Member Article

5 tax-compliance questions for e-invoicing request for proposal

Rochelle Cohen, senior product marketing manager at GXS, shares 5 tax-compliance questions you should include in any e-invoicing request for proposal (RFP).

Today’s business environment places a lot of emphasis on streamlining work and cash flows. E-invoicing can offer a solution to this challenge by providing huge financial and efficiency savings if implemented correctly. However, many companies have been left confused as to how to best introduce and use an e-invoicing solution. Varying regional regulations can often be a source of misunderstanding and error when companies exchange electronic invoices. For example, a supplier in Germany will have different legal requirements for e-invoicing than a buyer in France. Failure to act in accordance to these different regulations could end with sanctions and financial penalties to the offending company. To avoid this, it is important to keep these 5 questions in mind when considering your e-invoicing solution.

1) Data requirements – Does the solution support varying country-specific data requirements? If so, which ones, and how are they implemented?

Data requirements vary from country to country. For example, a UK invoice is required to display the place of legal seat but not the legal form of the company, while a French invoice is required to detail both. Other countries such as Australia require little information about the company itself to be on the invoice, but requires transactional details such as item quantities, item prices, VAT rates, and VAT amounts. Your e-invoicing solution should support all of these requirements as needed so work with a provider that can offer this support.

2) Authenticity and Integrity – Does the solution support varying country-specific requirements for guaranteeing the authenticity and integrity of electronic invoices? If so, which ones, and how are they implemented?

In addition to data requirements, it is necessary to take into account the different methods for ensuring the authenticity of an electronic invoice between regions. This includes digital signatures and EDI invoices as well as country specific requirements. For example, EDI in France requires a trading partner list, as well as daily, automatically generated invoice summary reports in addition to the invoice. In some countries such as Spain, digital signatures are not mandatory, but extensive use particularly in the retail sector has made them a cultural requirement. E-invoicing solutions must be able to account for variances in compliance information on a country-by-county basis – this is particularly important if your company deals with different EU member states.

3) Archiving – How does the solution provide invoice archiving?

Buyers and supplies are both required to store copies of their e-invoices. All the relevant documentation must be stored in a human readable format upon request of the tax auditor. The stored information must include proof of the integrity of the document, as well as any country-specific legislation and data-storage laws. Importantly, all of this data must be kept secure. It is important, therefore, to ensure that your e-invoicing solution allows for data storage in a secure environment, while providing an audit trail of all transactions.

4) How does the solution speed compliance with auditor requests?

Companies are often inspected by auditors to ensure compliance with a variety of necessary regulations. Whilst these audits can be very time consuming, your e-invoicing solution can help smooth out the process, reducing the time and amount of resources required to provide invoices to an auditor. Your solution should enable you and/or the tax auditor to easily search the electronic archive for any and all invoices in question with minimal effort.

5) How does the solution keep up with frequently changing tax regulations?

E-invoicing regulations around the world often change, which can mean that your solution could become out-dated very quickly. An out-dated system could spell disaster when the auditor visits. Your e-invoicing solution should therefore include a facility to ensure the latest changes in regulations are met, allowing you to stay compliant at all times.

This was posted in Bdaily's Members' News section by Rochelle Cohen .