Governments around the world are pushing hard for unified tax collection and paperless data exchange. One of the most important changes concerns the regulation of electronic invoicing, which is becoming mandatory in an increasing number of countries.

Why are so many countries going paperless? The main benefits of adopting e-invoicing are:

• Reduction of tax evasion and increase in government revenues
• Cost optimization, as electronic invoicing can reduce costs by 60-80% compared to paper invoices.
• Make automation easier
• Minimize the risk of human errors by eliminating manual tax reporting
• Environmental concerns

However, the process of transitioning to electronic invoices is quite complicated and lengthy, with different countries adopting different formats, mandates, integrations with government platforms and, most importantly, dates when the new approach to data exchange will become mandatory.

Staying on top of these changes is crucial, as failure to comply with the new rules can cause serious problems – not only due to disrupted communication with your customers and partners, but also due to the sanctions that some countries are considering imposing on taxpayers who issue incorrect invoices.

How to Avoid E-Invoicing Penalties

Due to the number of different e-invoicing requirements, government directives and potential fines, there is unfortunately no one-size-fits-all approach to avoiding e-invoicing penalties. But these tips can help your organization reduce the risk of e-invoicing non-compliance and adopt optimal solutions in the future.

1. Generate your electronic invoices on time

One of the most universal causes of penalty is the late generation of electronic invoices. Understand the country(ies) in which your billing mandates apply and generate your electronic invoices as soon as possible after producing a taxable supply.

2. Ensure accuracy of electronic invoicing

Whether negligently or intentionally, governments will treat inaccuracies the same way. Although many countries have a “slap on the wrist” policy for first offenses, these mistakes can still be costly. Carefully review electronic invoices for accuracy and ensure the format and information is consistent with the governing body.

3. Stay Ahead of Potential Changes

E-invoicing mandates are on the rise and governments around the world are rapidly adapting to digitalization and modernization to reduce their indirect tax gaps (e.g. VAT). Be aware of upcoming changes and give your organization time to adapt and adjust your systems to remain compliant.

4. Use reliable e-invoicing partners

As the adoption of mandates continues to become more widespread, organizations (especially those with a global presence) will find e-invoicing a huge headache. Increasing complexities will only lead to increased penalties.

Take a proactive approach to global evolving e-invoicing requirements by choosing the right platform and anticipating upcoming regulations.

Would you like to learn more about the global e-invoicing mandate landscape? Download the new white paper, “Mandatory e-invoicing penalties around the world (and how to avoid them)”, available for free HERE.