“Cultivating success in today's shifting business landscape requires embracing innovation. E-invoicing isn't just a change in process; it's a catalyst for efficiency, growth, and sustainability. By digitizing invoicing processes, businesses streamline their operations, reduce costs, and free up resources for strategic initiatives.”
Stefanie Dreher, Director, Indirect Tax at KPMG in Belgium, explores how e-invoicing is reshaping the way businesses operate and paving the path for future success.
We’ve all seen the impact that digitization has had on all sectors. How is the world of invoicing impacted?
Stefanie Dreher: Traditionally, invoices were created on paper and transmitted via fax or post. However, with the evolution of technology, we transitioned to electronic invoicing, allowing for invoices to be sent in any electronic format such as PDF or Excel invoices via email. One notable development in this space is the push towards mandatory e-invoicing, particularly at the EU level. While already mandatory for B2G transactions in Belgium, there are initiatives underway to expand this requirement to B2B. This shift towards mandatory electronic invoicing paves the way for greater automation and digitization within the invoicing workflow.
It's important to highlight initiatives like the Belgian Law, which aims to facilitate the automation of invoicing workflows. The publication of the Law on 20 February 2024, marked a significant milestone in this journey. Starting from 1 January 2026, Belgian businesses registered for VAT will be mandated to use structured electronic invoices. However, it's crucial to note that this requirement applies exclusively to domestic B2B transactions and not to B2C transactions.
In summary, the drive for digital transformation is revolutionizing invoicing by promoting automation and modernization within invoicing processes. Initiatives such as mandatory e-invoicing laws are accelerating this transformation, ushering in a new era of efficiency and transparency in financial transactions.
Understood. And what’s behind this push to digitize invoicing? Are the authorities suddenly becoming champions of business convenience or something?
Stefanie Dreher: I wish! While embracing electronic invoicing initially aimed to tackle the issue of tax fraud, which has been draining government resources faster than a leaky faucet, there's more to the story. Between the two of us, I see it like a digital shepherd keeping a watchful eye on its flock, nudging everyone to play by the rules in this modern marketplace. E-invoicing will also allow for e-reporting which will facilitate data collection and delivery to the government.
But let's not forget the perks – besides giving governments a better grip on tax collection, e-invoicing promises businesses reduced costs, smoother operations, and heightened security. There's a whole digital jungle out there, and everyone's got to play their part!
Let me get this straight. Do businesses now need to recreate their invoices and adapt certain fields?
Stefanie Dreher: Nope! For now, there won't be any changes to the invoice requirements, the invoicing period, or the invoice modalities. Nevertheless, invoicing systems will need to be adjusted to allow for the sending of the invoices through the Peppol network. You should also know that electronic invoices in PDF format will still be accepted in cases where structured e-invoicing isn't mandatory. For instance, telecom providers sending PDF invoices to both businesses and consumers can continue to do so to consumers. Similarly, Belgian companies invoicing business customers outside Belgium can still send PDF invoices via email to these customers.
Also, it's important to note that the obligation applies to both invoices and related credit notes.
I can imagine that each company has their own way of structuring their invoices and the same goes for countries and their preferences. It sounds like we may have a potential mess on our hands!
Stefanie Dreher: Luckily, the European Commission was one-step-ahead and launched Peppol (Pan-European Public Procurement Online) many years ago as a European pilot project to facilitate seamless trade between public and private sectors. It’s basically a highly secure international network that enables companies to exchange business documents, including invoices, between all registered participants on the Peppol network. While it started as an EU initiative, Peppol has garnered adoption globally, with companies in various countries, including Australia, New Zealand, Japan, and Singapore, embracing it. This trend suggests the potential for Peppol to evolve into a universal standard, streamlining electronic transactions on a global scale.
OpenPEPPOL, the organization behind Peppol, consists of both public and private sector members and is responsible for the development, implementation, and maintenance of the Peppol specifications. In Belgium, the Peppol authority is FOD BOSA and they’re also tasked with helping the Federal government with digital transformation initiatives.
How does Peppol facilitate communication between different entities potentially using different electronic document formats? I’m asking for a friend!
Stefanie Dreher: Peppol is an international delivery network for electronic documents. I’m not going to bore you with the details, but to achieve the objective of interoperability, the Peppol Business Interoperability Specifications (Peppol BIS) were created, standardizing the exchange of essential documents like e-orders and e-invoices. This is how I compare it: nowadays, everyone has a mobile phone. And, as long as you have someone’s phone number, you can reach them, regardless of their telecom provider or your location. Well, unless, of course, you find yourself shipwrecked on a remote island in the middle of nowhere without a phone signal!
Ok, I think I understand why e-invoices came about, and the role of Peppol in all this. But how does it actually work?
Stefanie Dreher: If you want to join the Peppol network, you must connect through a certified Access Point (AP). This connection can be made directly from the business’ billing system or through a certified service provider. The AP registers the business and provides a unique Peppol ID. With that unique ID, your access point will be able to determine if your contact is registered on Peppol – thereby allowing you to send your invoice. Et voila!
Thanks for that very clear explanation! Final question, how do you think e-invoicing will make a difference?
Stefanie Dreher: E-invoicing promises to revolutionize traditional invoicing practices by introducing numerous benefits. Firstly, it enhances efficiency by streamlining the invoicing process and reducing manual errors (assuming, of course, that the data are correct). Secondly, it improves accuracy and security, minimizing the risk of fraud, and unauthorized alterations. Additionally, e-invoicing facilitates faster sending of invoices and confirmation of receipt. Moreover, it promotes environmental sustainability by eliminating paper usage and reducing carbon emissions associated with traditional invoicing methods. Overall, e-invoicing offers a modern, cost-effective, and environmentally friendly alternative to traditional paper-based invoicing, promising significant improvements in business operations and financial management.
To get started, we advise businesses to conduct an impact assessment, to reflect on governance, and determine budget and resource allocation. And don’t forget that an ERP feasibility assessment needs to be done before the actual ERP systems integration.
I know I may have used a lot of technical terms, and this all sounds very complex, but if there’s one thing I want readers to remember, it's this: time is not on your side! Implementing such a project takes time, and even if you think you have plenty of it, you’re going to need the upcoming 1.5 years before going live. So, start yesterday!
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