GAUGING THE MARKET
is currently slowed by a myriad of paperwork , customs declarations and lagging payments . Rather than waiting for an invoice to be sent in the post , e-invoicing offers a secure , fast-delivered alternative for business in 2024 . Its granular machine-readable data allows for near-touchless processing from start to finish , which ensures a better and faster way to process invoices and payments .
As such , the role of e-invoicing in commerce and trade is becoming increasingly significant . This is particularly the case as businesses seek to connect with a wider range of trading partners . There is a growing trend of e-invoicing mandates in response to this , rolling out in various countries . Why ? Well , the rise of standards-based e-invoicing formats and open networks is projected to enhance interoperability and strengthen the way businesses exchange information with each other and tax authorities .
Alex Baulf , Vice President , Global Indirect Tax and E-Invoicing at Avalara
Governments across Europe , including Germany , France and Italy have started mandating e-invoicing to drive improvements in economic efficiency , reduce fraud , improve sustainability efforts , and optimise tax auditing and reporting processes . E-invoicing helps businesses comply with legal and tax regulations both domestically and across borders and maintain the integrity of the invoice data . By adopting e-invoicing , businesses can remain compliant and continue to trade in countries where e-invoicing is mandated .
Additionally , countries are adopting e-invoicing to reduce the VAT gap . The European Commission estimates that the lost VAT revenue reached € 134 billion in 2019 . Worldwide , the gap could account for 20 – 30 % of public revenue or a staggering half a trillion euros . The VAT gap is caused by multiple factors , from fraud to bankruptcies , but importantly a country ’ s level of VAT compliance . With the emergence of e-invoicing , the EU ’ s VAT gap is slowly decreasing from roughly € 193 billion in 2011 to € 61 billion in 2021 .
E-invoicing is changing the landscape of industry
Contrary to popular belief , an e-invoice is not the same as a PDF . Unlike a standard PDF , e-invoices contain structured data designed to be automatically exchanged and processed by a system . It ’ s this structured machine-readable data that sets e-invoices apart .
E-invoicing can help businesses avoid compliance costs and reduce tax errors , again preventing tax fraud , by giving authorities access to transactional data while incorporating time-saving automation of their finance department . Real-time tax-relevant data can be viewed by relevant authorities and governments . Each transaction ( and in many countries both sides of the transaction ) can be examined and matched with the supplier ’ s and the customer ’ s invoice input tax deduction .
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