• Henrik

e-Invoicing: automation, COVID and SMEs

Updated: Nov 10, 2020

In our previous post we discussed the impact that late payment of invoices has on society at large and small businesses in particular. If you missed that post, you can read it here

One potential way to reduce payment delays is to promote the usage of electronic invoicing in order to make the entire process more efficient and quicker. While this seems fairly straightforward and is not at all a new solution, there is still no uniform e-invoicing solution that has managed to convince a large section of European SMEs to switch from paper-based invoices and processes. However suppliers to public institutions are, in accordance with the EU’s e-invoicing directive, able to use e-invoices that follow a standardised syntax and data model developed by the EU. The syntax and data model is also publicly available with the aim to promote its usage outside of the public sector, and there is also a developer guide for service providers that want to develop e-invoicing solutions. As with other areas of technological advancement that have accelerated due to the effect of the COVID-19 pandemic, it would not be surprising to see a similar development when it comes to e-invoices. Indeed, according to Google Trends data using Electronic Invoicing as a topic, there seems to be a notable increase in searches of this term recently. This may be driven by businesses reacting after seeing the benefits from existing users, perhaps in the Q2 billing cycle.

There are a number of service providers that are seeking to develop solutions that make the invoicing process easier. But the main problem with e-invoicing will still remain, regardless of solution, as in order to have a fully electronic invoicing process you need system interoperability. This is hard to achieve in a segregated market where a wide variety of accounting and POS systems are used. This is why the EU has decided to to nudge development towardstheir preferred approach and agreed on the EN 16931-1 standard. Whether that approach finally will be the one that is followed and finally implemented is yet to be seen.

E-invoicing in Luxembourg The applicable rules regarding e-invoicing is found in the Law of 16 May 2019 which implemented e-invoicing Directive 2014/55/EU as discussed above. This makes the e-invoicing process mandatory for receiving and processing invoices for central and sub-central/local authorities and voluntary for businesses submitting invoices to public institutions. Electronic invoices in Luxembourg follow the PEPPOL-BIS and UBL 2.1 standard which need to be supplied through a PEPPOL access point. PEPPOL is a system used to enable business across Europe to communicate electronically with public buyers in various stage of the procurement process. This is precisely the type of platform-based service provider we would need for the private sector and hopefully will develop over the coming years. PEPPOL is also used outside of the EU in the US and Singapore.

Example of an automated e-invoicing process from the European Guide to e-Invoicing for SMEs Report (2009) Our approach At Yoba, we think there is huge potential in this area for SMEs. While the standards and acceptance continue to improve we also think business could benefit from some intermediate steps such as the machine reading of PDF invoices in order to allow faster processing. We look forward to telling you more about this in a future blog. Some useful further reading can be found below:

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