Exploring Mandatory e-Invoicing

Accounts payable (AP) is one of those functions that remains stubbornly wedded to legacy, ink-and-paper processes. Despite the emergence of AP automation solutions, many departments have been slow to automate. With the rise of mandatory e-invoicing, however, this is all set to change. Automation is fast becoming non-optional.

In this article, we're going to explore everything there is to know about mandatory e-invoicing: what it is, why it's important, and what you need to do about it.

What is mandatory e-invoicing?

Mandatory e-invoicing refers to a series of government and regulatory requirements for businesses to generate, send, and receive digital invoices. The idea is to make invoicing more efficient, convenient, secure, and traceable ― helping businesses maintain compliance and expediting the audit process.

E-invoicing has already become mandatory in numerous countries worldwide, and although the specifics may vary by region, the general idea is the same: to dispense with needless paperwork and modernize certain outdated aspects of accounting, while simultaneously tackling tax evasion. 

Businesses that can't comply with e-invoicing mandates face fines and other punishments. Depending on the regions in which they operate, companies will have a set amount of time to bring their financial systems and processes up to speed. 

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Which countries have mandatory e-invoicing?

More than 80 countries worldwide have implemented some form of mandatory e-invoicing. Any company that conducts business in one of these countries will be expected to comply with their mandatory e-invoicing requirements. Such countries include:

Argentina. Since 2019, e-invoicing has been mandatory in Argentina for all companies, including freelancers.

Australia. In July 2022, e-invoicing became mandatory for all Commonwealth government agencies in Australia. The country will gradually roll out mandatory e-invoicing for businesses by size.

Brazil. Brazil is ahead of the curve. E-invoicing became mandatory in the country way back in 2008, with suppliers required to submit their invoices to tax authorities before issuing them to clients.

Chile. Chile has gradually implemented mandatory e-invoicing for businesses by size, starting with large taxpayers before trickling down to smaller businesses.

European Union (EU) countries. The EU mandated e-invoicing for business-to-government (B2G) transactions in 2014. All EU member states must adopt these e-invoicing requirements, but many states have their own additional requirements too. For example, Italy mandated B2B e-invoicing in 2019, but it won't be mandatory in Germany until 2026.

GCC Countries. The VAT-implementing states of the Gulf Cooperation Countries are moving toward mandatory e-invoicing to curb tax evasion and streamline accounting processes.

India. In 2017, India introduced the Goods and Services Tax, which as part of its remit mandated e-invoicing for businesses that passed a predefined turnover threshold.

Mexico: Mexico has had mandatory e-invoicing requirements in place since 2014. Like many countries, Mexico initially employed a gradual roll-out before applying the regulations to all taxpayers.

Turkey: In 2023, B2B e-invoicing became mandatory for all Turkish businesses with an annual turnover in excess of TRY 3 million.

These countries are just a small sample of those to have introduced mandatory e-invoicing, while more countries are joining them each year. While nations like Brazil were at the vanguard of mandatory e-invoicing, it's inevitable that most regions will join them sooner rather than later. 

Will the U.S. and Canada get mandatory e-invoicing?

At the time of writing, the United States and Canada do not have mandatory e-invoicing requirements in place, and have no immediate plans to implement them. However, the U.S. ran a pilot in 2022 to test a virtual network that could enable B2B e-invoicing, and in Canada, B2G suppliers have been required to accept e-invoices since 2018.

However, regulatory landscapes can alter quickly, and a change in government often results in a change in policy. Furthermore, some companies and even government agencies have voluntarily adopted e-invoicing processes already ― either in anticipation of future mandates, or in recognition of the benefits e-invoicing can offer:

• Cost-savings
• Reduced data entry
• Enhanced compliance
• Convenience
• Fully searchable and traceable
• Fewer losses or duplicates
• Paperless
• Secure
• Superior reporting capabilities

What should you do to prepare for mandatory e-invoicing?

In many ways, the die has already been cast. Mandatory e-invoicing is now standard in a growing list of countries worldwide. That list will inevitably include the U.S. and Canada sooner or later. And even if it doesn't, consider this from KPMG:

"Regardless of whether a company faces such requirements in any given country, they will eventually face mounting pressure to implement e-invoicing amid a growing tide of adoption by industry partners in countries and jurisdictions where it is a requirement. Sooner or later, uniformity will reign supreme."
- KPMG

Whether your business deals internationally or not, it's time to read the writing on the wall and adopt e-invoicing capabilities now ― before the choice is taken out of your hands. AP automation solutions like Quadient AP can help businesses like yours comply with e-invoicing standards, while maintaining data accuracy and transparency.

Quadient AP delivers end-to-end automation of your entire AP workflow. By switching to e-invoicing with Quadient AP, you can accelerate invoice processing by as much as 9x ― automatically capturing invoice header data at 99% accuracy to cut manual data entry by up to 83%. Digital invoice storage enables you to search invoices by vendor, GL code, amount, or any other data point ― allowing you to instantly find any invoice and simplify the audit process.

To find out more about how Quadient AP helps prepare you for mandatory e-invoicing, get in touch to arrange a demo today.

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