspective. Depending on the retention period, which varies per country, this could be anywhere from four to eleven years after the original transaction. Regardless of whether you send or receive invoices as paper using traditional mail or fax or if you switch to electronic formats, you still have an obligation in tax law to ensure a robust and auditable process, and to archive your tax invoices for long term audit. ![]() Reason 1: A robust e-Invoicing process simplifies tax audits So given the challenges, why switch? Let’s look at the five key reasons to make the leap. Ensuring electronic invoice processes are robust and auditable over the long term is a real challenge facing businesses who make the switch. Tax auditors are rightly nervous about electronic invoice formats since they recognize that digital data is very easy to manipulate, providing opportunities for tax fraud. However, for the majority of the world, where VAT reigns supreme, electronic invoicing has always been more complex and challenging since the invoice is a legal document for tax audits and is therefore one of the most highly regulated documents in the supply chain.įor companies in these countries, tighter regulations can mean changes in long-standing processes as well as an investment in specific technology to support the legal requirements in each country they operate in.Īs a result, companies have been slow to embrace electronic invoicing, in many cases switching to technologies like PDF, since it at least resembles the familiar paper-based processes they’ve been used to.īut while a PDF might be accepted as an e-Invoice for tax purposes, it offers few of the benefits that are available to businesses who fully embrace e-Invoicing and automate the end-to-end process. Making invoices electronic is the same as making purchase orders, advanced shipping notices or any other business transaction electronic. In North America, one of the few major economies without a Value Added Tax (VAT) model for indirect taxes, electronic invoicing isn’t really a separate process at all. Of course, we know electronic invoicing means different things in different regions. At the same time, it is altering the way businesses approach electronic invoicing. Companies have been digitizing their invoice processes for decades to take advantage of the many clear benefits it provides both in improving efficiencies for resource-strapped finance teams as well as enabling broader digital transformation efforts.īut the wave of e-Invoicing mandates that are currently spreading across the globe has moved this from a “nice-to-have” to a “must-have” for an increasing number of businesses. This might be via email or a secure website.Electronic invoicing is hardly new. Send invoices through the agreed-upon method. According to a study by the Hackett Group, organizations that automate their invoice processing can see a 30% reduction in the number of invoices requiring manual intervention. Invoices should include, at the minimum:īecause manual steps and manual data entry are eliminated or reduced, the entire AP process becomes exponentially more efficient than manual invoice processing. Verify the contact information for each supplier and double-check this against your invoicing software.Įnsure that the e-invoice format you have chosen includes all necessary information. Confirm that they are willing to receive invoices in this manner. The first step in getting started with e-invoicing is to communicate with your business partners. ![]()
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