Last editedDec 20212 min read
Global invoicing allows your business to take payments from clients around the world. But with different regional regulations and tax laws, there are unique factors to consider when it comes to global invoice management. Here are a few best practices to ensure your global e-invoicing is both efficient and compliant.
The complexities of global invoice management
With hundreds of different currencies, languages, and tax regulations involved, it’s no wonder that global invoicing can be a complicated process. While your business must adhere to all regulations within Australia, when you submit and receive invoices from around the world you’ll also need to think about international formats and standards.
These varying standards also include global e-invoicing requirements. In some areas, such as many parts of the EU, electronic invoicing is now a requirement. Other non-EU countries, like Singapore, have opted into the PEPPOL (Pan-European Public Procurement Online) e-invoicing standard with Australia potentially soon to follow.
Why is invoice compliance important?
Why is global invoice management so important? Beyond consistent formatting, it’s important to realise that governments worldwide use invoices as an important financial document for tax filing and collection. Invoice compliance is the key to ensuring that your documents meet worldwide standards for collection goods and services taxes (GST), value added taxes (VAT), and others.
When looking at global invoicing, you’ll need to comply in three key areas:
Invoice receipt: how invoices are created and exchanged
Invoice archiving: how invoices are stored
Invoice tax rate capture: how tax rates are noted and calculated on the invoice
These three areas of compliance ensure that taxes are correctly implemented, reported, and paid as needed in the relevant country. Businesses are also responsible for verifying that invoices are real and authentic.
Global e-invoicing as best practice
To stay compliant with global invoicing, most businesses will use electronic or e-invoicing as best practice. It offers numerous benefits, including the following:
Faster processing times when submitted electronically
Lower processing costs in comparison to manual invoicing
Reduction in processing errors with the removal of manual data entry
Improved security with built-in electronic security features
More accurate record keeping with easier reporting and file storage
Advantage of an international framework for overseas invoicing
PEPPOL and e-invoicing compliance
While e-invoicing isn’t mandatory in Australia, this is under review by the Australian Tax Office (ATO). Currently, the ATO has adopted the PEPPOL framework for e-invoicing and acts as its authority. This forms part of the ATO’s overall move to digital tax services and e-reporting. One thing to note is that the ATO can’t view the contents of e-invoices, they simply regulate the use of e-invoicing over the PEPPOL network. However, some tax authorities use data matching to compare VAT between suppliers and buyers as part of an audit.
How to prepare for global e-invoicing
While not yet mandatory, it’s a good idea to prepare for e-invoicing compliance if your business does not already have this structure in place. You’ll need to think about the following components:
Access point service provider to connect with PEPPOL
Accounting software to scan your business’s suppliers, vendors, and countries
Accounting software capable of integrating with the PEPPOL access point
Data cleansing to prepare your accounts for a transition to electronic invoicing
It’s also best practice to review all your accounting systems before switching over to e-invoicing so that you know what to set up. Think about your payment methods, two-way or three-way matching processes, and how you collect and store documentation.
Manage global invoices with automation
Perhaps the best way to manage global invoices and ensure e-invoicing compliance is through automation. Invoice automation software helps your business stay on track when it comes to regional and international regulations. It’s also more efficient, freeing up time and money in comparison to all the admin involved with manual invoice processing. An electronic invoicing trail also helps prove your compliance to the ATO for auditing purposes.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.