Global E-Invoicing: In-house Perspectives
Fonoa recently hosted a live webinar panel through Thought Leader Global (TLG) where the guests shared their in-house experiences at Google and Meta on e-invoicing and Digital Reporting.
The panel provided a fresh, down-to-earth, in-house perspective from colleagues working with e-invoicing and digital reporting. The panelists elaborated on the daily challenges they face in the space. They also shared how some of the world's largest enterprises have managed to overcome the common hurdles faced by all.
The webinar was well-attended, with well over 200 registrants. Despite running far beyond the planned 45 minutes (ultimately stopping at 80 minutes), there was still not enough time to answer all the great questions raised.
Moreover, this was a live-only event - no recording is available for review or replay of the excellent discussions.
Consequently, we have decided to summarize the event for those who missed out and close some of the open questions for those who attended.
This summary respects the Chatham House Rules under which the discussions were held, so no comments are attributed to any particular speaker. Importantly, all panelists spoke in their personal capacity.
Who were the panelists?
The panel was hosted by Fonoa and consisted of The panel consisted of Liz (Meta), Misha (Google), Rob (Fonoa), and AKo (Fonoa)
Misha Narinsky works within the Payments Platform at Google and specifically looks after the billing module. Payments Platform is a comprehensive homegrown system designed to handle most of Google's billing, charging, risk management, digital identity and other payments use cases.
Misha is responsible for overseeing the rollout of digital reporting and e-invoicing as well as sourcing, evaluating and onboarding third-party vendors. He is very well versed in the problems encountered by a large multinational when it comes to meeting deadlines, coping with a tide of mandates and working within a large enterprise with several technical stakeholders (tax, procurement, legal).
Today, Misha represents the views of a growing number of people working with tax professionals - software engineers, product owners, and non-tax specialists.
Liz Gallagher is the EMEA head of indirect tax at Meta. Her team is responsible for Indirect tax strategy, planning, compliance, audit, Tax Transformation & Automation, and litigation for the EMEA region.
In relation to Digital Reporting and e-invoicing, her team is responsible for monitoring legislation and supporting the broader Finance team (who are accountable (owners) of e-invoicing implementation). Put simply, her team is essentially accountable for ensuring Meta meets its obligations.
Based in Ireland, Liz also supports several international institutions, including the OECD Working Party 9 on Consumption Taxes and is a member of Business at OECD (BIAC).
Previously head of International Tax at Uber, Rob is no stranger to the in-house problems faced by hyper-growth multinationals.
His in-house experience of working with third parties (both positive and negative) has directly shaped the way Fonoa operates with vendors and is directly responsible to the different approaches the company has taken in this space to align with in-house teams.
Better known for his tax humor on LinkedIn, AKo does have a more serious side as an active member of Business at OECD (BIAC) and a contributor to the global discussions on Digital Tax Identity, Taxation of the Platform Economy, Digital Reporting, and Tax Data Sharing.
Prior to joining Fonoa, AKo was the Head of Tax Technology at Uber.
Here is a summary of some of the topics covered in the webinar.
The biggest in-house challenges faced today
The number of new mandates
Introducing new mandates across different countries has placed a significant burden on businesses, requiring them to respond by learning an entirely new field of expertise. This meant either upskilling existing individuals or hiring new talent dedicated to the space of e-invoicing and digital reporting.
The sheer number of new mandates introduced in parallel are putting a strain on in-house teams. A successful implementation typically requires three phases and cutting corners is not an option. The three pillars of the process are:
- Scoping: understanding new legislation requirements (that is actively changing), often requiring external input (e.g. from a Big 4 consultancy) or a local technical specialist. The foundation for a successful implementation lies in understanding the specifics of each mandate and how it impacts each business.
- Sourcing: identifying and integrating with third party vendors for technical government system connections.
- Building: developing the internal connectors for vendor systems, is a complex task handled by engineering teams.
Managing multiple workstreams (i.e. mandates) at the same time is proving difficult purely from a volume of work perspective. Some of these mandates are in different stages requiring a good structure, planning and project management discipline.
Lack of standardization
The absence of reusability within the e-invoicing and digital reporting space exacerbated the volume issue described above. As new countries introduce new and bespoke requirements which do not borrow or build on past practices, teams have to learn new onboarding flows, data requirements, formats, schemas, and technical responses.
However, intra-governmental bodies, like the OECD, are holding discussions on this very topic and have recognised the feedback of businesses on the challenges that the lack of standardization, reusability and interoperability are causing.
Some within the business community remain optimistic that these discussions will result in meaningful actions and help to direct the e-invoicing and digital reporting rollouts to a more standard approach.
Lack of certainty and predictability
The instability of implementation dates is creating challenges for planning and resource allocation. However, it is also harming the internal credibility of in-house tax and engineering professionals who have to internally align teams and “sell” the projects to key internal stakeholders.
Jumping between deadlines is painful for teams in large enterprises who need to budget for and approve projects 6-18 months in advance.
Better discipline in timekeeping is needed from an authority perspective.
Delays
Similar to the ‘fluid’ dates, there are also delays.
For some, these can be a welcome benefit, offering additional time to get familiar with the requirements. For others, like engineering, who invest their time and resources and align to a specific launch date these delays are disastrous. The opportunity cost is material - resources could, and in hindsight should, have been allocated to other priority, revenue-generating activities.
Many companies are also concerned about sudden, overnight announcements of new legislation. The preference is for a minimum of 12 months lead time after the full development of legislation and the introduction of a government technical portal that supports the integration.
Delays can also impact standardization - take Europen Union’s ViDA for example. The (new) 2030 deadline set is simply too far away for some Member States who have already started their research and plan to have a system in place well before that. This would likely result differences between approaches.
Maintenance
Staying up-to-date on all the proposed digital reporting changes (ViDA, Belgium, Germany, Poland, etc) is itself a burden and many companies have had to develop the in-house capacity not only to build and integrate with vendors but also to monitor and maintain connections to stay compliant.
This has directly influenced the evolution of ownership (see below) and the shift from tactical to strategic thinking about e-invoicing and digital reporting.
Having to permanently track and monitor multiple government websites for news updates, changes, delays, and amendments is also a costly undertaking. Currently there is no one source of truth that covers this globally.
Ownership of e-invoicing and digital reporting at large enterprises
Tax vs Finance vs Product vs Engineering
This is a complex area as many teams are affected by digital reporting and e-invoicing.
As a consequence, ownership has evolved naturally without much strategic planning or attention. The owners are those individuals who gained the most knowledge in the early implementations and by happenstance became the de facto experts.
This means that across enterprises, ownership is fragmented - in some companies, it rests with Product, in others Tax, and in others, it’s shared between Finance and Engineering.
Many companies are looking to change this “organic” development by allocating clear and unambiguous ownership in line with RACI models.
Tactical vs Strategic
As this space grew, many of the largest companies had to transition from a tactical approach - “let’s solve it on a country level basis” - to a more strategic approach - “if our company has to implement 30 Continuous Transaction Control mandates in the next 5-10 years, how can we do it in a scalable and sustainable way?”
As part of this some of the world's largest companies allocated ownership and centralized the process globally. This meant that the drivers were global but they still relied on local expertise as required (e.g. tax).
Vendor Management
Overpromising and Underdelivering
The ability to know and trust your vendor's capabilities is crucial for global expansion.
However, a common problem today is that many vendors fail to disclose their limitations (e.g. processing volume) or make commitments/promises they simply cannot meet (e.g. country coverage).
In order to “separate the wheat from the chaff”, one practice is to test vendors on a particular market first before committing to a regional or global rollout.
Vendor Consolidation
The trend is to consolidate wherever possible. This has not been possible because:
- Some countries legislate to allow a handful of local vendors to connect with government systems meaning your existing providers are simply locked out of the market.
- Country growth has been exponential and some vendors do not have the capacity (or appetite) to expand globally.
- Some vendors achieved global coverage by acquisition, which means that it may be the same company on paper, but the integration work is still a bespoke build and integration. This simplifies matters for procurement, but not for engineering teams. Another model that has been observed is the aggregator model (i.e. "connect to our system and we will use multiple sub-vendors to deliver your data in various countries"). Many companies try to avoid using subcontractors where possible, because this brings additional security, contracting and maintenance/accountability risks.
Taking advantage of economies of scale (i.e. processing more transactions with one vendor to benefit from reduced per-transaction costs) and consolidating vendors to achieve this is a goal of several in-house e-invoicing teams.
Vendor Team Centralisation
One experiment the teams are running is to try and centralize the vendor teams working on e-invoicing with your company. In other words, asking your vendor for a dedicated point of contact globally. This person would cover all the markets globally for which they are contracted.
This is not easy.
To do this efficiently it is important to invest in training your vendor point of contact to understand your business and to be able to communicate your requirements accurately and efficiently to their regional teams.
Promoting the importance of e-invoicing internally
Selling the importance of e-invoicing and digital reporting to your CFO
Inaction has consequences for the business, being able to explain the consequences of the failure to comply in a manner that aligns with the interests and needs of your stakeholders (e.g. your CFO) is paramount.
The bottom line is that in e-invoicing and digital reporting, you are dealing with high-stakes regulatory mandates - the risk of non-compliance includes the inability to collect revenue in major markets, directly impacting the bottom line.
Data
One of the topics that the panel didn’t have enough time to cover is Data. Several data related questions appeared prior to and during the event including:
- How do you ensure data availability (for due diligence) and define reportable data?
- How do you verify and validate Data?
- Do you have any tips on how to manage or control the right data flow and meet the intended purpose?
- How can Tax Technology and AI help with data quality to ensure a robust e-invoicing and reporting output?
- How can you promote the importance of data accuracy?
The above questions raised possibly highlight the need for a dedicated webinar on this topic.
Further Reading
If you are interested in finding out more about this space, consider connecting with the speakers on LinkedIn.
Here are three more content pieces related to the e-invoicing and digital reporting topic:
