Global E-invoicing: Entering New Markets

An economic climate that remains tough and the emergence of new markets abroad have encouraged many businesses to look further afield to find growth opportunities. However, when finding and entering new international markets there are inevitable operational hurdles to overcome before those opportunities can pay dividends.

Different laws, an alien tax system, language or cultural barriers and regulatory requirements around trade and financial documentation all have to be overcome. Financial processes are one element of entering new markets that can be particularly complicated. Researching and mastering these international variations can demand significant time and resources, which makes some markets a challenge to crack.

However, certain tactics can be employed to overcome a number of these hurdles. E-invoicing, in particular, has significant benefits when it comes to managing increasingly complex financial processes, which are an inevitable part of growing internationally. Not the least of these is the experience and expertise of the provider in managing the legal and regulatory boundaries of each market. E-invoicing provides a secure, efficient and flexible way to send and receive financial documents in a global business-to-business (B2B) commerce network, without worrying about international compliance issues, language barriers or the cost, risk and time taken for delivery.

In recent years governments and regulatory bodies across the world have initiated schemes to help expand e-commerce opportunities and simplify trade across geographic borders. At the heart of several of these initiatives is the automation of financial documents, thanks to the efficiency and simplicity it can foster. Through automation, particularly e-invoicing, governments, authorities and businesses are seeking to knock down operational hurdles to growth.

European Initiatives

In Europe the pan-European public procurement online (PEPPOL) initiative, co-funded by the European Commission (EC), has been launched to enable EU-wide exchange of electronic invoices and business documents amongst private and public businesses of any size. The aim is to foster European-wide commerce opportunities.

Global e-invoicing adoption spans a wide spectrum of maturity, from barely there in some regions to highly mature, often government-backed, initiatives in others.

In Norway, Denmark and Austria the development and adoption of PEPPOL and e-invoicing have been relatively rapid and these national governments have already stated that e-invoicing is or will be mandatory. In Denmark a mandate was introduced in 2005; Norway implemented PEPPOL e-invoices at the beginning of July 2012; and the latest from Austria is that from 1 January 2014 e-invoices will become the only way to send invoices to the federal government.

Further Afield

In Asia and Latin American areas of e-invoicing leadership have primarily been driven by the support of tax authorities. South America and Mexico in particular have driven e-invoicing by enforcement in public sector contracts and pro e-invoicing legislation aimed at reducing fraud.

Large European economies, such as Italy and France, are also introducing PEPPOL, but so far there have been no firm mandates to use it or e-invoices. This is largely because it first requires a willingness to change, and on a large scale this is more difficult to achieve – a simple mandate won’t work alone. The challenge lies not in converting invoices to electronic format, the difficulty lies in getting every business on-board with standardised processes at a local, regional and national level.

All of these initiatives hold great promise for increasing traction in e-invoicing. Ease of use and the potential for growth are the easiest ways to incentivise engagement with the change. However the future of the B2B commerce space holds even greater promise for reducing friction and building a global infrastructure of trade and collaboration.

A New Generation of Business Commerce: Mobile

The seamless interoperability of the mobile phone networks and banking systems provides the model for the future of the B2B commerce space. When buying a mobile phone contract with O2 you’d never expect to be limited to ringing only those on the same network. Similarly, when withdrawing cash or paying for items we’ve come to expect universal acceptance of our NatWest debit or Barclays credit card, regardless of what bank the company we’re buying from may use.

By contrast, when it comes to B2B commerce some suppliers have to join multiple networks in order to transact with customers. This can be even more prevalent as they enter new international markets where their e-invoicing provider may not have trodden. The drawbacks of these closed networks are that while they are doing away with some obstacles, it is only to introduce others.

However, this is where an open network really pays dividends; allowing a business network to grow by each business bringing its own network of buyers and suppliers to the table. As networks like this grow they bring more countries to the table, allowing businesses to trade and collaborate with a country on the other side of the world as easily as they would with one next door.

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