A year ago, on the 17th of April, the 2014/55/EU Directive on “Electronic Invoicing in Public Procurement” came into full effect. From that day forward, electronic invoicing in the Business-to-Government sector became mandatory in the European Union, making both governments and businesses fully aware of the need for digitalization.
While the recent Covid-19 epidemics and the measures that followed slowed down commercial activity, the same events might actually speed up e-invoicing adoption. According to a recent Billentis article, the electronic invoice volume for businesses is not expected to drop, a fact that was confirmed by previous crises. Additionally, since late payments are now a huge issue, many companies that were not required to have such systems in place are thinking of implementing them. Even more, as the deadline for e-invoicing implementation at a subcentral level has just been reached, many countries plan to make the process mandatory in all business areas. To see how this can be accomplished, we shall take a look at how individual European governments have implemented the European E-Invoicing Directive and on what the private sector can learn from their experience.
As expected, a few countries like Austria and Italy anticipated the legislation and created their own legal framework back when the directive was first announced. In fact, aside from having a legal framework from 2014, Italy implemented a clearance model in 2019 where invoices are sent in real time to both Government and business partners. Such a model can easily reduce friction and paperwork on both sides and save a lot of time. Luckily, this model is not unique. Hungary is planning on applying a similar model while In Poland, a unified B2G and B2B e-invoicing model is currently being developed. Much like Italy, the Polish government plans on creating a centralized e-invoice exchange platform that will be active in 2022.
Other countries such as The Czech Republic and Spain were also among the first to implement the model, and some of their neighbors even took the legislation a bith further. Beginning with April 2020, Portugal planned on making e-invoicing required for all companies with more than 250 employees. While this process has been slightly delayed because of the global health crisis, the initiative is still a priority.
Countries such as Finland have reported that more than 90% of exchanged invoices with the government are now electronic, proving that electronic invoicing is slowly becoming an European success story. However, few have tried to take government-level digitalization further than France.
While France has adopted the 2014/55/EU Directive from 2017, its also been quick to push other measures for the large scale use of electronic invoicing, especially within the B2B environment. In fact, in 2019, France drafted a plan that was meant to boost electronic invoicing in the business sector, a plan that was included in the 2020 Budget Law. According to it, France plans to implement mandatory electronic invoicing for all sectors by 2023. This provision will bring immense changes in both the way business is done, but also within individual accounting and procurement departments.
To better see how these measures impacted the business sector but also how opinions on digitalization shifted, we can look at a 2019-2020 Markess survey, comissioned for DocProcess, on P2P and AP automation. According to the study, 52% of decision makers in the French business sector considered P2P digitalization a main priority and 58% already had a paper document dematerialization solution in place.
When it came to electronic invoicing, almost half of respondents claimed to have a proficient solution installed, while 35% of them planned on having one until 2022, before the aformentioned legislation was in effect.
Regarding digitalization, accounts payable invoicing were prioritary in 65% of the cases, with the study identifying three main courses of action for implementing electronic invoicing in AP. The first was creating a workflow that allowed legally compliant audit trails, the second refered to electronic signature implementation, while the third pertained to using a structured format that abides current European standards.
In other words, France is not just getting ready to follow the European E-Invoicing Directive, but is already taking steps ahead of it, making sure the business environment is prepared for a completely digital and bottleneck-free electronic invoicing model. Also, since the current health crisis has made many businesses increase their digitalization spending, it’s clear that electronic invoicing is no longer an objective, but a fact.
Starting from April 2020, EU Public Administrations on all federal levels should be e-invoicing and e-procurement ready. This means all businesses in contact with them will have to do the same. And, if we are to base our predictions on France’s model, it’s clear that all businesses, regardless of their size and partners will have to be e-invoicing ready in a couple of years.
So, where should you start when preparing your business for digitalization? As the study above shows, the best place to start might be the procure-to-pay process, a process our company can easily help you with. By using a change management approach, DocProcess helps companies transform their ecosystem from a paper-based business model to a complete electronic exchange system.
Our company develops digital transformation solutions for procurement, logistics and financial-accounting processes. The solutions can be used by companies in a wide range of industries: retail, DYI, manufacturing, logistics , utilities, IT, pharma, insurance and banking, as well as services such as BPO (Business Process Outsourcing) and SSC (Shared Services Centers). Our offer includes a wide range of platforms covering P2P automation, e-catalog management, paper dematerialization, electronic archiving, and contract management. And, of course, electronic invoicing that’s fully compliant with the European E-Invoicing Directive.
So why not anticipate the future of invoicing and give our consultants a sign? If you want to consult the entire survey, feel free to download the infographic.