U.S. Compliance Roadmap 2021
The United States is one of the most digitalized countries on earth. Without exaggerating, one could say it is where digitalization was born. The cradle of the internet has given birth to most major information technologies currently used by companies and governments around the world.
American companies are heavily involved in innovation and digital transformation. Constant investment in those areas has resulted in continuous implementation of new information technologies that help optimize private businesses. This tendency will continue throughout the year as Robert Gallo, EDICOM’S US Sales Manager mentions below
The benefits of digitalizing business processes in the US is already known and although the transformation is long underway, there is still significant room for growth. Even without government support like we see throughout Europe, LATAM, and Asia the market for digitalizing business processes in the US is expected to reach $ 757.63 billion by 2025. This is expected to be spurred by investment in new technologies such as Artificial Intelligence and Machine Learning, but many companies (especially SMEs) still have the opportunity to take advantage of more traditional digitalization processes such as OTC & P2P automation, robust cloud based ERP & CRM rollouts, and the adoption of digital signature software.
However, when it comes to compliance unlike Europe or Latin America there is no standardization in the electronic data interchange arena especially when it comes to B2B2G transactions. This particularity is primarily due to the U.S tax system, which is completely decentralized, with different fiscal compliance laws based on local and state tax regulations. This has led to overlapping and complex taxation models with their own tax declaration systems.
Currently there are many initiatives focusing on the simplification of the current system through the standardization of the electronic invoice. Amongst those initiatives the Business Payments Coalition (BPC) stands out. The BPC is currently working to create a standardized model for the electronic invoice and the development of a network for the exchange of similar documents like those developed in other countries.
The future of this framework is still unknown. There will be no government mandate to adopt the model, which we have seen done successfully in other developed countries. Instead, key stakeholders and hubs in the industry will need to drive adoption. What is certain is that if adopted, the model will reduce invoicing complexity for companies in the US by allowing them to leverage a standardized approach with both suppliers and customers, states Robert Gallo.
Currently there is no state B2G electronic invoicing mandate, but some government agencies have taken initiative and make their suppliers electronically invoice them. They have implemented their own standardized telecommunications infrastructures and standards like the Invoice Processing Platform or WAWF. However, these efforts to optimize public e-procurement do not seem to go far enough as Robert Gallo suggests, “While these portals do support electronic invoice formats, their automation capabilities are still lacking. Suppliers can send invoices to the portals electronically, but invoice responses and other documents are only available by logging in manually. This lack of functionality means businesses are not able to reap the full benefits of an automated processes and more often than not, opt to manage the entire process manually.”
The proliferation of interchange formats and platforms in the different administrations carries many cost inefficiencies since they all have overlapping functions increasing public expenditure. Not only does it increase government costs, but it also increases compliance costs for public entity suppliers. For example, the federal government of the United States processes 19 million invoices per year and only 40% are electronic invoices.
As demonstrated above the standardization of the electronic invoice at a state level that optimizes both government and private management of business transactions is a necessity. Because of this decentralized model it is necessary to have a technology partner that can integrate information from various trading partners in the private and public sectors.