In this part 1 of 2, KPMG explains the electronic invoicing for Microsoft Dynamics 365 Finance and Dynamics 365 Supply Chain Management. The Microsoft ERP enables configurable processing of electronic invoices and configurable electronic document exchange.
Electronic invoicing is the exchange of an electronic invoice document between a supplier and a buyer. An electronic invoice (eInvoice) is an invoice that has been issued, transmitted and received in a structured data format, which allows for its automatic and electronic processing, as defined in Directive 2014/55/EU.
The European Parliament and Council voted on Directive 2014/55/EU on electronic invoicing in public procurement on 16 April 2014. This Directive calls for the definition of a common European standard on electronic invoicing (EN 16931) at the semantic level and additional standardization deliverables which will enhance interoperability at the syntax level.
Public administrations are supported to comply with EU eInvoicing legislation and help service & solution providers adapt their services accordingly for Business-to-Government (B2G). However, eInvoicing can also be used to enable Government-to-Government communication (G2G) as well as in the private sector for Business-to-Business (B2B) transactions.
Business-to-Business (B2B) and Government-to-Citizen (G2C) or Business-to-Consumer (B2C) are not addressed in the context of the eInvoicing Directive until now. This is a plan, especially in scandinavian countries where people are open to sharing personal data such as their private mail address, bank account number or phone number.
What is an electronic invoice?
An invoice is generated, stored and amended in a structured electronic format (usually XML) through an electronic solution, which includes all the requirements of a tax invoice. A handwritten or scanned invoice is not considered an electronic invoice.
Why are countries implementing electronic invoicing?
Western countries are implementing electronic invoices for several reasons. These include, but are not limited to:
- Reducing the shadow economy
- Increasing compliance with tax obligations & reporting
- Reducing commercial concealment
- Adopting global best practices and improving ranking in relevant international indices
- Enabling fair competition and improving consumer protection
The implementation of electronic invoicing has two main phases:
- Phase One: generating and storing tax invoices and electronic notes in a structured electronic format issued through an electronic solution and including all the requirements of tax invoices.
- Phase Two: integrating the taxable persons’ electronic solution used to generate electronic invoices and notes into tax reporting systems, with the objective of sharing data and information.