LATAM e-Invoicing, European e-Invoicing
Frequently asked questions on Global e-Invoicing
What is a B2B e-Invoice?
- In the EDI sector, B2B e-Invoicing refers to when transactions are exchanged by electronic means in a habitual business relation between members or partners. In other words, it is the invoice that is exchanged in the private sector between a client and the provider of goods or services. This type of electronic invoice always has a legal framework to comply with to be able to engage in business operations, including e-Invoicing. Nevertheless, depending on the region or country of the world, this legislation may be compulsory, as in the case of the Latin American region, or simply provide a basic framework for businesses to integrate this document within their customary workflow, as is the case in Europe.
What is a B2G e-Invoice?
- B2G - Business to Government - is the type of invoice where the main recipient of the transaction is one or several Public Administration authorities. In this interchange flow of fiscal information, the issuing parties are providers of goods and services to the Administration. Normally, in addition to the existence of a set of regulations governing the technical and legal features to be used in issuing and receiving e-Invoicing, there is also a governmental obligation both for suppliers and official bodies to adopt these electronic systems. The latter concept, at least in Europe, constitutes a differential point between B2B and B2G e-Invoicing.
I already have an EDI solution. Can I send invoices?
- Yes, electronic data interchange technology is the basis taken by e-Invoicing systems to link up the partners. In fact, the invoice message, in a dataflow exchange between partners, is one of the most common operations, along with the purchase order or despatch advice. In this sense, if you already have an EDI solution for interchanging these or other business and logistical messages with your trading partners, you are now ready to integrate this transaction into your communication flow. However, you must consider other provisions that particularly affect these e-documents depending on the legislation, such as data encryption processes (electronic signature), or the obligation to submit online tax returns to the relevant Tax Administration. If you would like to know what type of e-Invoice you need to issue to your public and private partner, please do not hesitate to contact our business consulting service.
What distinguishes the e-Invoice from other types of EDI message?
- An e-Invoice is a structured data documents (EDIFACT, XML, X12… etc.) issued in electronic format with similar technical features to those of an order, despatch advice for goods, or receipt confirmation handled via EDI technology. The main difference resides in the fact that it is a legal document with fiscal implications, which means that certain stipulations and precautions must be observed to ensure the document’s integrity and authenticity. These special security measures are determined by the implementation of data encryption processes. This is where the secure electronic identification mechanisms come into play, allowing businesses to engage in activities where e-signature replaces its handwritten counterpart with identical legal guarantees. Again, the specific regulations on taxation and fiscal affairs of each country, will affect the type of electronic schema utilized (XML, EDIFACT…etc.) and the fields deemed mandatory, as well as the encryption measures to be applied.
I am a Public Administration supplier. Am I required to send electronic invoices?
- The current trend in European governments is to legislate in favor of the rollout of e-Invoicing systems in business relations between suppliers and public administration departments. Countries such as Spain, Italy, France and Portugal already have specific regulations in place to this end. However, many more countries around the world are still in the process of developing their mandatory e-Invoicing models in the authorities’ relations with their suppliers, setting out different technical and legal requirements affecting the formats, delivery procedures, response management and electronic signature of documents.
What do I need to send electronic invoices to the Public Administration?
- First, it is necessary to comply with the regulations on e-Invoicing issues specified by the Tax Authority of the country where we have to issue e-Invoices. Although certain regions like Europe, through Directives such as 2014/55/EU affecting all member states, are seeking a normalizing and unifying effect, there are always certain features which mean that no two e-Invoicing models are ever identical. So, each country sets out its own requirements in terms of the communications and channels used to transmit these documents. In almost all cases, these channels are usually of two kinds:
- Web portals: These are solutions developed by the public administration itself, making it possible to upload invoice data manually through a web portal.
- Web Services: Devised for the unassisted automatic delivery of large volumes of documents, web services usually require the prior implantation of an integration module to allow data extraction from the management system and transformation into the invoice standard required by each administration.
What is the e-Invoicing situation in Latin America?
- Latin America is by far the world region where use of electronic invoicing has seen most growth. In this part of the world, there are different models which usually make the use of this invoicing system compulsory, both for B2B and B2G relations. Behind this requirement lie the great possibilities it provides the tax authorities in the drive to control tax evasion, thanks to systems that require declaration of the documented amounts to the authorities beforehand, and/or the registration for electronic tax control codes as a preliminary step before sending the document to its recipient. Controls and electronic stamps like these will grant the document validity for tax purposes, being liable to rejection by the recipient when the document does not have them.
Do I necessarily have to engage the services of a provider to do electronic invoicing?
- In most cases, the answer is ‘no’. As is the case with other EDI transactions, you can choose to develop your own e-Invoicing system in-house, provided it complies with the legal and technical requirements of the country where the invoices are issued. Nevertheless, especially if your business issues and average to high volume of e-Invoices, it is highly recommendable to engage the services of a specialist EDI and e-Invoicing services provider. A specialized e-Invoicing solution provides automation and secure delivery of a critical document like the invoice in day-to-day business operations.
In what cases will I be required to engage the services of an e-Invoicing services provider?
- In some e-Invoicing models, especially those gaining ground in Latin America, the figure of the certified e-Invoicing services provider is an important agent in the process of validating and submitting tax documents to the pertinent Tax Authorities. These are providers of invoicing services that have undergone different official audits to endorse and certify the solvency of their technological platform and, of course, that they comply with all legal regulations and requirements. In this e-Invoicing situation, these certified service providers take over the task of receiving the e-Invoices, validating their correct syntactic construction and providing an electronic seal or stamp that certifies their validity. The process is completed with submission of the document to the Tax Authority or Treasury.
My business has subsidiaries in different countries. Can I issue all my invoices in accordance with the features of each country from a centralized ERP?
- Yes. Data integration technology deployed by specialist providers such as EDICOM automates the standardization of e-Invoicing according to the characteristics of each country, based on a single data interface. A Global e-Invoicing solution develops a single data matrix concentrating all the information required to construct the different invoices. The solution is totally scalable and can easily be extended in line with the company’s growth in the international scope. Workflow centralization is completed by integration of the solution with the company’s central ERP, which is the source containing all the invoicing data needed to construct the master file. Through advanced systems for data processing, e-signature and online submission of tax returns to the competent tax authorities, large volumes of electronic invoices can be processed both in issuance and reception, duly integrated with your internal management system, automating the entire process of generating, sending and integration into accounts payable systems in the case of invoices received.
Can I manage all my invoicing with private partners and Public Administrations from the same solution?
- Of course, you can. With the same data integration technology that makes a global e-Invoicing solution possible, we can extend the range of the platform to any partner, whether public or private. All we need to do is suitably identify the recipient of the invoice in the data structure created by the ERP, and the centralized e-Invoicing platform takes over the tasks of acknowledging the recipient and applying the necessary transformations as set forth in the regulation. So, when the recipient is a public authority of a given country, it will be the platform that adapts the data to the standard defined by that administration, while also automating sending through the channel requested by said recipient. Likewise, the platform will recognize the recipient when it is a private company, applying the transformations and checks set out both in the document issuing country’s legislation and in the business agreements adopted by issuer and receiver.