As mandates spread globally, businesses must look beyond basic e-invoicing and prepare for a much broader push towards supply chain automation. Understanding the real drivers behind global tax mandates is the first step to staying compliant and maintaining a competitive edge.
In this video, Philipp Liegl, Managing Director, explores which document types, such as dispatch advices, are likely to be regulated next and provides actionable steps to future-proof your technical strategy.
Watch the video or read the transcript below.
Why are governments pushing e-invoicing so strongly?
There are two answers to that question. The Northern European perspective, which is process automation, and the Latin American perspective, which is fighting tax evasion. If we look at Europe, the main reason is fighting tax evasion and closing the VAT gap.
Is e-invoicing just the beginning of a wider automation push?
Let’s look into the crystal ball. Too bad we do not have one, so let’s look at Latin America instead. There e-invoicing is the absolute norm. Latin America is moving beyond e-invoicing towards other document types. There in particular, dispatch advices. So yes, e-invoicing is just the beginning of a wider automation push and we will see more documents mandated by governments.
Which automations are likely to be next?
To answer that question, let’s look at the classic order-to-cash or purchase-to-pay process. What kind of electronic documents are involved there? The answer is an electronic purchase order, an electronic purchase order response, a dispatch advice and an invoice.
So if we look for additional document types to automate as part of mandates, purchase orders, purchase order responses and dispatch advices are most likely to go next. My personal bet here will be dispatch advices.
What should companies do to prepare for broader transaction automation requirements?
Let me start with citing the famous French chemist Louis Pasteur, who said, chance favours the prepared mind. We need to prepare accordingly and there are three aspects to consider regarding automation requirements.
A, we need to understand the choreography. What is the flow of documents? What is the exact order in which these document types are exchanged?
B, we need to understand the data points which are supposed to be sent and received, and C, we need to understand the technical foundations, which in case of e-invoicing are mostly APIs and web services.
What is the most common mistake companies make when it comes to compliance transactions?
To answer that question, let’s look back into our high school or university times. Why do students fail most of the time when learning for a midterm exam or for a final exam? There are two reasons. A, the students underestimate the effort, and B, the students start too late. This is exactly what happens with failing compliance transaction implementations.
What are the risks of attempting to manage compliance entirely in-house?
To answer that question, we need to look at how we actually manage compliance in an organisation. We need two things: A, know-how and B, manpower, both of which are not always provided in a company itself. A third aspect is these mandates change all the time, so you are working against a moving target. To follow the old management saying, strengthen your strength to strengthen your weaknesses, contracting an external expert is usually the better choice.
Is it really possible to future-proof compliance?
Good news is it actually is possible if you prepare accordingly. All the mandates out there follow three principles. A, There is an underlying choreography defining the exact document flow and what kind of documents are exchanged in which order. B, Data points are defined that are the fields to be sent and received. And C, an underlying communication technology such as web services or APIs is used. If you prepare for these aspects, you are ready for any compliance which might be out there.
