By Anu Linjamäki
When looking at the SMB market, it’s interesting to understand how local regulations can affect the way companies do business, and how even the smallest change can open a window of opportunity for service providers.
I recently had a chat with my colleague Klaus Tenderich, who runs the volume business sales for Basware in Germany and France, and he told me about the Tax Simplification Act that came into effect for the German Market just over a year ago.
From Klaus Tenderich
One year on from approval of the 2011 Tax Simplification Act by the German Finance ministry, designed to reduce the regulations surrounding the delivery of e-invoices, many German SMBs are still not legally compliant with the legislation.
In many cases, the finance teams and business owners have not recognized the new rules that should be applied as stated by the regulations. It is surprising since the primary objective of the Act is not to reduce taxes but rather to reduce bureaucracy.
Previously, electronic invoices needed to be transmitted using an EDI (electronic data interchange) process, or with a qualified electronic signature. Under the new Act, any kind of e-invoice – including email – will be accepted, providing that all invoices show the origin and integrity of the content, as well as demonstrating readability.
As a result, businesses have the freedom to establish their own procedures to ensure these requirements are adhered to for both paper and electronic invoices.
All three requirements (origin, integrity, readability) can be proofed through an organization‘s internal procedures by providing a reliable audit trail between the invoice and the purchase. By implementing a complete electronic invoice processing approach, whereby all invoices are received electronically and the whole purchase invoice approval process is managed within one system, SMBs will be confident in providing proof of the origin of the invoice as well as an audit trail. Small and medium-sized companies are continuing to struggle with manual, paper-driven processes and are now realising that electronic invoice processing could alleviate most of the challenges they face in their day-to-day operations.
Choosing a service provider that can automate the accounts payable processes from receipt of invoice, through approvals until payment will ensure errors are avoided, lengthy approval processes are reduced and wasted hours spent on repetitive tasks are eliminated. More importantly, this kind of invoice handling process follows the regulations set by the Bundesministerium der Finanzen (BMF), the German Finance ministry.
The simplified requirements for electronic invoices that are presented through the Tax Simplification Act should be well received. There hasn’t been a more important time to ensure that internal procedures are implemented that are robust and reliable enough to meet the regulations of the Act.
It’ll be interesting to see how this change will affect the adoption rate of electronic purchase invoice processing solutions, as it’s an easy solution to a complex issue.
I’ll keep you posted.