Trends and Challenges Related to E-invoicing in Light of Legal Requirements

E-invoicing is transforming global business practices. While many countries introduce mandates to enhance tax compliance, the diverse legal requirements can make it hard to keep up. This is what Comarch recently covered in its webinar “Global E-invoicing Mandates – Trends, Strategies & Key Deadlines”, during which our e-invoicing experts discussed recent developments, shedding light on the implications for businesses navigating these changes. In this article, we’re summing them up for you

What’s going on with e-invoicing systems – new trends and tendencies

1. Pandemic-driven acceleration

The COVID-19 pandemic acted as a catalyst for the digital transformation of business processes, including invoicing. During the pandemic, the European Commission noted that disruptions accelerated the shift toward digital services, with e-invoicing becoming mainstream. The increased reliance on digital platforms for business continuity necessitated the introduction of new invoicing mandates globally. Since 2020, approximately 14 to 15 new invoicing mandates have been released annually, underscoring the momentum of this trend.

2. Fraud prevention and efficient tax collection

Governments worldwide are prioritizing e-invoicing as a means to combat tax fraud and improve revenue collection. Electronic invoices provide machine-readable data, making transaction flows transparent and reducing fraud risks. Enhanced visibility in payment and data flows ensures compliance with tax regulations, fostering greater trust in financial systems.

3. Government-driven digital transformation

Government initiatives, such as the OECD's Tax Administration 3.1 framework, are spearheading digital transformation in tax administration across countries. These efforts aim to standardize and modernize tax collection processes, compelling businesses to adopt e-invoicing to align with new compliance requirements.

4. Harmonization efforts

In regions such as Europe, harmonization initiatives (for example, VAT in the Digital Age (VIDA)) are designed to standardize invoicing practices across member states. However, achieving harmonization is a gradual process, with significant progress expected only over the next five to 10 years. Despite the challenges, this trend pushes countries toward issuing more mandates to ensure uniformity in invoicing compliance.

Challenges in e-invoicing compliance

1. Fragmented systems and disconnected processes

E-invoicing often involves multiple systems, including procurement, order management, accounts payable, accounts receivable, banking, and enterprise resource planning (ERP) systems. The lack of seamless integration between these systems creates inefficiencies and complexities. Disconnected processes hinder real-time compliance and data accuracy, leading to operational bottlenecks.

2. Manual operations and digital maturity gaps

Many companies remain in the early stages of digital transformation, relying heavily on manual processes such as spreadsheets for invoicing tasks. These methods result in inefficiencies and increase the likelihood of errors, undermining the benefits of e-invoicing. Businesses face the dual challenge of upgrading their systems and training staff to adapt to automated invoicing workflows.

3. Regulatory fragmentation

E-invoicing compliance is complicated by fragmented regulations. Each jurisdiction imposes unique requirements for formats, archiving, e-signatures, and reporting timelines. In Europe, for instance, countries use different platforms and roll out compliance requirements on varying timelines, making it difficult for multinational companies to achieve uniform compliance. Similarly, Latin America and the Asia-Pacific (APAC) region face challenges due to diverse legal requirements and technological infrastructures.

4. Regional complexities

• Europe: Despite progress toward harmonization, European countries maintain disparate invoicing regulations. The use of different platforms and standards, along with variations in archival and signature requirements, creates significant compliance challenges.
• Latin America: Brazil, Argentina, and Mexico have long-established e-invoicing mandates but continue to grapple with fragmentation. Each country’s mandated formats and platforms differ, complicating compliance for businesses operating across the region.
• APAC: While APAC countries lag behind Europe and Latin America in e-invoicing maturity, the region’s diversity presents unique challenges. With over 50 countries, each with distinct languages, platforms, and standards, achieving compliance is a daunting task for businesses.

5. Phased implementation

Many countries adopt a phased approach to rolling out e-invoicing mandates. For example:

• Singapore: By November 2025, newly incorporated companies must transmit invoice data using the InvoiceNow network.
• UAE: By July 2026, invoicing will be mandatory for all transactions.
• Malaysia: Starting with large enterprises, mandates will gradually extend to small and medium-sized businesses and eventually to all taxpayers.
• Germany: The B2B mandatory e-invoicing process is divided into three phases, in 2025, 2027 and 2028.
• Poland: By April 2026, all taxpayers will be obliged to use e-invoicing through KSeF.
• Belgium: E-invoicing will be mandatory for all taxpayers from January 2026.

Strategies to move forward

Despite these challenges, the shift to e-invoicing offers significant benefits, including improved tax compliance, reduced fraud, and enhanced operational efficiency. To capitalize on these opportunities, businesses should consider the following strategies:

1. Invest in technology: Implement scalable and adaptable invoicing solutions that can integrate with various national systems and accommodate future changes.
2. Build digital competencies: Provide training for employees to ensure they understand new systems and processes.
3. Engage with policymakers: Participate in consultations and pilot programs to stay informed and influence the development of e-invoicing systems.
4. Leverage expertise: Collaborate with specialized service providers, such as PDPs in France, to streamline compliance and reduce administrative burdens.
5. Monitor global trends: Stay informed about international developments in e-invoicing to anticipate future requirements and align with best practices.

Conclusion

E-invoicing is a transformative trend in global commerce, driven by the need for greater transparency, efficiency, and compliance. However, the implementation of these systems is complex, requiring businesses to navigate delays, legislative changes, and technical challenges. By understanding the trends and challenges, businesses can develop proactive strategies to ensure compliance and reap the benefits of digital transformation.