Italy is the first European country to introduce a centrally managed real-time e-invoice clearance platform. And their model is quite similar to the ones we’re used to seeing in Latin American countries. To get up to speed, read our last blog on Italy’s e-invoicing mandate.

When this idea was introduced, the first question asked was whether the European Union would even allow Italy to go against its Invoicing and VAT Directives at all. In April 2018, however, it became clear that Italy was going to be permitted to pull this off when the European Union decided to allow a temporary deviation from the Directive.

Is Mandatory e-Invoicing Really on Its Way?

For many companies doing business in Italy, this was the point when they realized they were going to have to change their existing business processes and find solutions for local e-invoicing. Not all businesses took the matter seriously, though. Many believed that deadlines would be broken and that the Italian authorities wouldn’t really expect private companies to be able to react in such a short time-frame. Private sectors began to protest the mandate’s tight deadlines and rumors concerning deadline extensions became popular.

The Deadline Still Stands

On October 15th, a press release from the Italian Council of Ministers put an end to the rumors regarding deadline extensions and restated that the January 1st deadline still stands. Though, one change was mentioned—penalties for non-compliance have been decreased for a temporary six-month period. Even though the process is demanding quick e-invoice adoption for all, those companies who have been late to start will at least be able to begin their transformation with more direction and better information regarding the process.

One of the key challenges we faced with customers who started their e-invoice adoption process early was that there were quite a few unclarified elements concerning the mandate until recently. Now, the Italian authorities have issued further guidance making the process towards e-invoice adoption a bit easier for late-starters and providing additional information for those already well on their way to electronic invoice implementation.

Is Your Organization Embracing the Change?

The submission process looks a lot like what’s already been developed for e-invoicing in the business-to-government (B2G) sector. The FatturaPA standard requires all invoices to be issued in an XML format approved by the Italian tax authority. A qualified signature is then attached to the invoice and sent through the Sistema di Interscambio (SdI).

The Italian e-invoicing implementations may seem complex, but they’re not rocket science. The common challenges we’ve seen with companies we’ve worked with relate to combining specific technical and legal requirements with customers’ current business processes and multiple business systems. This process requires investment from companies, but it also offers a great opportunity. Businesses should look at the change as an investment in their automation and not just as a compliance cost.

When the authorities mandate the use of a single invoice format and a central clearance system, your organization will need to put time, money, and energy into developing the capabilities to produce or handle the required format, content, and connections. But, it’s not as hard as it seems when you work with an experienced provider.  

After deployment, you’ll have strong invoice data in machine-readable formats. This invoice data becomes information you can use to better inform your business decisions and strategic goals. Good invoice data in large volumes is the key to adding value in both Accounts Payable and Accounts Receivable. It’s not just the process automation, but everything on top of that you can achieve with quality data.

5 Tips for Success with the Italian (and Other) Clearance Models:

1.  If you operate globally, look for a provider that can help you solve multiple countries and e-invoicing models.

2.  View the required changes as opportunities for further automation and adding value to your organization, not just compliance mandates.

3.  Seek a provider with in-house knowledge on technical, legal, and business process aspects - especially if you’re looking to get the most out of your e-invoicing solution.

4.  Understand that the best solution may not be copying your current business processes into a new model, but instead, it may be better to improve your organization’s business processes during the same time

5.  Remember to consider all aspects of the process that may be affected, such as domestic invoices, cross-border invoices, archiving, AP processing, ERP integrations, and capabilities to handle new data elements required by the model.

Be Ready for the Next Steps

At the moment, there are a lot of rumors and discussions on which countries are going to be the next in Europe to follow in Italy’s footsteps and introduce something similar. Candidates like Spain, Greece, and Portugal have all been mentioned along with some Eastern European countries. Both Spain and Greece have already published plans of possible, real-time e-invoice clearance in the near future.

To prepare yourself for the clearance trend in Europe and to stay one step ahead, here’s a tip for your organization: In addition to following industry leaders and experts, look at the VAT gap stats published by the European Union. It will provide some hints on who has the biggest incentives to combat VAT fraud – possibly indicating future candidates for e-invoicing clearance models.

How Can Basware Help?

Basware has been supporting both invoice sending and receiving customers in Italy already for some time. The first invoice sending customers were onboarded to the SdI (Sistema di Interscambio) Business-to-Government e-invoicing model in 2014 and the first invoice receiving customers with the first B2B mandates to oil and gas sectors earlier this year.

If you’re doing business in Italy and want to learn more, contact us – we’re here to help.