Invoices, like death and taxes, seem to be one of those irritating clerical parts of the supply chain that will always be with us. Companies spend an inordinate amount of time issuing them, receiving them, processing them, paying them – or not in some cases – which means chasing them.
So wouldn’t electronic invoicing be a great idea? No more troublesome pieces of paper to deal with. Well, it certainly could be a good idea. Except that the tax authorities of the various EU countries – and remember they’ll number 25 in May – seem determined to make it less of a good idea.
A couple of years ago, the European Commission produced a draft Electronic Invoicing Directive. Like many EC directives, it was pretty prescriptive. The guys in Brussels had a clear idea how they’d like e-invoicing done. But first they had to get the approval of the member states. So off went the draft to the then 15 member countries and, with varying degrees of horror, they all held up their hands and said: ‘We can’t have this.’
Each had its own response. The Germans, for example, had been allowing e-invoicing under their own rules – but only on condition that e-invoices were also printed out. But the Germans were happy to drop the printout idea. Not so the Italians. They still wanted e-invoices printed.
In Britain, the Treasury had its own thoughts which centred round how much easier it would be for fraudsters to manipulate e-invoices.
To be fair, the EC took all these comments on board and published a much less prescriptive draft. By the start of January this year all the member countries had stated how they planned to implement e-invoicing. So that’s all right then?
Well, not for a company that wants to make the most of e-invoicing across the continent because every country has interpreted the directive in different ways. So there are 15 sets of rules – it’s a case of confusion worse confounded.
Take one of the central features of the directive – paragraph 3.1.2, as a matter of fact. This says: ‘With regards to the exchange of invoices for goods or services by electronic means, the exchange shall be accepted by member states provided that the authenticity of the origin and integrity of the contents are guaranteed.’
But each country has been left to decide how it guarantees ‘authenticity of origin’ and ‘integrity of the contents’. So sending invoices to each member state involves knowing exactly what’s required by 15 sets of rules. For example, it’s now unlikely an ordinary e-mail invoice will cut the mustard. That will also be true for invoices sent from one company to another within Britain next year.
There’s been a lot of confusion on this point, largely generated by the Customs & Excise itself. Last November, it issued a notice saying it would continue to allow e-mailedinvoices within the UK without the security procedures of other EU states.
But in December it reversed that approach. So if you want to send an electronic invoice within the UK, you have to be able to guarantee the authenticity of its origin (that it came from your company) and the integrity of its data (that it hasn’t been tampered with in cyberspace).
Customs & Excise notice 700/63 sets out a formidable list of technical and other requirements it will expect a company sending electronic invoices to follow. These involve using an advanced electronic signature (which identifies and is uniquely linked to the signatory) or electronic data interchange (the computer-to-computer exchange of structured data).
But it’s not quite that simple. Within the UK, Customs says you can also use electronic invoicing if you can ensure security of authenticity and content by another means. It cites the security of networks, access controls or message transfer protocols such as http-a as acceptable means.
None of this rule-making is designed to turbocharge the growth of e-invoicing. Which is a pity because it has some rich benefits to deliver.
The invoicee reaps most of the savings from receiving, processing and storing. The invoicer makes smaller but still useful savings. Still, no doubt companies that want to reap the benefits will find ways to cope with the complexity. It’s just that it would be so much simpler if everybody could have agreed to do it the same way.