In a day and age when all we talk about is Industry 4.0, our goals have now shifted towards increasing collaboration and integration between our suppliers, producers, logistics operators and distributors. By combining digital philosophy, digitalization of invoices and the electronic management of files, your organization can take its first steps towards developing innovation in your supply chain.
In Italy, a regulation was recently released where the private sector is encouraged to adopt electronic invoicing or e-invoicing. This development came after e-invoicing was adopted for transactions involving government institutions. The new law also called for the development of an Invoice Interchange System for the private sector, similar to what was previously created by Italy's tax agency for invoices issued to government institutions.Starting January 1st, 2017 Italian VAT taxpayers can now use e-invoicing for transactions between individuals. To make this possible, a free portal was created available by the tax authorities. This required the adjustment of the format of the invoices, which was until then only used for transmitting e-invoices to government agencies, ministries etc.
However, the use of e-invoicing for private business transactions is optional unlike for government agencies. In the Italian public sector, e-invoicing has been mandatory for ministries, tax agencies, pension and social security funds since June 6, 2014 as set down by the Italian Decree 66/2014.
Now that you have a better idea of how e-invoicing started its rise in popularity particularly in Italy, we can now better define what electronic invoicing really is.
E-Invoicing: Specific Features
When talking about e-invoicing, there are a couple of points we should cover such as formats, processes and key players:
- E-invoicing allows us to forever abandon paper invoices and all associated costs such as printing. E-invoices have an .XML digital format which ensures the authenticity and integrity of the content through digital signatures.
- The Interchange System makes different communication channels (such as Certified Electronic Mail, SDICoop-Transmission Service, SPCoop-Transmission Service etc.) possible. It allows you to receive notifications such as delivery updates and expiration of the term of acceptance during active and passive billing cycles. All details of the passive and active billing cycles, and the simplified process can be found in Italian government's invoicing portal.
- The players involved in the e-invoicing system are: the supplier or their agent, the National Interchange System and the recipient or their intermediary.
Let's take a look at what is an intermediary exactly. We know that they sends and receive e-invoice or archive files for third parties, but let's examine it more closely.
What is the role of an intermediary?
Intermediaries are authorized to transmit files to the recipients on behalf of third parties. Sometimes they're also authorized to receive the files on behalf of recipients. The intermediary's role is to provide support for compiling, transmitting and digital storage of e-invoices.
There's no one-size-fits-all solution but relying on an intermediary allows to you delegate digital storage and e-invoicing tasks, while continuously updating of standards and norms. We've seen this in particular during our experience developing similar systems. Recently, Extra developed the IntermediaMarche project for the Marche Region's regional government.
It includes an Enterprise Service Bus (ESB), JBoss Fuse ESB, as an intermediary to communicate with the interchange system. Other players in the system are the protocol systems of involved institutions and their management systems for passive and active billing cycles. The ESB is the single point of entry and exit for the messages exchanged between the interchange system and the sending/receiving entities. (For more details on the "IntermediaMarche" project, you can download our free ebook that you can find at the end of this article)
Benefits of E-Invoicing
Aside from the benefits of digitizing invoices such as reduction in time and costs for recording invoices, managing customer relations, conserving resources and reducing errors, e-invoicing allows you to improve procedures and contribute to the company's bottomline as you adopt more efficient invoicing software solutions, perform data analysis and much more.
Aside from these, those who adopt e-invoicing will receive additional benefits such as:
- Exclusion from the transmission of transactions through the Customer/Supplier Listing (spesometro in Italian);
- Exclusion from the transmission of so called "blacklist" operations;
- Exclusion from the transmission of Intrastat files;
- Exclusion from the transmission of the contracts concluded by leasing companies;
- Entitled to receive refunds within 3 months following the submission of the declarations;
- Checks, inspections and tax assessments reduced to one year;
- Exemption from the need to affix the stamp of approval;
- Exemption from the need to register the issued invoices and purchases.
For more information, you can refer to the Italian Decree 127/2015.
The IntermediaMarche project provided a system for the large-scale implementation of e-invoices. The project's success and effectiveness were recognized when it won the Electronic Billing Prize for Public Administration in 2015.
System integration is key to being able to adopt e-invoicing especially in this grand scale. To learn more, download our free System Integration Knowledge Pack!