And to do that, invoices must be in a compatible format. Perhaps most importantly, Europe’s incoming e-invoicing rules require you to send and receive invoices through a designated system. HMRC allows for electronic invoices to be in a “structured” format like XML, or unstructured like PDF. But simply digitizing your invoicing process isn’t enough to be compliant, particularly in the EU.įor example, the EU states that they must be sent and received in a “standardised structured data format that provides for automatic reading of the data into computer systems.” This usually means an XML file. We explore both of these below, when we look at the kinds of tools and software available.Į-invoices are a form of digital invoice - an invoice in a digital format. And in these cases, the portal determines the format, since each invoice needs to be fit for the platform. The channel is typically a government-controlled portal through which invoices must pass. Most authorities have set clear guidance for each of these. But broadly speaking, there are two considerations: There are different rules in different jurisdictions, so the best move will always be to check with your local authorities. While the primary goal is to make tax authorities more efficient (and to easily recover VAT), private companies also stand to gain from more efficient invoicing. Today, the EU, US, and UK all require e-invoices when dealing with the public sector as a way to save taxpayer money and make agencies more efficient. There’s a more formal, technical process in place in many countries. But it’s not simply invoice digitization, as we’ll see in a moment. What is e-invoicing?Įlectronic invoicing is the process of creating and storing e-invoices in place of traditional paper invoices. This article is an introduction and explanation of the major e-invoicing rules and concepts coming into force in the EU, and how these compare with the UK and US. Which means new compliance headaches in the near term. But these reforms require businesses to make some major changes to the way they issue and receive invoices. New e-invoicing mandates mean that things will hopefully become more efficient by law very soon. If both sides of this process are efficient and compliant, you can focus on more fundamental goals like product development and finding new customers.įor companies in the EU, there’s good news and bad news. Every company needs a smooth process to pay suppliers and receive payment from customers.
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