E-Invoicing

Paperless trading, particularly e-invoicing, underpins the essential movement and exchange of data for trade across international borders. Thanks to e-invoicing standards, interoperable e-Invoicing systems can streamline processes for government agencies and businesses – especially MSMEs operating within and across Southeast Asia.

What is E-Invoicing? 

E-invoices are invoices issued, transmitted, received, processed, and stored electronically using specific document formats. They rely on a set of frameworks, including standard machine-readable documents and secured network with adequate security protocols, and require involved parties to be utilising common standards for the exchange.

Key Trends in E-Invoicing

Trend 1: Rapid growth of e-invoicing in ASEAN

With the high level of consumers in ASEAN adopting e-commerce throughout the pandemic, the e-invoicing market is expected to reach a notable CAGR of 17.4% in 2030. Further integration of smart IT solutions in financial services, insurance, energy, and telecommunications will further propel the growth of the e-invoicing sector in ASEAN.

Trend 2: Paperless trade brings tremendous economic benefits

E-invoices can be automatically generated in a supplier’s accounting system and transmitted electronically to the recipient via intermediaries for automatic processing—bringing greater security through standardised protocols and technical implementations, and generating savings that range from 8% to 39% in upfront costs (mainly thanks to automation, which improves efficiency and eliminates transcription errors).

Trend 3: E-invoicing enables post-pandemic recovery

E-invoicing enables more immediate access to cashflow through faster settlement of bills; 92% of e-invoices are paid on time compared to 45% of paper invoices, resulting in better cash flow and better access to financial services for suppliers. This has the potential to help multinational companies, government agencies procuring products and services, and the large number of MSMEs in ASEAN that have been hit by the pandemic and need to improve their cashflows to stay afloat.

Key E-Invoicing Standards

E-Invoicing standards, guidelines, and protocols

International standards play a key role in aligning rules and processes to mitigate uncertainties. Whether they are industry standards, technical standards, national, regional, or international—standards are an increasingly vital driver of a fast-paced, competitive trade environment, where they help governments adapt to a rapidly changing digital age.

  • EN16931: The European standard on e-invoicing for public procurement contracts is developed and maintained by the European Committee for Standardisation, CEN/TC 434. It establishes a semantic data model to define the core elements of an e-invoice to ensure legal compliance and interoperability for domestic and cross-border trade.
  • eInvoicing Directive 2014/55/EU: The Directive was instrumental in standardising the many e-invoice formats used across Europe’s public authorities. Of note, the standard required all contracting authorities to accept e-invoices that follow the EU standard, but did not replace the nationally specific rules across the EU. This allowed both the EU standard and national standards to coexist together.
  • PEPPOL Business Interoperability Specifications (BIS): PEPPOL BIS standardises electronic documents and procurement documents, such as e-orders, e-advanced shipping notes, and e-invoices so that they can be exchanged and validated between sending and receiving Access Points (AP) for public-sector buyers and their suppliers through an open and secure network. PEPPOL BIS is based on the work of CEN Workshop on Business Interoperability Interfaces for Public Procurement in Europe and EN16931.
  • APEC e-Invoicing Guideline for Future Development: Published in 2008 as part of efforts to develop frameworks to promote e-commerce in the APEC region by facilitating cross-border exchanges of e-invoices among APEC members. The guideline provides a high-level framework for APEC members to implement e-invoicing in their economies and was developed by integrating international open standards and global approaches in its content. These standards include:
    • The UN/CEFACT Business Requirements Specification (BRS) for Cross Industry Invoice (CII);
    • Organisation for the Advancement of Structured Information Standard’s (OASIS) Universal Business Language (UBL);
    • EU’s European Electronic Invoicing Framework.
  • ASEAN Single Window (ASW): First developed in 2005 as part of the ASEAN Economic Community Blueprint to expedite and enable cross-border exchanges of electronic trade documents among ASEAN economies, such as customs declarations and certificates of origin. The ASW aims to expedite cargo clearance processes, reduce the cost and speed of doing business, and enhance trade efficiency and competitiveness.

Opportunities and challenges

Opportunities to seize

  • Enabling efficiencies – Paperless trade is quickly improving the efficiency of customs controls and trade administration processes, helping smaller businesses address bottlenecks in supply chain management, complex regulatory documentation, and other logistical challenges.
  • Facilitating trade – The UN estimates that the full implementation of the WTO Trade Facilitation Agreement measures, together with paperless trade measures driven by seamless electronic exchange of trade data and documents across borders, can lead to a 12.2% decrease in trade costs for ASEAN as a whole.
  • Increased returns for MSMEs – E-invoicing reduces manual input errors and processing times, significantly slashing the cost of doing business for MSMES, as well as reducing tax-compliance costs and leading to reductions in taxation gap and fraud.
  • Increase accessibility of e-invoice – E-invoices which adhere to accessibility standards and guidelines can be more inclusive than paper invoice and rolled out more widely, allowing more people—regardless of their personal backgrounds or situations—to engage in digital trade.

Challenges to overcome

  • Nascent paperless trade mechanisms – E-invoicing is relatively nascent among AMS. Indonesia, Singapore, the Philippines, Thailand, and Viet Nam have made significant progress in this area, but there remains room for standardisation and harmonisation of international trade standards to enhance regional adoption.
  • Fragmented paperless trade frameworks – ASEAN economies have differing approaches to paperless trade and e-invoicing, mainly in electronic signature standards and recognition procedures. Without interoperability, it is difficult for regional sellers and buyers to scale and expand their operations.
  • Constrained cross-border data flows – ASEAN policymakers are placing greater emphasis on data sovereignty, restricting the way data is collected, held, or processed. Such obligations not only place significant burdens on businesses of all sizes, they also multiply exponentially when considering the need to apply sovereignty to individual data assets.
  • Cybersecurity and privacy – The successful implementation of e-invoicing entails adopting cybersecurity and privacy measures to protect the infrastructure and data shared between organisations. Without such foundational mechanisms in place, the critical data that organisations store or send electronically is in danger of being breached.

 

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