Invoicing is central to the cash flow and liquidity of any trading organisation.
Small improvements in efficiency can improve working capital, reduce gearing and
bring better liquidity. The report by the Commission's Informal Task Force on e-Invoicing
cites research claiming that the average processing cost of a paper invoice across
Europe is around €30. E-invoicing can cut that cost by 80%, it says.
A legal framework for e-invoicing is in place currently, but it does not work as
it should, according to the report, which was published in July. Consequently, private
and public sector organisations continue their reliance upon paper invoices.
The E-invoicing Directive, passed in 2001, required Member States to recognise the
validity of electronic invoices and allow electronic storage. It set out mandatory
items of information that must be included on every invoice; but it gave each Member
State discretion to decide the details of the implementing legislation.
This discretion has resulted in diverse national laws. Some countries' regimes are
very strict and mistakes may result in e-invoices being classed as non-compliant
for tax purposes, triggering penalties that can include fines and even imprisonment.
The report gives examples of the problems that exist today. In some countries, electronic
invoices are subject to rigorous security requirements that the report describes
as "overkill". Germany, Italy, Poland, Portugal, Spain and Hungary require digital
signatures on e-invoices. These so-called qualified signatures must be based on
digital certificates issued to natural persons – i.e. they cannot be based on a
company's certificate, according to the report.
Storage requirements for e-invoices also vary. Estonia allows complete freedom on
the storage location for electronic invoices; Germany allows storage only in an
EU Member State. The period for which e-invoices must be stored varies too: the
mandatory period is three years in France and 10 years in Germany.
The report says the legal position is so complex for buyers and sellers because
"e-invoicing lies at the crossroads of several areas of legislation – mainly VAT,
accounting, payment, authentication, company transparency and data retention."
The report recommends documenting all legal issues and developing the EEI Framework
as a formal Recommendation of the European Commission. Current barriers should be
addressed within a period of 18 months, it says.
The initial focus will be the Business to Business (B2B) market, followed by Business
to Consumer (B2C) and Government to Citizen (G2C).