The Consequences Of Mismanaging E-Invoicing
E-invoicing isn’t a new concept, and it’s slowly making its way across the world. As governments realize how much easier the implementation of electronic invoicing makes their lives, businesses need to keep up to avoid falling afoul of new tax regulations. For companies that do business in Europe and Latin America, e-invoicing for VAT has become part of operating in those countries. Compliance with local tax laws takes precedence when it comes to doing business in any country.
The most common issue with a country’s e-invoicing demands is that the governments of those countries are liable to change the laws regarding taxes at the drop of a hat. Because of how quickly companies are to adjust e-invoicing procedures, governments offer little time for businesses to adapt to new legislation for taxation. The result is that companies always run the risk of being caught out by new tax legislation. The consequences of mismanaging e-invoicing can be quite dire to a business. In this article, we examine the potential effects of this mismanagement.
Failure to Simplify
For businesses involved in SAP digital transformation, simplification is a necessary part of moving the system. Unfortunately, because e-invoicing demands are splintered, poor compliance can lead to invalidated transactions within SAP. There are workarounds, such as decentralizing responsibility for transaction taxes to the local subsidiary. The big issue with this approach is that it goes against the simplification that a business wants. This simplification is crucial to the company’s digital transformation strategy. With so many different e-invoicing compliance systems present, it becomes a battle to keep the existing ones relevant, much less simplify them into a unified process.
Failure to Innovate
For SAP clients, the depth of the system allows for many different ways to perform a task, just as there are several ways to perform affordable MRI imaging. However, when it comes to managing fractured e-invoicing systems a lot of the time, it’s just putting out fire after fire. Operating under international governments can be a cause for concern, especially since those ruling bodies tend to change their minds at the drop of a hat. In countries with e-invoicing mandates, falling out of compliance can severely damage the company’s business and its ability to interact with local suppliers and buyers. However, because of how quickly these governments push through addendums to tax law, businesses are usually left trying to glue pieces of their e-invoicing systems to remain compliant with the latest change. With all this effort put into maintaining the existing system, there isn’t any place for innovation.
Lack of Planning for SAP Implementation
SAP is a dynamically evolving system, and the release of SAP S/4HANA has seen many companies make the switch already. With businesses that need to deal with e-invoicing concerns, this move becomes a chore. Businesses start off moving their central finance systems and eventually migrate their entire system onto SAP S/4HANA. However, companies that operate in these countries requiring e-invoicing, such as online betting 2020, need to maintain several unrelated systems to conform to the regulations. If so many resources are dedicated to keeping the business compliant, very little else can be spared for planning the business’s move to S/4HANA.
Digital Transformation And Tax Compliance
A business needs to learn how to manage e-invoicing centrally, making it a core consideration of its migration to S/4HANA. To do so, the company needs to take stock of its compliance operations and see which ones can be simplified. This investigation has to take place alongside staying abreast of the latest developments in compliance law. As labor-intensive as this sounds, it’s the only way to ensure that the business’s systems can successfully make the jump to S/4HANA with the least amount of teething problems, including avoiding falling out of compliance with local tax law.