Invoicing mandates and real-time reporting requirements are becoming the new normal, yet many companies still haven’t addressed e-invoicing compliance at a strategic level.
Tungsten Network and Sharedserviceslink recently conducted a compliance readiness survey to discover how businesses around the world are preparing, and to understand their feelings about these ongoing changes. The survey found that a staggering 77% of respondents lacked confidence in being able to meet changing compliance regulations on time.
Following the release of the survey, sharedserviceslink and Tungsten Network ran a webinar to discuss the findings in detail. The webinar aimed to uncover why many businesses might be feeling worried about invoicing mandates, and provide tips on how to become compliance ready.
In this article, we’ll run through everything covered in the webinar, featuring exclusive tips and insights from Tungsten Networks SVP for Global Compliance, Ruud Van Hilten.
Country-based readiness vs global readiness
One of the key complexities surrounding the e-invoicing mandates is the differing rules enforced by each country. There’s a lack of standardisation, which can make navigating changes on a global scale very difficult. As such, 32% of respondents admitted that they were concerned by their strategies being country-based or regional, rather than global. Ruud has his own take on why many businesses might have siloed themselves into country-based strategies:
“It's interesting to see that many are saying that strategies are very often country based. I think that's very often caused by the fact that there simply weren't too many of these mandates happening at the same time. 2023 is probably the first year we'll see multiple of these government interventions go live in a single year. So it’s quite logical that you’ve organised yourself locally or geographically so far.”
However, as more and more countries begin to implement e-invoicing mandates, it’s imperative for organisations to start taking a more global approach. Ruud explains:
“Now we'll see Spain, Poland, Australia, France, Slovakia, Belgium, Denmark, all implementing legislation. So what you need to do now is move out of the silo and start looking at how to implement a strategy which considers four or five different countries across Asia, Latin America, China, Europe, where mandates are happening.”
What’s causing a lack of confidence in compliance readiness?
In the survey, which was completed by over 100 people predominantly in the finance industry, only 23% of respondents shared that they were ‘very confident’ about meeting compliance regulations. The rest answered ‘somewhat confident’ (58%), ‘not very confident’ (14%) or ‘worried’ (5%). In the webinar, Ruud explained that even those who are ‘somewhat confident’ need to be diligent in putting the right preparations in place.
“I find ‘somewhat confident’ very interesting as it means that you have a worry, or at least you feel that you may be missing something.
“One thing I would strongly recommend if you don't feel 100% comfortable, is that you start identifying what you may not be able to meet. For example, is it our ability to scale quickly? Is it because we do business in eight countries? Do we feel that we have a good grasp on the invoicing but we don't really understand the archiving side of things? Identify the discomfort so you can prepare for things.”
Reactive and proactive compliance efforts
There are two approaches organisations can take when it comes to managing compliance efforts: reactive and proactive. When a business is reactive, they’re taking a ‘here and now’ stance instead of being future-thinking. This could include decentralised teams and a project-based strategy to combat problems as they arise. In contrast, proactive compliance is sustainable. It uses centralised teams, collaboration, a global outlook, and a future-proof solution.
Interestingly, 70% of respondents who were ‘not very confident’ also cited their compliance strategy as ‘reactive’. Whereas, 98% of those who were ‘somewhat’ or ‘very confident’, also described their efforts as ‘proactive’.
Ruud talks about the cost of being reactive: “If you are in a place where you feel like you're sitting and waiting for things to happen, this will affect organisational efficiency, cash flow, and could actually expose you to risk and penalties.
“We know from our experience in working with customers that if you jump in at the very last moment before a mandate goes live, the cost is going to be much higher. Simply because you need to pull people off other projects, it will be difficult to manage and I can assure you that this may work if you are going live in one country. But if you're looking at three or four or eight countries, reactive compliance just doesn't work.”
Use the mandates to the benefit of AP
For many businesses, e-invoicing mandates could be seen as a hassle and highly disruptive to business operations. However, organisations which have outdated AP functions or paper-based invoicing processes could use these mandates to drive their business into the future. A governmental shift towards e-invoicing compliance is the foundation for a solid business case for digital transformation across finance and AP.
“It's a big distraction. But frankly, in a way, it's also a blessing”says Ruud. “Because it forces supply chains to become electronic. It drives out paper, it drives out PDFs from the financial supply chain. It’s definitely an opportunity that you should seize.”
Tips to ensure compliance readiness
Ruud finished the webinar by sharing his top tips for businesses to proactively prepare for e-invoicing requirements and become 100% compliant ready. These are:
- When putting together a business case, consider the costs involved and work cross-functionally. Look beyond your own department to understand both the opportunities and the costs, as well as identifying the savings which could be made in other departments.
- Work with suppliers who are already electronic and ensure you can meet the government’s reporting requirements.
- Take a global approach to compliance so that your solution is scalable. Doing so saves you from having to ‘reinvent the wheel’ for every country you operate in.
- Don’t manage compliance efforts alone: work with third parties who know what they’re doing. These are important government regulations and there are far too many complexities to handle internally.