Governments throughout the world are implementing government mandated e-invoicing for its ability to facilitate compliance and track fraud quickly and efficiently. Driven by the continual growth of global digitization, governments are increasingly leveraging technology to review every transaction in real-time. Real-time monitoring and enforcement has introduced a range of potentially costly penalties ranging from fines to shutting your business down completely. As many governments move towards new e-invoicing laws, IT leaders must devise a plan to handle these changes.
We spoke with five of our experts at Sovos, about how this shift will affect IT departments and how they can best prepare. The following is a sampling of what they had to say on these topics and how the role they believe IT should play.
With government authorities now in companies’ data and demanding real or near real-time reporting, what impact will this have on IT departments?
According to Ryan Ostilly, VP of product and GTM Strategy, EMEA & APAC, “IT teams will have to work hard to ensure their core finance and transactional tax systems have the enhanced capability to extract, transform, remit and consume real-time data with all tax jurisdictions across their global footprint, in compliance with an ever-changing myriad of legal and procedural requirements. I fear that in a growing number of cases, the owners of the data may be functional departments. The IT department will need to evolve its role in this relationship, viewing the government as a critical business partner – one with whom they must always be connected, continuous and complete.”
Another main concern for IT departments is data aggregation/reconciliation and how it is now considered a “must have.” Oscar Caiedo, VP of Product Management for VAT Americas, discussed the challenges businesses face with data aggregation/reconciliation. “Registering data in real time with local regulators was the initial challenge. The current challenge is ensuring all systems involved are maintained in sync and are always fully harmonized.”
To meet government mandates and ensure operations continue uninterrupted, what should IT prioritize? What approach would you recommend?
IT should focus on the end goal: implementing a centralized approach to these government mandated e-invoicing laws to ensure a globally consistent approach to all digital filings. There will be cost reduction as the number of vendors and tools are consolidated, and risk will be further mitigated through increased standardization and visibility. Steve Sprague, CSO and General Manager, VAT, breaks down the significance of synergy, “I can’t overstate the importance of implementation synergies as requirements increase and expand. This is only going to get more complex as time goes on.”
In today’s world, tax and IT go hand in hand, a key success factor is the degree to which IT and tax can team up to affect change in the organization. Christiaan Van Der Valk, VP Strategy and Regulatory, talks about the importance of IT and tax teams working together for the common goal. “IT and tax need to work closely together to raise awareness among all corporate and country stakeholders on the importance of a coordinated, strategic response to this profound change. The role of tax technologists who specialize in these interdisciplinary challenges cannot be underestimated.”
Amit Venugopal, CIO, states that “as organizations make the move to a centralized approach, they need to be aware that the blast radius of “failure” affects more than a single country.” To combat this, IT organizations need to have strong procedures and plans in place that help to both avoid these situations and quickly limit the damage if a problem does occur.
Led by countries such as Brazil, France and Germany, the growing shift toward government mandated e-invoicing is here to stay. Global organizations must adapt to avoid costly fines and to survive in today’s digital economy. Companies are now heavily leaning into their IT departments to meet the demands of transparency and real time reporting. For organizations looking to stay ahead of the curve, aligning your tax and IT departments is a crucial step in remaining compliant.
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For more information on how to manage government mandated e-invoicing, download the E-book: Government Mandated E-invoicing Laws are Expanding Globally.
