E-invoicing clearance systems are increasingly being accepted and implemented worldwide. This development, with its origins in Latin America, is viewed by many market participants as potentially increasing tax compliance efficiency for businesses and public administrations alike.
Mexico can be viewed as a relatively mature example of a clearance system. This country, where the tax administration outsources the clearance process to accredited agents (called PACs), processes around 10 billion e-invoices annually. This model has allowed Mexico to increase tax collection by 34% so far.
These are amazing figures which are inspiring other parts of the world including Asia, where countries such as China, South Korea, Taiwan and Turkey use or are introducing clearance systems.
In Europe, the trend towards automation in the compliance process is for now focused on reporting broader audit data rather than real-time transaction clearance – but we anticipate that this model will over time evolve into the clearance system direction.
Naturally, these government-driven initiatives are leveraging advances in technology and associated processes that are also revolutionising the world of business. As also mentioned in the 2017 Billentis market report, this includes the following trends:
- Blockchain: A blockchain is essentially a decentralised database in which every transaction is tracked and recorded. This system forms the basis for the virtual Bitcoin currency and is being used in more payment systems. There are also a number of proof-of-concepts on-going to evaluate how blockchain could be used in procurement and e-invoicing systems.
- Robotic Process Automation (RPA): These solutions may automate repetitive and rules-based processes that are usually performed by humans. In the e-invoicing sphere, such robotic solutions have the potential to replace tasks such as purchase order checks, payments, e-invoice delivery and tax calculations. Needless to say, this could lead to more efficient organisations.
- Machine Learning & Artificial Intelligence: These systems have the capability to interpret massive data flows and “learn” to detect normal patterns and anomalies. Such systems have the potential to optimise e-invoicing processes by reducing human intervention, detecting fraud, forecasting revenue, and adjusting prices in real time to dynamic levels.
- Advanced Analytics: Since e-invoicing networks process a huge amount of transactions, they are able to provide advanced statistics analysis based on big data. With such analytical systems, the e-invoicing service providers have access to powerful tools to check invoice contents, real-time spend analysis, competitive benchmarking, capture business trends, and detect fraud.
There is a real potential for convergence between business and tax administration processes leveraging these technologies – this would constitute a major opportunity for better and easier compliance. However, there’s an equally significant risk that the worlds of e-business and e-government will further diverge as a result of these powerful new trends. We need all stakeholders to think creatively about maximising the opportunity and minimising the risk.