Top ten e-invoicing challenges for multinational companies
E-invoicing started as a way to streamline business processes and reduce paperwork, but it has since evolved into a powerful tool for curbing tax evasion and ensuring proper tax collection. Today, mandatory e-invoicing laws are becoming a global standard. However, for multinational companies, implementing e-invoicing presents unique and complex challenges.
E-invoicing is a powerful tool for curbing tax evasion and ensuring proper tax collection
What are the primary challenges of e-invoicing for international businesses?
1. Regulatory complexity
One of the biggest challenges for multinational companies is navigating the patchwork of e-invoicing regulations in different countries. While the EU strives for economic unity, e-invoicing rules vary significantly between its member countries.
Variations in systems and invoice formats make global compliance particularly tricky, requiring localised expertise to stay compliant in each jurisdiction. Furthermore, the integration of complex processes such as self-billing and factoring adds another layer of difficulty.
2. Technological integration
Moving from traditional invoicing methods to the structured formats required for e-invoicing can be a massive challenge for companies. These structured invoices must comply with the government scheme, which often necessitates a complete overhaul of legacy ERP systems.
Integrating structured e-invoices and potentially using an external e-invoicing system may involve significant investment. It is crucial to partner with a provider that has a proven track record and offers cost-effective solutions, such as Comarch.
3. Compliance risks
Governments worldwide are continually updating their e-invoicing requirements, making it difficult for businesses to stay current. Each country may announce new changes with different lead times, leading to a constant state of adaptation.
Multinational companies working in several countries simultaneously must be particularly vigilant to keep pace with these evolving rules. E-invoicing mistakes and non-compliance with e-invoicing mandates can result in significant fines, legal disputes, and strained business relationships.
4. Interdepartmental coordination
Successfully implementing e-invoicing requires cooperation across multiple departments. IT teams may prioritise system integration and security, while finance focuses on compliance and invoice accuracy. Operations may need to adjust workflows to align with these new systems. The challenge lies in aligning these diverse priorities and ensuring that each department works in harmony.
5. Supplier and customer adaptation
E-invoicing impacts the entire supply chain, requiring suppliers and customers to be prepared for the transition to standardised e-invoicing systems. For a multinational company, coordinating with suppliers and customers across different regions adds to the complexity. Extensive outreach, comprehensive training, and cooperation are necessary to ensure a smooth transition for all stakeholders.
6. Data security and privacy
Handling sensitive financial data across borders increases the risk of cyber threats and data breaches. With multiple stakeholders involved in e-invoicing, companies must be extra cautious about securing their data and adhere to data protection laws like GDPR in Europe and CCPA in the US.
In fact, over 20 countries outside the EU have adopted data protection laws similar to the GDPR. Furthermore, according to Cisco’s 2021 Consumer Privacy Survey, 60% of those familiar with these laws hold a favourable view of them.
Scalable EDI invoicing systems are essential to managing growth efficiently
To safeguard sensitive information, companies should implement robust security measures such as encryption, secure authentication, and data integrity monitoring. Regular employee training is also essential.
7. Economic and cost implications
Implementing an e-invoicing system requires upfront investment in new software, hardware, and IT infrastructure.
For large companies with multiple subsidiaries, these costs can add up quickly. However, despite the initial investment, e-invoicing can lead to long-term cost savings, reducing processing costs by up to 70%.
8. Cultural and language barriers
Cultural differences across regions influence how businesses approach e-invoicing. Local business practices and legal standards, as well as language barriers, must be taken into account when implementing an e-invoicing solution across different subsidiaries.
To mitigate the risk of common e-invoicing mistakes, companies should consider implementing multilingual support, localised compliance integration, and culturally tailored training programmes.
A survey by RW3 CultureWizard of employees from 90 countries revealed that 89% of remote teams had representation from at least two cultures, with over one-third including four or more.
9. Technological reliability and support
The maturity and reliability of government e-invoicing platforms vary widely across countries. Additionally, in some cases, there may be no centralised platform, yet companies are still required to comply with established standards, such as the CEN norm in Germany. Some platforms may experience frequent downtimes or inconsistencies, making it harder for businesses to stay compliant.
Experienced vendors who offer reliable technical support can help companies navigate these issues. They can quickly adapt to new regulations and ensure that systems remain compliant as laws evolve.
10. Scalability and system flexibility
As companies grow, their e-invoicing systems must be able to handle increased transaction volumes and complexity. Scalable systems are essential to managing this growth efficiently.
The ability to adapt to new regulations, integrate with emerging technologies, and handle diverse business needs is critical for long-term success. A flexible e-invoicing solution that can evolve with the business environment will help companies stay competitive.
Conclusion
Multinational companies face numerous e-invoicing challenges, ranging from regulatory complexity to technological integration and compliance risks. However, by investing in secure, adaptable, and compliant solutions, businesses can overcome these obstacles.
As e-invoicing continues to expand globally, companies that successfully navigate these challenges will be well-positioned for growth and long-term success.
Sponsored by Comarch
