e-invoicing compliance – a conversation with Markus Hornburg from OB10

e-invoicing compliance – a conversation with Markus Hornburg from OB10

Posted by Pete Loughlin in Compliance, e-invoicing, Electronic Invoicing 26 Mar 2012

Last week, I had the great please of speaking to Markus Hornburg, Vice President Product Development & Compliance at OB10, a real expert on e-invoicing compliance, about his views on e-invoicing compliance.

I can claim some expertise on e-invoicing but it’s quite humbling when you chat to someone with really deep global expertise on a particular subject. And Markus can claim just that. His experience goes back to the late 1990s when in Switzerland, he played a part in establishing the first electronic invoicing legislation in the world. He’s been with OB10 for over 5 years now.

I’ve always viewed compliance as being one of OB10’s strength. It was one of the central pillars of the OB10 proposition when they were first founded and so I was interested to hear Markus’ views on the approach that the plethora of newer players take to compliance, on the European Union post 2013 and on the challenges of using e-invoicing globally.

Purchasing Insight logoMarkus explained the OB10 approach to compliance: “The approach you need to take is to consider the conversation that you might have with the tax authorities after an audit. Ask yourself ‘what would the auditor need to see to satisfy them in the absence of paper?’ The answers aren’t always easy and some of the newer service providers are avoiding some of the difficult questions.

“This isn’t faceboook.” he goes on. “It’s not simply about putting buyers in touch with sellers. Invoices are legal documents and the means by which messages are exchanged need to comply with the local law. If the guidelines are not respected the business transaction is invalid

“Take a fairly complex example of Germany. Under German law, an invoice is technically a ‘business letter’ and it not only needs to comply with VAT rules, it needs to comply with commercial law too. Depending on which of the 8 to 9 company types defined in German law, there are different rules that need to be accommodated.

“In the UK by contrast, the tax regime is relatively simple but even there, companies can easily fall foul of rules if they fail to document properly their invoice process including being able to evidence clearly the route that an invoice has taken from supplier to buyer.”

Will e-invoicing get easier in 2013?

Germany is often quoted as being the most difficult cases but from the beginning of 2013 there will be a level playing field. All electronic invoices will have the same status as paper invoices according to European law and all of the complexities will be removed. Won’t they?

“There is a complete misperception about 2013” pointed out Marcus. “Sure, PDF invoices will have the same status as a paper invoice but so what? They don’t deliver any process benefits – at least not by themselves. And as far as the removal of the need for qualified digital signatures and the like, that has never been the issue that many commentators  have led the market to believe. Sure, qualified digital signatures are a pain but it’s always been possible to delegate the production of the signature to the service provider. OB10 have been offering that service for years. The problem was never one of complexity. It was a problem in perception.”

Well, that’s told me! I’ve been one of those commentators. But while 2013 won’t change the reality, changing the perception of complexity may well help to improve the e-invoicing landscape.

But enough of Europe. What about the rest of the world?

“There are still places where we continue to have real difficulty. China and India for example. Although China has their Golden Tax System it is still not possible for outside third parties to operate in China although we have reason to believe that this may change in the foreseeable future. India is only just launching GST so it may be some time before we see e-invoicing there.

“Thailand still insists on paper. Taiwan requires the use of their government-sponsored infrastructure. Brazil is still fragmented and we need to make special provision in Mexico. So it’s still a little uneven but the landscape is certainly maturing.”

Getting to grips with compliance

Compliance is the single most important component of an e-invoicing program. Failure to comply properly with local tax guidelines can lead to onerous penalties that can potentially negate the benefits. But it can be a confusing area that overlaps with the even more complex areas of Value Added Tax (VAT). Getting to grips with compliance is critical and the level of expertise that a service provider can bring to bear should be a priority criterion for any provider selection exercise.

  • Christian Lanng (CEO Tradeshift) March 26, 2012 at 12:46 pm /

    You would think that having any kind of networking company, connecting buyers and sellers would be pretty high on the agenda. Doing that well with a great user interface, just like Facebook should not be a barrier for compliance, but it explains a lot if OB10 see it that way.

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