Regardless of whether you’re in the oil & gas industry, renewables, or some other aspect of energy and fuel production or delivery, the cost and complexity of doing business are on the rise. One big issue that concerns stakeholders is staying in compliance with government mandates.
For example, the US Office of Management and Budget (OMB) issued a mandate in 2015 requiring all companies with government contracts to implement an electronic invoicing system (E-Invoicing) within three years. The government estimates that this one change will increase transparency and efficiency while saving up to $260 million in cost.
Those companies who fail to comply with these mandates risk fines and loss of lucrative government contracts, and this only affects agreements between companies dealing with US government agencies. Enterprises with multiple locations and contracts with governments outside the US face a maze of evolving regulatory issues, invoicing systems, and tax concerns.
The risk involved with new or evolving requirements surrounding E-Invoicing alone only increases with the size and reach of your operation.
An electronic invoicing platform is any method used to digitally generate, transmit, fulfill, and archive transactions. At the most basic, it merely means going paperless. However, mandates affect these processes all along the supply chain from obtaining raw materials to production to service delivery.
Mandates seek to standardize invoice requirements and platforms between vendors and customers, especially when the customer is a government agency or involved in a heavily regulated industry. These requirements vary from industry to industry and government to government, which only complicates matters if you’re a large, multi-national corporation.
Taking the example of the OMB mandate, the goal was to:
The mandate itself involved using a shared service provider model, standardizing data and document formats and requirements, and tightening compliance with government regulations.
In an environment where approximately 19 million invoices are processed each year by a single customer – the US government – defining parameters and issuing mandates for conformity is necessary to control costs and avoid duplication, redundancy, and waste. It also promotes more effective oversight and transparency.
However, it only works if there are clearly defined goals, standards, and consequences for non-compliance.
Mandates around e-Invoicing affect government agencies and companies alike, but not in the same ways. From the standpoint of government agencies, e-Invoicing mostly impacts tax authorities. By going paperless, these agencies are able to ensure a steady, predictable influx from both direct and indirect taxes necessary to fund the government. The predictability factor also helps to create budgets and estimate costs over time.
Businesses impacted by mandates must ensure that they are in compliance with tax requirements and other regulatory concerns. This is especially important to cover VAT gaps and other problems. Although adoption and rollout can be a complex process that impacts employees and business operations at all levels, it’s a necessary evil that will help them avoid audits, fines, and other penalties.
On the plus side, adopting the required e-Invoicing mandates will prevent business disruptions and contract termination. You’ll also receive correct reimbursements, refunds, and rebates, and you’ll get them faster.
Over the next three years, invoicing mandates will be in effect for at least 30 countries. In addition to those enterprises holding government contracts within the US, these mandates will affect inter-company and overseas transactions.
Plus, we all know mandates that begin at B2G level always trickle down to affect B2B business enterprises.
The larger, more complex, and far-reaching your business, the greater the difficulty in maintaining compliance, sailing through audits, and avoiding penalties. However, the process is necessary if you want to expand your operations, or even stay in business in some cases.
As part of the bargain, you’ll also:
The goals of these mandates are to overcome challenges facing government agencies and inter-company transactions, including:
In addition to mandates and regulatory compliance, you also have to ensure legal compliance. This involves such key issues as providing proof of the authenticity of origin and the integrity of the content. Recipients need to know that the invoice is authentic, is issued by someone with the authority to do so, and that security was ensured throughout each point of transfer.
Fully digital invoicing systems address or eliminate these issues. They also collect and parse data in real-time, which supports daily and long-term decision-making that’s rooted in data.
So, what goes into an effective, compliant e-Invoicing system?
To begin with, such systems should focus on these key areas:
Although invoicing mandates are not yet in place everywhere – or with everyone – you might do business, it’s inevitable that these requirements will be almost universally applied in the not-so-distant future. That makes it imperative that you adopt such a system now rather than waiting to see if your enterprise will be affected at some time down the road. Assume that it will and plan ahead.
At a minimum, your system should provide support for:
Before you begin implementing an electronic invoicing platform, you should look into contracting additional services if these services are not already available in-house.
Even the most complex business model or procedure can be improved by adopting the right technology. However, that technology is best when it comes from a vendor who knows your industry and how to manage all the moving parts within.
Engage Mobilize digitalizes end-to-end financial processes related to:
Ensure that you’re able to meet invoicing mandates by scheduling a consultation with an Engage Mobilize team member today.