International Trade: Situation of mandatory electronic invoicing in the world

Digital transformation has arrived and is causing a cultural change in companies and administrations around the world such that more and more organizations are embarking on projects of digital transformation of their processes. This cultural change is having a significant impact on commerce and is driving the electronic exchange of documents.

More and more documents in our daily life are required in electronic format. With regard to invoices, many administrations around the world are integrating electronic formats into their management methods. It is estimated that almost two-thirds of the countries in the world have already adopted it. Although some companies have adopted it on their own initiative, many have been forced to do so due to the implementation of mandatory electronic invoicing by administrations.

An Electronic Invoice is mandatory in various continents

Europe and the Americas are the territories with the highest adoption rates, followed by Asia, Africa and Oceania. In the European Union, public administrations are generally obliged to receive and process electronic invoices from April 2019 (there are some exceptions in countries such as Portugal or Greece, whose regulations stipulate April 2020). In the Americas, the percentage of countries that use it is somewhat lower, around 75%. On the other hand, Africa and Oceania have much lower adoption rates of 35% and 20%, respectively. The success of electronic invoicing lies largely in the effort and importance that governments have given to this measure. Although European Union countries have implemented it on a mandatory basis, it is not mandatory in the rest of the continents, since most of the countries and companies that use it do so voluntarily, due to the benefits of adopting the electronic invoice.

Present and future

With each passing year, more and more paper invoices are being replaced by electronic. Studies conducted in the last year have confirmed the trend towards a use of this format, thus registering, in the year 2019, a volume of about 55 billion electronic invoices. According to forecasts, by 2025 electronic invoicing is expected to be the predominant model in all countries due, among other things, to the cost reductions involved in its adoption, the impact of which is estimated at between 8% and 39% savings compared to paper invoices.

Currently, the inequality in the use of this technology in different countries is very apparent, but there are more and more countries that understand the facilities and advantages that it brings; an example is India, whose idea was to have launched at the beginning of 2020 its mandatory electronic invoice system (called GTS System) for B2B but this has finally been postponed until October 1, 2020 and exemption from its implementation has been approved for some companies such as insurance companies or banks.

If progress continues as it has been up to now, the forecasts will be met and the digitalization, not only of invoices, but of all types of documents, will be a real fact and a positive impact will be achieved not only on costs but also on the environment due to the reduced use of paper and transport.

If you are thinking of switching to electronic invoicing, do not hesitate to contact us.

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