E-Invoicing across the European Union
Electronic invoicing, or e-invoicing, has been around for a long time. But it’s only recently been getting the attention it deserves as a means for strengthening the financial supply chain. Increasingly, companies across the EU are recognizing the potential for speed and savings that e-invoicing offers.
Savings like 60 percent to 80 percent over traditional paper-based processing.
Even so, most companies remain mired in slow, manual invoice management processes. Each company may have its own reasons, but common barriers to adoption are concerns and confusion about legal and compliance issues raised by e-invoicing practices.
E-Invoicing is legal
E-invoicing in the EU was legalized on 1 January 2004 via the implementation of the First Directive on VAT Invoicing by Member States. That directive was amended in January 2013 with a second directive that established the principal of parity, making it clear that electronic invoices have the same legal status as paper invoices and must be dealt with according to a single set of VAT rules in each country.
In effect, the intent of legislation and regulation and has been to encourage adoption of both domestic and intra-EU e-invoicing, as well as to simplify compliance.
How SAP Ariba can help
SAP Ariba helps countries in the EU comply with legal and regulatory e-invoicing rules by connecting buyers and suppliers through the global Ariba Network. Think of SAP Ariba as a smart invoicing network that validates e-invoices by automatically matching them to purchase orders or contracts. This way, suppliers can correct any errors before an e-invoice reaches a customer.
In addition to operational cost and time savings, e-invoicing over the network can help buyers achieve better than 98 percent touchless processing and help suppliers reduce days sales outstanding (DSO) by an average of six days.
Buyers use SAP Ariba to support global e-invoicing programs because Ariba solutions can be configured with business rules at the country level and apply these rules to country-specific e-invoice templates. These rules support VAT and other indirect tax methods and help buyers comply with e-invoicing regulations. Business rules are based upon Ariba best practices and expert tax research into e-invoicing legislation by country, relating to domestic, cross-border, and intra-EU trade.
In addition, SAP Ariba publishes tax compliance country guides for more than 36 countries in Europe, the Middle East, Africa, North America, and Asia-Pacific to further help companies ensure compliance with their e-invoicing solution. We also offer an e-archive service that can help address the e-archiving requirements of the European Union.