In today’s dynamic business landscape, a transformative wave is reshaping conventional invoicing practices on a global scale. The evolution of e-invoicing isn’t merely altering how business issue and receive invoices; it’s also triggering a surge in technical complexities.
Let’s dive into the intricate terrain of digital reporting requirements by dissecting four distinctive models that define the connections between e-invoice issuers and recipients.
Centralized exchange model: sender – tax authority – recipient
The e-invoicing process doesn’t have to be complicated. This fundamental model encompasses three key players. Instead of directly transmitting the invoice to the recipient, the issuer forwards it to the tax administration. The government then acts as an intermediary, conveying the invoice to the recipient. This model gives greater control over VAT transactions, thanks to the flow of all documents related to them through one central platform.
While this three-step process forms the foundation of the e-invoicing connection, it often undergoes modifications as per individual country preferences. This model, used for example, in Italy, has proven itself well and therefore some countries will certainly try to imitate it. Poland is of course one of them, with a mandate that will come into force in July 2024. However, it is not the most business-friendly model.
Real-time (or near real-time) reporting model sender – recipient + tax authority
An intriguing alternative emerges in this model, as it doesn’t mandate the digital format of invoices. In Hungary, paper invoices are still permissible. Regardless of format, however, invoices must be reported to the central platform.
Data collected from each invoice must be reported to the tax authority either in real time or near real time. In this way, the tax administration can better estimate VAT income, detect fraud early, and track trends in the economy.
Clearance model with undefined transmission channel: sender – tax authority – sender – recipient
In this case, the invoice must be approved by the tax authorities before it can be sent to the recipient. The clearance approach guarantees the monitoring and supervision of transactions in real time, and each invoice at the stage of acceptance by the government entity is stamped, signed or coded, thus becoming a valid invoice that can be sent to the recipient.
Characteristic of this model are real-time interactions between authorities and companies. Most Latin American countries have adopted the clearance model for e-invoicing.
Hybrid model: sender – certified service provider – tax authority – recipient
Some countries implement a mix of the models mentioned earlier, flexibly catering to the needs of the country’s government and its business people. These sophisticated hybrid models provide taxpayers with alternative ways to send an invoice.
For example, in France, a centralized invoicing platform transmits transaction data to the tax administration post-operation. Certified service providers will facilitate the transactions between suppliers and buyers, and report operations through the public invoice portal.
Innovative transformation and navigational implications
As the area of business transaction reporting is undergoing profound change, the intricate differences between the e-invoicing models define the differences in the area of solutions adopted by individual governments to increase financial transparency, efficiency and oversight.
Each invoicing model offers similar benefits, especially for tax authorities. In the case of companies, these benefits may be less visible at first. However, it should be remembered that the adoption of e-invoicing presents a unique opportunity to digitize and optimize invoicing processes, making the process more competitive.
Empowering through Comarch e-Invoicing
In this ever-changing landscape, Comarch e-Invoicing stands as a robust platform enabling dynamic and reliable data exchange. Fully compliant with the latest regulations, this solution is designed to automate all of your AP/AR invoicing processes across diverse operating countries. Embrace the afore mentioned models and their implications with Comarch e-Invoicing to navigate the world of digital invoicing with confidence and innovation.