| Author: |
Martin Diviš, PricewaterhouseCoopers |
| Publication: |
Czech business weekly |
| Date: |
6/2/2006 |
While e-invoicing and e-archiving offer competitive advantages, 64% of European companies are missing out. A study by PricewaterhouseCoopers predicts there will be a lot of catching up in those areas over the next 12 months. According to a PwC study called e-Invoicing and e-Archiving - Taking the Next Step, only 36% of European companies with a high volume of invoices actually use these electronic solutions.
The concepts are pretty straightforward. E-invoicing is the sending of invoices by electronic means, while e-archiving is the storage of electronic invoices. The companies examined in the study have at least Euro 100 million (2.84 billion Kč) in revenue and process at least 2,000 invoices a year. Some 28% of the companies send out more than 500,000 invoices per year.
According to the study, 71% of companies that have implemented these solutions benefit from increased efficiency, 61% report cost reduction and 38% report faster payments. In addition, 21% reported a reduction in disputes with customers and suppliers about invoices.
Some respondents indicated that they chose or would choose e-invoicing because a significant number of customers (19%) or suppliers (16%) would prefer to work electronically. However, 35% of companies say their customers aren't ready for or are unsuited to a system of einvoicing. This also applies to 21% of their suppliers. For 30% of those surveyed, their internal systems aren't compatible or ready. Other obstacles include the complexity of the solutions, which was a drawback for 23% of companies. Some 24% balked at the high investment cost and 10% feared too low a yield.
Keeping a paper trail
Currently, 38% of the companies that have implemented e-invoicing still exchange paper invoices in parallel, but this is no longer needed if their technical solution has been well-implemented in a compliant fashion. In a test phase, paper originals or paper copies might still be useful, but in a production phase, it should be possible to achieve a completely "dematerialized" process.
If companies use both electronic data interchange (EDI) invoices and parallel paper invoices, they should make sure it's clear which invoice stream qualifies as the original invoices and which are "copies." Otherwise, the companies might end up with the risk that the tax authorities consider these two valid streams, with the result that VAT should be paid twice or that penalties are set for noncompliance for one of the invoicing streams.
In general, companies tend to feel well-informed about most dematerialization technologies. They are most familiar with scanning (78%), einvoicing (64%) and EDI (64%). Of the respondents, 22% feel less well-informed about electronic signatures and 17% about earchiving. Companies that have already implemented e-invoicing most often use scanning, EDI, and electronic bill presentment and payment (EBPP). The latter refers to invoices for B2C sales that are sent and paid over the Internet. Implementation plans for the coming year predominantly focus on advanced electronic signatures and electronic invoice presentment and payment (EIPP), which concerns the B2B environment.
Big shift expected
E-invoicing and e-archiving are still in their infancy, but the legislation is ready and the technology exists. It's now up to companies to take the next step, and they certainly will do so. In 12 months, the results of a study on this topic will look completely different.
Twenty% of companies with a high volume of invoices are currently in the process of implementing e-invoicing and 29% plan to start within the next 12 months. Only 3% have ruled out implementation, while another 23% of companies haven't yet fully considered e-invoicing.
As for archiving, four-fifths of companies still store invoices on paper, but 72% archive the invoices on a server at the same time. Other media on which electronic versions are stored are CD-ROM, at 29%, DVD, at 15%, and tape, at 28%. Be aware that electronic invoices must also be archived electronically in most EU member states and that printed copies of electronic versions aren't compliant archives. Only 5% of companies archive abroad, most likely because most companies still archive paper versions and that's more easily done locally.
The 2001 European VAT Directive concerning invoicing, aims to simplify, modernize and harmonize e-invoicing and e-archiving with regard to VAT. By January 2004, this directive was to have been integrated into the national legislation of each of the 15 existing member states, with a date of May 1, 2004, set for the 10 newly joined member states. Although the legal obstacles have been removed, many companies are only now looking at implementing e-invoicing and e-archiving. Even though the requisite technological solutions are available and significant increases in efficiency and reductions in costs are expected, einvoicing and e-archiving are not yet widely used.
