Latin America is the world’s leader in government electronic invoice mandates, as jurisdictions there address issues like invoice fraud and a lack of transparency in government procurement — efforts that proponents of these mandates say can positively influence the private sector.
In a recent blog post citing Billentis research, Sovos highlighted some of the successful eInvoice mandates across Latin America, with Brazil reporting $58 million in tax revenue increases as a result of such a mandate, while Chile and Mexico were able to reduce their VAT gaps by as much as 50 percent. Colombia, meanwhile, used an eInvoicing mandate to cut tax evasion by 50 percent, researchers found.
For businesses, digitization of invoices promotes process automation in the supply chain and procure-to-pay arenas, the blog post noted.
Those benefits are spreading beyond Latin America, too, with the latest initiatives focused in Europe.
Late last month Sovos announced the acquisition of Foriba, an eInvoicing company based in Turkey. At the time, Sovos noted the country is “one of the few countries outside of Latin America with a mature eInvoicing mandate.”
Other markets in Europe are playing catch-up.
One of those is Italy, where delayed invoice payments in both the private and public sector have raised concerns about business-to-business (B2B) and government-to-business (G2B) payment practices, as well as about the government’s rising debt. At the beginning of the year, Italy’s eInvoicing mandate for the private sector came into effect, requiring all transactions — with exceptions for certain small businesses — to ensure invoices are accessible via electronic means.
The traceability of transactions via B2B and business-to-consumer (B2C) eInvoicing enables Italy to combat fraud and tax evasion, reports in Fieldfisher said last October, and adds on to Italy’s existing eInvoice mandate for the public sector, which has been in effect since 2015.
While eInvoicing could, in theory, promote faster vendor payments, the Italian government’s lengthening supplier payment practices suggest that the public sector eInvoice mandate has not had such an effect.
As Italy’s eInvoice mandate continues to evolve, similar regulatory initiatives have surfaced in Norway and Ireland.
Reports in ZDNet last week said Norway lawmakers have introduced regulations to require eInvoicing in the public sector for both local and state level governments in an effort to accelerate digitization and save money.
“The use of eInvoices saved the nation almost [$544 million] in 2018,” said Norway minister of digitalization Nikolai Astrup in a statement. “As we now mandate state and local government to require eInvoices, we expect the gains to be even higher.”
Electronic invoicing is on the rise in Norway already as part of the European Union’s PEPPOL electronic document exchange, reports noted, with more than 90 million eInvoices sent in Norway last year.
According to reports, government suppliers will only be considered for contracts if they comply with eInvoice mandates.
“Suppliers who want to compete for public contracts will have to comply with the new regulations,” Astrup said, adding that Norway spends about $58 billion per year on products and services for the government. “This will contribute to increased digitalization in the business sector and ensure that more of the procurement process becomes digital.”
He told the publication that eInvoicing combats errors, accelerates processes, reduces paper waste, and promote correct and timely vendor payments.
Late last month, the European Commission issued formal notices to 12 member states, including Ireland, accusing them of failing to implement EU eInvoicing rules in public procurement under the European Directive 2014/55/EU, which requires the public sector to receive and process standardized eInvoices.
“The European Commission has identified eInvoicing as a key enabler in Europe’s move towards a Digital Single Market,” Lexology reported Tuesday (June 11).
Yet the publication found that Ireland’s Office of Government Procurement, which established “eInvoicing Ireland” to comply with the EU’s eInvoicing Directive, is now in the crosshairs of the European Commission.
“The Commission has taken the view that Ireland has still not complied with its obligations and has taken steps to commence infringement proceedings,” the report said.
The publication did not note which other member states received such letters, but the Commission’s action suggests Europe is accelerating its focus on eInvoice mandates following the successes seen in Latin America.