E-invoicing Consolidation: The New Tax Transformation Challenge
While e-invoicing regulations are taking over the world and affecting businesses' operations in many ways, e-invoicing consolidation is one of the biggest needs and challenges.
Most e-invoicing regulations require real-time submission of invoice data to invoice platforms (being it a government platform or a platform from an outsourced private company) which gives real-time visibility to tax authorities about each and every transaction for each taxpayer. While this data provides transparency to tax authorities, businesses are struggling to have the same visibility on their own transactions. This might be due to several reasons:
- Having multiple systems for billing and invoicing,
- Having several e-invoice submission mechanisms,
- Having multiple service providers,
- Having multiple operation channels and systems used in the back-end generation e-invoices separately etc.
Why Consolidate?
When data is scattered across the organisation, businesses are unable to assess the accuracy of their tax-relevant data. This is particularly alarming for e-invoicing, as the tax authorities might have better visibility over the business data or can spot any discrepancies better by cross-checking data submitted by a seller with the buyer’s submissions. Therefore, consolidating e-invoices is particularly important for businesses that are required to submit this data to the tax authorities.
What are the key hurdles in e-invoicing consolidation?
The e-invoicing consolidation process often requires strategic planning and focus to integrate data from multiple sources and systems, similar to organising a huge library for a city where the books are located across different municipalities. Ensuring data accuracy, completeness, and security is significant for these types of projects but not really easy to achieve due to a few reasons.
Data Silos
Invoice data is stored in multiple departments across the organisation, such as sales, accounting, payroll, procurement, etc. These departments are often siloed. Additionally, data from external sources like vendors, clients, and tax authorities can also be hard to integrate.
Data Quality and Consistency
Different data formats, coding standards, and terminology between internal data sources cause inconsistencies between systems, making consolidation and consistency difficult.
Volume and Complexity of Data
Transactional data volumes are often high especially for e-invoicing. This means that a mass amount of data must be consolidated. Various data elements present on invoices make this process particularly time-consuming and complex.
Legacy Systems
Many of the systems used by businesses today fall short and are unable to cater to modern data consolidation needs. Legacy systems often require manual processes, which increase their error proneness.
Common Mistakes in Consolidation
Insufficient Scoping & Incomplete Data
The main goal of the consolidation project is to achieve complete and accurate data. To succeed, where data resides and how it flows between systems must be mapped out precisely; missing data will lead to failure.
Centralising e-invoicing through one provider can aid consolidation, but relying on a single global provider is often mistaken for complete consolidation. While a single provider will ease the consolidation effort, it does not ensure visibility over the entire e-invoicing data set. Different processes may still handle e-invoices, so thorough scoping is essential to ensure all relevant data is included.
Inconsistent Data Formats
Different countries and vendors might use different data formats making it difficult to consolidate. Furthermore, e-invoices must be stored in their original formats for archiving compliance. Therefore, storing originals should not be overlooked even though format conversions are made to consolidate.
Incorrect Currency Conversion
It is complex to deal with multiple countries and multiple currencies. Considering the number of transactions across different jurisdictions, currency conversion is significant for the accuracy of data. An e-invoice's original currency must be converted based on the exchange rate on the issuance date. Implementing inaccurate conversion logic will lead to incorrect calculations.
Insufficient Testing and Validation
Similar to any project that involves technology and data, e-invoicing consolidation projects must involve testing and validation. Without testing and validation, errors might go unnoticed. System failures and crushes might happen after the go-live. Insufficient testing might undermine the success of the whole project.
How can a global service provider like Fonoa help?
We understand that e-invoicing consolidation is a challenge. To help you simplify this process, Fonoa e-invoicing provides you with:
Centralised e-invoicing and reporting
Fonoa provides a centralized platform for e-invoicing and tax reporting, reducing the complexity of managing multiple systems and processes across different regions. With increasing global coverage, Fonoa ensures compliance with local tax laws and regulations, simplifying global operations.
Compliance maintenance and automated updates
Fonoa continuously updates its system to reflect changes in e-invoicing laws and regulations, ensuring that businesses remain compliant without needing to track these changes manually.
Data Quality and accuracy
Fonoa’s platform validates and verifies data in real-time, ensuring accuracy and consistency across all transactions. Automated processes minimize manual data entry and the associated risk of errors, improving overall data quality.
Integration and interoperability
Fonoa e-invoicing can integrate with existing ERP, accounting, and financial systems, facilitating smooth data flow and consolidation.
Scalability and performance
Fonoa’s cloud-based solutions can scale to handle large volumes of transactions, ensuring reliable performance even during peak periods. The platform is designed for high availability and reliability, minimising downtime and disruptions.
Even though having a single e-invoicing provider does not automatically mean that you have consolidated all your e-invoicing data, a service provider like Fonoa would enable you to easily navigate consolidation projects through its centralised platform that gathers all the data it is processing for you.
On top of Fonoa's Invoicing and E-invoicing solutions, Fonoa offers other solutions like Tax ID Validation, a Tax engine, Returns and Data Sharing (like DAC7), allowing you to consolidate through the whole indirect tax journey.
Contact Fonoa today!
