Digital transformation has taken root in many industries worldwide. Business processes have changed, and companies are rethinking their practices to stay competitive.
One key area that’s seeing new emerging trends is invoicing. New regulations, government mandates, and customers’ demands are increasingly shaping how companies approach the billing process.
What’s more, the pandemic challenges have even sped up the adoption of certain technologies such as mobile payments and eInvoicing.
So, companies that are the quickest to respond to these emerging trends will be the ones that survive and overcome new business challenges in the coming years.
Let’s look at new opportunities that await companies that want to handle the dynamic world of global invoicing.
Jump to section:
eInvoicing Is Becoming the Norm
Tax Compliance Is a Priority
Integration Is Growing in Importance
Invoicing Becomes a Source of Data
More Opportunities to Personalize the Invoicing Experience
Mobile-Friendly Experience Is a Must
eInvoicing Is Becoming the Norm
Judging by the global implementation rate and the mandates for electronic invoicing implemented by many countries, it seems that eInvoicing is becoming a regular occurrence.
The European Union made eInvoices compulsory for all transactions between businesses and public government institutions (B2G) in 2019. But some EU countries had been using them for years before the EU mandate.
For example, Finland started to issue eInvoices for public procurement in 2010, and now the Finnish government relies completely on eInvoicing for their transactions.
Moreover, even privately owned Finnish companies have adopted them.
Italy, France, and Poland have adopted the same practice for domestic B2B payment practices.
A similar eInvoice adoption trend can be followed across the globe.
Actually, Latin America was the first to introduce eInvoicing in their business transactions. At first, mainly for the private sector, to ensure secure and efficient trade.
The first country to do that was Chile, back in 2003, and was soon followed by Argentina, Mexico, Peru, Uruguay, Brazil, and Ecuador.
Thanks to their early mandates, the process is now standardized and regularly used for every transaction.
Asia-Pacific is also a growing market for implementing electronic invoices.
Automation technologies have enabled countries like China to implement eInvoicing in over 30 provinces as of January 2021, and they reached a B2B eInvoice transaction rate of 79.3%.
Source: RegPack
How does the US stand with eInvoice implementation?
For now, there is no strict mandatory enforcement for eInvoices. Most companies treat it as a competitive advantage, and it’s a growing process. Currently, it is estimated that 40-45% of annual invoices in the US are electronic.
But what do these countries want to accomplish with eInvoices?
This trend is not just about moving from paper to the digital medium. Obviously, the environmental impact is an important factor, but there are more benefits to eInvoices that countries want to take advantage of.
The most obvious goal is to speed up and simplify the payment process across borders.
When you move to eInvoicing, the receipt, collection, and access to invoices are more efficient.
Both trading parties can open and review invoices anytime and from any place.
Furthermore, companies that don’t rely on eInvoices have a payment processing cycle five times longer than the companies that have adopted them.
Moreover, when you consider the fact that an average paper invoice in Germany costs €50, while the eInvoice reduces that amount to just €1, it’s clear that going digital results in huge savings.
In fact, the new invoicing system is expected to save countries in the EU over €2.3 billion.
So, when you consider the benefits and rates of eInvoice implementation around the globe, it’s no wonder that the eInvoice market was valued at $8.74 billion in 2021, and it’s expected to reach $29.68 billion by 2027.
eInvoicing is here to stay, and companies must adapt to the change.
Tax Compliance Is a Priority
It’s not just ease of use and the simplification of invoicing that most countries strive for by implementing eInvoices. There is also a growing concern over tax evasion and fraud.
Despite frequent audits and imposing legal obligations for companies, most global governments collect less tax than they should.
This difference is often called the VAT gap, and it’s estimated that 15-30% of VAT is not collected worldwide.
The calculations are based on registered business activity, so many experts believe this number would be much higher if we accounted for lost tax revenue from unregistered businesses.
Source: RegPack
In the EU alone, prominent research has shown that tax evasion and fraud have led to a €120 billion VAT gap. Therefore, many EU countries have started to switch to eInvoicing as a method to track and control business transactions and collect tax revenue.
In some countries like Italy, this has been a fruitful method. In 2019, they imposed B2B eInvoicing to combat tax evasion, and in 2020 almost 770 million eInvoices were sent.
This helped the government garner almost €3.5 billion in tax revenue, and the Italian tax legislators say eInvoicing has tremendously helped reduce tax evasion over the years.
Even countries that previously didn’t have a VAT obligation, like the United Arab Emirates (UAE) and Saudi Arabia, introduced one in 2018. But to have better control over B2B transactions, Saudi Arabia made eInvoicing mandatory in 2020.
On the other hand, the UAE didn’t make it a legal obligation, but the use of eInvoices is highly encouraged.
As you can see, eInvoices are certainly valued as a way of monitoring tax compliance and fighting business malpractice in countries around the world. More and more countries want to close their VAT gap to fund public and government projects.
As more countries try to enforce stricter controls for tax collection, eInvoices will become indispensable for staying tax compliant.
Integration Is Growing in Importance
Modern consumers have high expectations for their online payment experiences.
Most of them can be boiled down to the ease of use, convenience, and real-time information. So, as more consumers turn to online retailers due to the pandemic, businesses will need to accommodate these expectations and needs in terms of invoicing.
This means having an integrated payment process that will provide a frictionless payment experience.
Cutting down steps for the customer to make a purchase is one of the best ways to streamline the checkout process and get more sales.
This also means giving the customers options to use digital wallets, as well as mobile and automatic payments.
That is why integrations with a payment processor are necessary. Most commonly, they involve integrating enterprise resource planning (ERP) systems with accounts payable (AP) technology.
When these two systems work together, you’ll have all the necessary data about the customer, the order, and the payment method they used to produce accurate invoices.
Since these systems regularly update data, there is less room for mistakes. Actually, after integrating these solutions, many companies reported improving their processes for order entry and invoice management.
Billing management becomes automated and easier when your invoice system is connected to the front and back-end systems with the customer’s data.
Here is what integrating their systems meant for one company.
Animal Supply Company is an American pet food supplier which has grown rapidly, but their ERP wasn’t properly integrated with other systems.
The result was that employees and customers had to move between different web stores and self-service portals to review purchases and manage inventory.
After the company integrated a digital solution into their existing systems, they created a single eCommerce platform that connected customers, products, and order information in one place. It centralized their operations but, most importantly, allowed for a better customer experience.
Source: RegPack
RegPack also has an integrated registration process with payment features like automatic billing, customized payment plans, and payment reporting. This gives companies a seamless process so they can manage payments better.
In the end, integration between ERP and AP will become non-negotiable if businesses want to accommodate the customer’s needs and improve their processes.
Invoicing Becomes a Source of Data
It goes without saying that data is any company’s biggest asset in today’s business practice.
Capturing, managing, and interpreting data helps companies beat their competitors because they can predict customers’ behaviors and scale their business accordingly. So, a new source for leveraging important customer data is invoicing.
Invoicing is full of valuable information, from the preferred payment methods to the time it takes customers to pay for services that can help companies fulfill the individual customer’s needs.
Basically, knowing who your customers are and what payment needs they have will help you tailor new products and services with them in mind.
©Sitthiphong via Canva.com
Your customer relationship management (CRM) team can see actual data about your customers’ buying habits and dig deep into which products are more successful with your customer base.
That way, they can make better decisions on how to price certain products and create customized packages to suit the customer’s needs, thus enhancing their experience.
Invoicing takes the guesswork out of what customers want and need and helps different departments gain valuable insight into the customers’ experience.
So, when a new product rolls out, they can track revenue and create accurate reports on the product’s success.
It all boils down to the fact that leveraging data is important for business growth, and invoicing is becoming a new source to gather it.
More Opportunities to Personalize the Invoicing Experience
Invoices are no longer seen as simple, bureaucratic documents for companies to collect their revenues.
According to a Walker report, consumer demands for personalization at every point of contact with a company have risen dramatically. This also extends to invoices.
Or, to put it simply, the billing process has now become a valuable area where companies can live up to their customers’ expectations and create positive experiences.
This is a strategic approach devised to create more sales opportunities and build repeat business with loyal customers.
Source: RegPack
Personalizing invoices is the latest method of providing better customer experiences. It’s an extension of a company’s brand and creates a better impression on customers.
When customers receive a personalized invoice with a company’s logo, they are far more likely to interact with it and pay on time.
In fact, more than 71% of customers say they respond favorably to content that’s tailored to them.
So, long gone are the uniform and unrecognizable invoices for companies that want to give a consistent brand experience for their customers.
Mobile-Friendly Experience Is a Must
Consider the fact that in 2021, there were more mobile phone users than desktop users. According to research conducted by Hootsuite, mobile phone users generated 54% of all web traffic made in 2021.
What this means is that their first touchpoint with a company’s bill or payment notification was through their mobile phones.
So, moving forward, many companies will have to implement a robust system that allows for a seamless mobile payment process if they want to bank on this emerging trend and grow their business.
Source: RegPack
This trend was pushed forward by the rise of mobile wallets, which provided convenience for customers when making in-store purchases.
Now, the pandemic challenges accelerated the push toward mobile payments because contactless payment became the preferred method for safety reasons.
But it’s not enough to simply offer a mobile payment option. Businesses must ensure that the same context, screen format, and checkout fields are provided as in other channels (i.e., desktops).
Customers want a more optimized omnichannel experience, and ease of use is a priority.
The idea with mobile payment is to give users a more interactive and convenient experience with paying their bills.
They can pay their bills from anywhere, and they aren’t tied to their desktops to make a purchase.
Now, we’ve mentioned before how countries worldwide want to simplify the payment process, and their efforts have also extended to mobile payments.
In some countries, this means putting QR codes on invoices to streamline data capture and payment processing.
In India, this proposition came into legal effect from March 2021 for companies with a net worth of over $70 million. Portugal and Sweden followed similar practices to streamline data collection.
To sum up, mobile payments are in the service of making the mobile user experience convenient and straightforward. So, companies that want to bill clients successfully and generate more revenue should embrace mobile-friendly payment processes.
Conclusion
There is no doubt that these trends will shape the way companies do business in the future.
Global invoicing will be changed by increasing digitalization and the adoption of eInvoices and mobile payments.
But companies also have to consider how eInvoices will affect their tax compliance and customer experience. Keeping track of government regulations is necessary to stay on the right side of the law.
Furthermore, companies can leverage customer data and improve relationships with their customers by implementing personalization in invoices.
In the end, keeping an eye on the emerging trends and understanding their impact on businesses worldwide is one of the ways to create a competitive advantage and achieve business goals.