The EU and e-invoicing – top 3 priorities for 2013

The EU and e-invoicing – top 3 priorities for 2013

Posted by Pete Loughlin in AP Automation, e-invoicing, Electronic Invoicing, EU Commission, P2P Europe 08 Jan 2013

The debate on these pages on e-invoicing and interoperability has been fascinating. It was inspired by the EU’s consultation designed to solicit views in order that e-invoicing in public procurement can be stimulated and encouraged. But there’s more to this than interoperability and we think that there are three things that the EU can do to get electronic invoicing really motoring in Europe – mandate, regulate and educate.

Mandate

Purchasing Insight logoGive people an option to do something they don’t understand or that they are afraid of and the option to do nothing becomes attractive.

The business case for e-invoicing stacked up over a decade ago but despite this we see a paltry penetration of about 15%. Sure, this will grow. Other economic changes are driving change but if the EU economy is to enjoy the economic boost that could be delivered by a truly networked economy, it needs to act and it needs to act decisively and promptly.

Mexico  and Brazil are seeing huge growth in adoption of e-invoicing for a single reason – they’ve mandated it. Mandating e-invoicing isn’t like mandating a new tax. That hurts business. Mandating e-invoicing is mandating common sense. That will act as a timely fillip to business if it’s done now. Mandating e-invoicing would act as major driver for the service providers to put aside their differences and make the e-invoicing eco-system work. Sure there are problems with interoperability but opening up the market by mandating its use will provide an attractive motive to find solutions.

Regulate

Regulation comes at a cost. It creates red tape. Ideally we could do without regulation but the EU should leave nothing to chance. Anti-competitive, protectionist or exploitative behavior by dominant players or cartels could scupper the best laid plans and following a mandate, the EU should position itself prominently to step in at short notice when necessary. The market should be left in no doubt that the EU means what it says when it declares war on the cost of doing business.

Educate

The technical issues have been overcome. The business case is complete. All that is left is the perception that it won’t work.

There is a genuine fear from some businesses that they will fall foul of the laws relating to e-invoicing. There is uncertainty about how the rules, which were supposed to be simple, will apply – especially for cross border transactions. And there is an understandable doubt from some quarters that it will actually work. Today, even very large established businesses retain a paper process as a backup to their e-invoicing process because their tax people are afraid to make a call.

It shouldn’t be left to the buyers or suppliers to work out these issues. It shouldn’t be left to the service providers. The member states within the EU should be evangelizing e-invoicing. They should be educating the market and playing a full role in demystifying the new world.

Pete Loughlin can be found on twitter @peteloughlin

  • Ellen January 9, 2013 at 12:46 pm /

    Hi Pete – I think you’re right about a lot of this, but I still have doubts about whether the EU would ever mandate the use of e-invoicing across the board, and that being the case -it’s better, surely to focus on the last issue – educate. Get that bit right, and the rest will follow – albeit a bit more slowly. However……if they ever do decide to mandate – the regulation element needs to be ironed out first. Mexico for eg has undergone a number of regulation changes since 2010, which only serves to confuse and wrong-foot business (a by-product of which being the expansion of their managed service industry).

    The business case for e-invoicing boils down to “common sense” as you say – but I do think that if you’re a Head of P2P or FD or CFO – then it’s time to start acting like one and see its benefits and advocate its usage – not wait for the Government to do the job for you. I just think that sometimes talking about mandating e-invoicing is wishful thinking that distracts from the real job – getting the message out in a coherent way that makes it a no-brainer.

  • Markus Hornburg January 9, 2013 at 1:07 pm /

    I fully agree with the statement made by Pete. However, I would like to add something that sometimes strikes me as odd. We constantly refer to “laws on e-Invoicing” while we should say “laws on invoicing”. We refer to mandating e-Invoicing to the market instead of making sure that Governments should in fact also “adopt” e-Invoicing for their own processes (which only few Governments in Europe have done so far).
    As a Government, setting an example would be an extremely helpful idea. But I think this is where the problem starts. It seems too easy to mandate something on others instead of starting in front of your own door.
    The volumes in B2G (Business to Government) are surely staggering and thus the potential savings must be enormous. But all we constantly hear and read is that the private sector should finally go ahead and get it done. We see Directives being published to “facilitate” the adoption of electronic invoices.

    I have a dream and in this dream the following happens in the near future: A Directive will be published that says “The EU has recognized the immense savings, Governments can reap from implementing electronic procurement and invoicing processes. From January 1st 2014 onwards, all European Governments will not accept paper invoices anymore. All EU Governments will accept invoices in electronic format and the minimum content requirements are laid out in the 2010 Council Directive. As we have defined and developed interfaces with national and international service providers, feel free to inquire with your own provider on how to send invoices to your Government”.

    Then I wake up

  • Pete Loughlin January 9, 2013 at 1:19 pm /

    I agree with you Markus.

    I should clarify the Mandate part. The EU can only, practically, mandate what it has control of and, as you suggest, it is theB2G invoice that should only be accepted electronically.

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