When New York first passed its law defining what constitutes a “vendor” subject to collecting sales tax in the 1980’s, the idea of online shopping sounded like science fiction. In retrospect, NY may have effectively enacted the first “economic nexus” law when they drafted their definition of “vendor” to include a person who regularly or […]
Three Reasons Finance Departments Must Make eInvoicing a Top Priority
Since the first launch of eInvoicing mandates in Brazil 10 years ago, eInvoice adoption has now spread worldwide. Governments are implementing complex, real-time, transaction-level requirements to gain visibility into tax liabilities, close the tax gap and minimize corporate tax evasion. eInvoicing compliance is not a simple process for businesses – it requires a total shift in the way companies operate and conduct business, and should be a top priority for finance teams as more and more countries adopt this approach.
With real-time tax audits becoming increasingly common, companies must develop and submit their eInvoices with 100% accuracy, making this process a key focus. For finance departments, compliance with eInvoicing requirements presents several challenges:
- Errors and discrepancies – With greater audit automation, errors and discrepancies can be easily discovered, triggering costly audits, fines and even potential operational shut-downs.
- Audit trigger points – Key audit triggers include sales, purchases, payments, payroll and travel/expenses. Each needs its own valid XML to reduce the risk of a potential audit.
- Validation – Without validation of data, several errors can be overlooked in reports, including missing payment classifications, foreign invoices and non-deductible expenses.
While some companies see keeping up with eInvoicing regulations as a hassle, this process actually provides several business benefits – reduced costs, streamlined workflows, increased ROI – if completed properly. That’s why a proactive approach to eInvoicing should be a top priority for finance.
To ensure your finance department is making the most of eInvoicing, focus on the following positive impacts:
- Automated accounts payable, receivable and tax reporting – Because information from eInvoices can be directly input into payment and accounting systems, companies can ensure accuracy throughout the entire submission process. In addition, eInvoicing capabilities support tax reporting, streamlining reconciliation and facilitating automation of tax filings.
- Improved record keeping and visibility into transactions – When integrated into other processes – like logistics and VAT compliance – eInvoicing provides access to data that helps safeguard companies from risks of fines, penalties or operational shutdowns.
- Strong, defensible audit trail – Having records more accessible allows for greater visibility into transactions and provides businesses with a strong trail that will help them answer questions from tax authorities in case of a potential audit.
After all, proactive eInvoicing compliance can result in a 25% increase in productivity, saving businesses valuable time and money.
As businesses worldwide adapt to these new regulations, proper technologies and solutions must be in place to ensure compliance. To learn more about the world’s first global compliance solution for eInvoicing, contact us today.
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