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Uzņēmējiem - 2021 04 29
e-invoices | digitalisation

E-invoices is the future to be prepared for now

E-invoices is the future to be prepared for now Photo: Thanhy Nguyen, Unsplash

Digitisation of accounting processes, including the introduction of an e-invoicing option, can open up new optimization opportunities for companies and allow timely adaptation to future standards.

Although e-commerce and the possibility of receiving different services online has increased rapidly over the past few years, SEB survey of Baltic companies this year concluded that only 12% of Latvian small and medium-sized enterprises (SMEs) plan to implement some digitization processes in their company in the coming year, while 44% of respondents have not included them in the next year's agenda. By comparison, in Lithuania only 23% of surveyed SMEs do not think about digitization, but in Estonia — 26%.

What keeps us at the moment from accelerating the implementation of digitalisation processes, and why Latvian companies should not postpone the implementation of the e-invoicing function to the future?

Without a proper manager, development is slower

According to the head of the e-invoicing operator UnifiedPost (formerly Fitek) in Latvia Edgars Strazds, digitisation of accounting processes and the introduction of e-invoice is an opportunity for the company not only to optimise resources and reduce errors, but also to adapt timely to the fact that in the next few years e-invoicing will become part of daily activities at all levels, including relations with the state, as it is already happening, for example, in Estonia.

Strazds points out that the general digitization journey is largely influenced by the state's position. For example, Estonia managed to determine quite quickly and clearly which institution would be responsible for the development of this field, while in Latvia there has not been a right manager of the field. This is one of the reasons why digitalization in our country is progressing in relatively small steps.

E-invoice — various options for companies of different sizes

Although processing paper invoices and PDF invoices requires significant resources, data from the Central Statistical Office (CSO) show that up to 95% of Latvian companies still have to deal with such invoices on a daily basis.

Digitization of accounting processes can allow a company to significantly reduce resource consumption and eliminate human error, facilitate the work of an accountant, as well as allow to hope for faster payment of bills. 

However, according to CSO data, only slightly less than half of the large companies (with more than 250 employees) can send e-invoices in Latvia, while only 12.5% of small companies (up to 50 employees) have this option.

Strazds agrees that it is always more difficult for small companies to obtain the necessary information and adapt processes, so if large-scale accounting programs are more suitable for larger corporations, for smaller companies it is worthwhile to look for standard solutions.

Such as accounting solutions tailored to the needs of SMEs, which already include e-invoicing functionality, or specifically designed outside accounting systems platforms that will be able to provide the necessary functions at a very democratic cost, such as the e-invoice portal established by SEB in cooperation with UnifiedPost. "If a company has at least 5-10 bills per month, it would definitely be worth considering the use of such solutions," advises Strazds.

Some homework must be done before introducing e-invoices

To decide whether a company can implement the e-invoicing function in the near future, it is necessary to start by evaluating its accounting system in terms of what it supports or does not support. Strazds recommends that the company clarify these issues with its accountant or the operator of the accounting system. At the same time, he emphasizes that if this system is already outdated and does not support the functionality of e-invoicing, it is only a matter of time before it will have to be changed.

In order for the e-invoicing functionality to truly perform its function effectively, a company must timely perform some homework. According to Strazds, a rather common problem is digitally unworkable e-invoices, which comes in, for example, pdf format. Sometimes the company's internal processes are not adapted to the possibilities of e-invoicing, and it may be necessary to print the e-invoice and give someone to sign, or the current accounting system does not support the import of e-invoice files — in this case, e-invoicing does not make sense, therefore a company that has decided to implement the new functionality needs to evaluate and adapt all related internal processes.

It is also important not to forget to amend the relevant agreements: if they specify the procedure for mutual invoicing, then the option to issue e-invoices should also be included.

It is important to reach critical mass and not to jump on the train at the last moment

Considering the small number of companies that have joined the e-invoicing network in Latvia so far, many may wonder — why should I do it if there are not enough senders and recipients in the network? Strazds admits that this is really a problem at the moment, therefore UnifiedPost also offers its clients hybrid solutions, which means both the possibility to send and receive e-invoices and the possibility to digitize invoices received in pdf format. He recommends that companies that have already decided on the possibility of introducing e-invoicing functionality should talk to their partners in order to expand the network of beneficiaries as quickly as possible.

For companies that still doubt the need to introduce the possibility of sending e-invoices, Strazds calls for the future perspective to be taken into account — in about the next three years, a requirement for companies to exchange e-invoices with each other may come into force, not only to improve efficiency, but also to reduce the shadow economy. 

It has been reported that the State Revenue Service also plans to introduce a requirement for companies to receive copies of invoices in a digital format in the future, as is already the case, for example, in Lithuania and Hungary.

It is already clear that e-invoice will be the standard of the future, therefore Strazds recommends that companies prepare for this moment timely. He cites the introduction of the euro as an example — those who did everything at the last minute often had to reckon with longer project execution time and higher costs.

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