Grocers and other food businesses have seen tremendous technological changes in the last few years– and more are coming. How food companies invoice their B2B customers is changing, due to new e-invoicing mandates. Currently, the companies affected are ones that have international locations in affected countries or who do business with partners in those locations.
However, as e-invoicing grows, it’s likely that this process will become the global standard, if not the requirement.
Let’s take a look at what these changes are and what they mean for food businesses.
An expanding mandate for change
When many food businesses send a bill to their business clients, they email attachments or send paper invoices or PDFs. As the food business goes digital, companies increasingly send electronic or e-invoices. This process streamlines the payment process by reducing paper, speeding approval, and reducing eros and processing costs.
Beyond the operational efficiencies, food businesses have even more reason to use e-invoicing. New global e-invoicing mandates make implementing the process imperative.
Understanding the global e-invoicing mandate
The mandate has been in development for years, especially in Europe. A decade ago, Italy made electronic invoicing mandatory for business-to-government transactions, and five years later, expanded the requirement to include B2B and B2C interactions. Now, over 80 countries have imposed e-invoicing mandates on businesses.
Countries use the mandate to increase the transparency of sales transactions and address VAT discrepancies. With the typical e-invoicing mandate process, instead of the food company sending the invoice directly to the customer, the food company submits the e-invoice in a specified format through a government tax authority portal. There, the government approves the invoice, tracks taxes, and sends the e-invoice to the customer for payment.
Although most grocery businesses impacted by these mandates are in Europe, the requirement also affects those that do business with partners in any of the 80 countries.
While businesses operating in North America are not currently required to provide e-invoicing, that may soon change as more countries implement this directive. However, when that time comes, food businesses in the United States and Canada may not be ready. Nearly one-half of companies surveyed said they still invoice by paper.
Complexities of e-invoicing
Switching to e-invoicing is more complicated than just switching bills to being online. Each country has its own regulations and invoices must comply with each requirement.
France, for example, has one deadline for large and medium businesses and a different one for small enterprises. Germany has 16 federal states–with their own e-invoicing regulations. E-invoicing complexities aren’t limited to European countries. While Chile, Argentina, and Brazil are considered advanced in their mandatory e-invoicing progress, numerous Latin American countries are at different implementation stages.
Making the issue more complicated, if a U.S. or Canadian food business has overseas subsidiaries that are affected by the mandates, the business has to determine whether the subsidiaries, corporate headquarters, or global provider heads the process. Even in one company, the finance, tax, or procurement departments might handle e-invoicing– making it difficult to maintain consistency. Often the local business or partner may be more aware of invoicing requirements than the headquarters, requiring clear communication to eliminate confusion.
Getting e-invoicing right is essential. Those companies that don’t, can get fined. Governments may also delay payments to non-compliant organizations– significantly limiting their cash flow.
Although much of the focus is on why it is important to be aware of and meet the new e-invoicing mandates, it’s also important to recognize the benefits e-invoicing offers business operations. E-invoicing streamlines the process making it easier to exchange documents with trading partners. It also decreases the likelihood of errors and speeds the payment cycle.
As e-invoicing increases globally, food businesses must ensure they prepare for the changes.
How U.S. and Canadian businesses can get ready for e-invoicing
- Know the current e-invoicing regulations. Many companies aren’t familiar with the mandates and can be caught unaware. Stay up-to-date on shifting regulations in the food industry by monitoring government websites and food industry publications.
- Look at your current invoicing system. If you currently use an e-invoicing system, look at factors such as data format, integration capabilities, security, and storage requirements to see how compatible the current system is with the new requirements and if gaps exist.
- Evaluate e-invoicing providers that offer legal compliance with the myriad of regulations.
- Implement and test the new process, including training employees on the procedures. Do pilot tests to ensure the new process integrates with the entire system.
- Assess and ramp up current security and privacy measures. E-invoicing mandates often have heightened requirements to protect sensitive information and to follow enhanced privacy regulations.
E-invoicing is becoming a global standard. Even if companies aren’t required to adopt e-invoicing they can still benefit from implementing it, to streamline business processes now, and to prepare for the future.