# Why businesses need to shift their e-invoicing approach – from local and tactical to scalable and strategic Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-07-26 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Global Scalable E-Invoicing Strategies in Europe Meta Description: Discover how e-invoicing is evolving towards a global, scalable strategy in Europe, with insights from Avalara's Senior Director of Global Indirect Tax. URL: https://financedigest.com/why-businesses-need-to-shift-their-e-invoicing-approach-from-local-and-tactical-to-scalable-and-strategichtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1410016331-1736815534656-compressed.jpg) _By_ **_Alex Baulf,_** _Senior Director, Global Indirect Tax at_ [_Avalara_](https://www.avalara.com/eu/en/index.html) _, highlights how e-invoicing continues to evolve, with a focus on scalability and strategy_ Europe is marching towards the wholesale adoption of e-invoicing. Earlier this year, the European Union conducted a public consultation for its VAT in the Digital Age reforms on e-invoicing and digital reporting requirements. Meanwhile, France, which currently recently sat in the EU presidency chair for the last term, hosted a [virtual conference](https://www.avalara.com/blog/en/europe/2022/02/french-ministerial-conference-on-e-Invoicing.html) in February on electronic invoicing and how it can transform the digital landscape of businesses and government. France itself will mandate e-invoicing from July 2024. The way e-invoicing is being approached continues to evolve, but one marked [shift we’re seeing is a move from a local](https://www.financedigest.com/how-has-the-pandemic-shifted-the-perception-of-the-local-bank-branch.html "How has the pandemic shifted the perception of the local bank branch?") and a tactical approach to one that is global and centred around scalability and strategy. **The early days of e-invoicing** Traditionally, businesses opted for a quick, local, and tactical solution for e-invoicing to comply with Europe’s new digital [reporting regulations](https://www.financedigest.com/chinas-tencent-reports-first-revenue-drop-as-gaming-regulations-and-covid-19-bite.html "China’s Tencent reports first revenue drop as gaming regulations and COVID-19 bite"). This approach involved data being periodically uploaded or submitted to tax authority platforms, with traditional paper invoices issued to customers and trading partners, outsourcing [digital reporting of invoice data](https://www.financedigest.com/why-data-is-the-best-weapon-in-the-war-for-digital-talent.html "Why data is the best weapon in the war for digital talent") to a third-party compliance specialist or licensing a niche software package from a local vendor. This created a situation that failed to achieve genuine real-time transactional [reporting nor increased](https://www.financedigest.com/how-increased-environmental-and-ethical-reporting-impact-businesses-and-their-cfos.html "How increased environmental and ethical reporting impact businesses and their CFO’s") automation. In addition to the constantly evolving compliance landscape, with either a new mandate coming up or an existing one is changed, companies essentially engage in a [game of regulatory](https://www.financedigest.com/is-regtechs-rise-one-way-tackle-the-international-regulatory-game-of-risk.html "Is Regtech’s rise one way tackle the international regulatory game of Risk?") ‘Whack-A-Mole’– to ensure that they remain compliant. **E-invoicing and the current [direction of travel](https://www.financedigest.com/eurozone-equity-rally-remains-on-but-ecb-set-to-change-monetary-policys-direction-of-travel.html "Eurozone equity rally remains on – but ECB set to change monetary policy’s direction of travel")** Companies are now [seeking global](https://www.financedigest.com/global-citizen-seeks-up-to-1-billion-for-six-sustainable-impact-funds.html "Global Citizen seeks up to billion for six sustainable ‘Impact’ funds") and scalable solutions for a unified e-invoicing solution that is futureproofed and in line with up-to-date regulatory requirements. This means deploying a compliant [system across multiple jurisdictions to handle new and changing mandates and growth](https://www.financedigest.com/automotive-hmi-system-market-recent-industry-developments-and-growth-strategies-adopted-by-players.html "Automotive HMI System Market: Recent Industry Developments and Growth Strategies Adopted by Players") in transaction volumes. [Businesses can no longer view e-invoicing and indirect tax](https://www.financedigest.com/are-there-tax-breaks-for-business-health-insurance.html "Are there tax breaks for business health insurance?") compliance as two distinct areas. The improved scrutiny from governmental tax authorities is becoming savvier, with AI and algorithms being applied on the larger datasets and detailed [business exemption reporting](https://www.financedigest.com/local-government-business-support-getting-worse-report-shows-as-70-of-uk-firms-say-its-not-good-enough.html "Local government business support getting worse, report shows, as 70% of UK firms say it’s not good enough") and analytics. In doing so, [tax authorities can better identify tax errors in real-time, either during audits or under a pre-clearance model, highlighting and profiling higher-risk tax accounts](https://www.financedigest.com/accountants-cant-afford-to-ignore-making-tax-digital.html "Accountants can’t afford to ignore Making Tax Digital"). **Cutting the VAT gap** A major concern for governments across the continent, is typically caused by a combination of fraud and [tax evasion](https://www.financedigest.com/tax-evasion-avoidance-and-efficiency-which-are-legal.html "Tax evasion, avoidance and efficiency: which are legal?"), among other activities. In nominal terms, the European Union recorded a [VAT gap of €134 billion, representing more than 10% of the total VAT tax](https://www.financedigest.com/goodbye-to-all-vat-eu-indirect-tax-after-brexit.html "GOODBYE TO ALL VAT? EU INDIRECT TAX AFTER BREXIT") liability in 2019. Although this indicates a trend in the right direction (i.e., a decline in the VAT gap versus 2018), governments still miss out on huge sums of revenue. Further to this, it’s no wonder that EU countries are beginning to introduce mandatory e-invoicing to make the VAT [process more watertight and efficient](https://www.financedigest.com/1-easy-tip-to-make-a-key-e-commerce-process-more-efficient.html "1 easy tip to make a key e-commerce process more efficient"). In Spain, for example, data received through e-invoicing and e-reporting submitted under the Suministro Inmediato de Información (SII) is being used by its [tax authorities to pre-populate annual VAT](https://www.financedigest.com/boardroom-attention-to-tax-compliance-up-76-thanks-in-part-to-making-tax-digital-for-vat.html "Boardroom Attention to Tax Compliance Up 76%, Thanks in Part to Making Tax Digital for VAT") returns. If others follow suit, [businesses may shift in how VAT returns](https://www.financedigest.com/despite-return-to-work-virtual-meetings-will-continue-to-disrupt-business-as-usual-in-finance.html "Despite Return to Work, Virtual Meetings Will Continue to Disrupt Business as Usual in Finance"), with taxpayers expected to review, edit and augment returns given to them by their tax authorities. With this in mind, tax and finance leaders must assume a [central role](https://www.financedigest.com/inflation-fighting-central-bankers-air-climate-role-doubts.html "Inflation fighting central bankers air climate role doubts") in RFPs and vendor selection and take a hands-on approach to designing and implementing new e-invoicing processes. Those who stay on [top of these trends](https://www.financedigest.com/top-5-payment-trends-for-2016.html "TOP 5 PAYMENT TRENDS FOR 2016") and have a breadth of insight must steer this transition. E-invoicing is here to stay and will [transform tax](https://www.financedigest.com/the-digital-transformation-of-tax-filing-how-e-filing-revolutionizes-business-taxes.html "The Digital Transformation of Tax Filing: How E-Filing Revolutionizes Business Taxes") compliance procedures. Those organisations that get ahead and get on the journey are better [placed to handle the waves of changes coming now and further into the future](https://www.financedigest.com/future-cheque-clearing-model-places-emphasis-on-speed-and-innovation.html "FUTURE CHEQUE CLEARING MODEL PLACES EMPHASIS ON SPEED AND INNOVATION"). --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---