B2B Payments

The Surprising Nations Leading E-Invoice Adoption

Paper invoicing is expensive and time-consuming, yet businesses across the globe still rely on the antiquated system. Change is coming. Electronic invoicing continues to grow in popularity. Countries that have proactively moved into the future of e-billing and invoicing aren’t the ones that automatically come to mind. Pushed by government mandates, Mexico, Chile and Brazil are leading the way. When will the rest of the world to catch up?

Latin America has been on the forefront of legislative mandates requiring the use of e-invoicing, particularly in B2B and B2G interactions. Brazil, Chile and Mexico now require all accounts payable and accounts receivable transactions to use e-invoicing. Complete compliance is expected in both nations by the end of 2015. Other Latin American countries are following suit; Argentina already has accounts receivable legislations in place and is in the process of adding requirements for receivables. Peru expects to have full mandatory e-invoicing implemented by 2017, and mandates are on the horizon in Guatemala, Ecuador and Uruguay.

The rapid adoption of mandates surrounding e-invoicing are based in the belief that electronic systems can increase revenue and business efficiency, and grow the nation’s economy. Early indications show this to be true. In Brazil alone, Coca-Cola saved 70 percent on processing costs, according to research from the Accounts Payable Network. Electronic invoicing also helps tax authorities fight tax evasion. Since moving to an all-electronic invoicing system in last year, every peso the Mexican government has spent on auditing brought in 61 pesos, a total of nearly 79 billion pesos ($5.1 trillion) for the first half of 2014. The number of e-invoices show no signs of slowing, Mexico will see invoices increase 20 to 25 percent in 2015.

The success of e-invoice adoption in Latin America can be replicated, but implementing e-invoicing technology will not happen overnight. To prepare for nationwide mandates, first steps include evaluating various technological frameworks and then developing a standardized format. A survey conducted by ApexPeak, Gosocket Corp. and Invoiceware International illustrates the timeframe that must be accounted for in a successful transition away from paper. “Almost all Latin American countries decided to implement a pilot program first. Government invites a select group of companies to participate and provide feedback. A pilot can take between 6 and 9 months, with the aim of creating a solid regulation that can be implemented for all companies,” Mario Fernández, chief executive officer of Gosocket Corp. told researchers. He added it could take an additional two to five years for companies to implement a fully digitized process once the test phase is completed.

While the United States and Europe lag behind much of Latin America in the penetration of electronic invoices, both are making significant strides in lessening the prevalence of paper invoices. In the U.S., the volume of B2B invoices is projected to grow 20 percent in 2015 according to global overview of the international e-billing and e-invoicing market from Billentis. The European Union, like Latin America, has seen an increase in the usage of e-invoicing due to government directives. Countries in the EU have been required to accept e-invoices since the Electronic Invoicing Directive of 2001; upcoming directives for the next few years will see federal mandates go further. By November 2018, electronic invoicing will be required in all B2G transactions. This move will affect millions of suppliers.

E-invoicing can bring positive changes to both companies’ balance sheets and national economies. Countries with the strongest adoption rates have spurred adoption through mandates. The shift to electronic systems doesn’t come without its challenges, but the potential for real cost and time savings are encouraging more businesses and countries to make the move.

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