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Country government entities are increasingly setting up mandated invoice flows so they get to see and book an invoice before the payer does in an effort to close an estimated $500 billion global VAT Gap.
For organizations with a global footprint, the big question is: “What does this mean for you....?”
Potentially a lot of work, and a lot of worry.
But it doesn’t have to be that way. Viewed strategically, and with the right technology partner, the rising tide of e-invoicing compliance mandates across the world is your opportunity to turn compliance into an efficiency driver and competitive advantage for your business.
Tradeshift’s resident compliance expert, Marcus Gray, and Susie West, CEO of Shared Services Link, tell you everything you need to know to navigate current and future current changes to the compliance landscape, including:
Susie West: [00:00:00] Hello, ladies and gentlemen, A warm welcome to today's webinar, which is brought to you by Shared Services Link in association with Tradeshift. Today we are looking at how to prevent panic. Schooling up now on e-invoicing mandates. My name is Susie West. I'm the founder and CEO at Shared Services Link, and I'm delighted to be introducing as our main presenter today, Marcus Gray, who is tax compliance and interoperability expert at Tradeshift.
So great to have Marcus with us today. You of course have a role as to what you get out of the next 45 minutes or so, which is to really make sure that you put your questions through to Marcus. So just text those through to me in the GoToWebinar panel and I'll put those through to Marcus in the last 10 minutes of this webinar.
The slides will be made available after the webinar as well so you can refer to them moving forward after today. Let's have a look at the context for today. So, [00:01:00] I, I'm sure you'll be wholly aware as to what's happening. So but just a bit of a recap for, for most of you, In a number of countries v a t or sales tax actually makes up a significant amount of governmental tax income.
So to the tune of 40%. And you can imagine that 40% is pretty desired, desirable as far as governments are concerned. But in the last kind of 30 three or four years we, we've obviously seen that governments are scrutinizing. Spend a lot more, and they're even more keen keener than ever, really, I should probably say to get their hands on every single penny of VAT or sales tax that is owed to them.
So this is really what's driving all of these mandates that we are now seeing in a in a plethora of countries. What has happened really up until now and it's still ongoing, is that it's a bit of a combination of a bit of fraudulent stroke criminal activity where individuals or businesses [00:02:00] are trying to avoid paying tax and are sending dud invoices that don't reflect the kind of the true situation or process inefficiency has actually meant that governments haven't been able to get their hands on the, the VAT sales tax that they have been owned owed. And they've been short. They've been short. Really? I mean, we're, this is a figure that we are, we're still trying to get our arms around.
They're short. By about half a trillion US dollars. And this is what we refer to as the v a t gap. So it's huge. And countries are now saying absolutely no more and they're looking at the successes of what's been happening in Italy quite recently. Huge successes in Italy. With Italy closing their gap there.
And obviously going back to the the founding fathers, if you will, of this methodology, Brazil, Mexico. And looking at their records and seeing these countries are having huge success. So the countries [00:03:00] are coming on very fast, they're coming on board very fast. And what does that mean to you? Wow. What it basically means, and you'll be very familiar with this, and this is a refresher is that the roadmap ahead for all these countries coming on board with their clearance models, where they're wanting to see the legitimate invoice often before you even see it, the buyer.
It, that, that roadmap is relatively overwhelming. It can look intimidating. You look at these roadmaps and it can cause you to, you know, the, to have quite a tight chest. So what we are going to be doing today, hopefully is giving you some relief and Marcus today is going to be giving you a, an updated perspective on these changes.
And he's gonna be zeroing in on a few things. So ViDA um, that came into play end of last year and it's a new a new feature within this within this field. So Marcus is going to be just spelling out a little bit more about what we've learned in the last six months [00:04:00] about ViDA is going to be zeroing in on two key countries that are coming up Poland and France.
It's very interesting to see the, like for like, or not comparison between the two. And then that will give you an idea as to how there isn't a templated approach to all of these countries. And really importantly, he's going to be sharing with you the one key question that you need to ask and you need to find the answer to, to help you figure out if action actually needs to be taken within a country now, or if you can wait a bit so.
Before I hand over to Marcus, let's just kick off with one key poll. So coming up on your screen now, just to understand a little bit about what size organizations we have represented on the line today. How many accounts payable invoices do you process globally each year? So all kinds of AP [00:05:00] invoices, paper, pdf, emails, electronic.
Less than 50,000. 50,000. Two quarters of a million , quarter of a million to half a million, half a million to a million invoices a year, or more than 1 million invoices processed by your accounts payable teams globally each year. So just to recap, how many AP invoices do you process each year? About 55% of you responding.
If you haven't already responded, please do. So. We try and nudge these figures past about the 60% mark. Closing the poll in 3, 2, 1. Let's have a look at the results. So just, just on 60% there. So thanks for that. Right. What have we got here? So just over a third of your process. Less than 50,000. And and this is quite interesting.
We are seeing that because of these mandates organizations with smaller volumes of invoices, I less than 50,000 a year are [00:06:00] actually moving towards electronic invoicing. Before it was really those companies that process 50,000 plus. So this is an interesting development just under a third of your processing, between 50,000 and a quarter of a million invoices, and that means a third of your processing over a quarter of a million.
We're just under 20% of you processing significant volumes. So more than a million invoices a year. Great. Thanks for all of that. And over to you, please, Marcus.
Marcus Gray: Thank you very much, Susie. So my, my name's Marcus Gray. I'm the product owner of Compliance Services at Tradeshift. So it's my role to keep monitoring what's happening in the market and advise the business of which tools to develop next in order to support.
Our customer's compliance needs. So in, in today's session, we'll cover lots of several different themes throughout the presentation. We'll, we'll take, take a look at what the key changes coming into play in the next 12 months and beyond [00:07:00] are the steps to take to avoid panic or penalties.
We'll take a look at the, as Susie said, France and Poland and see what differences are between countries. We'll take a look at, well, we're, we've been, the, within the changes that we've got coming up, who's responsible for complying with the regulations, whether it's the supplier or the buyer.
And then we'll have a look at how we've deployed, how we, how we use Tradeshift to facilitate our client's compliance needs. So the pace of change is rapid when it comes to tax regulation. Remember that VAT was only introduced in its current form in 1954, and since then 174 countries introduced VAT and the focus was what was needed to be included on the invoices with regulations about content.
Really, really getting into more detail in the nineties. We jump forward to now. Since [00:08:00] 2014 tax authorities have been been introducing clearance controls where they intervene within the invoice cycle to make sure that they're, make sure that they're gaining the maximum revenue from, from the
so in this view that we, we can see the countries that have already introduced some sort, some form of clearance control. And the types of controls that they've introduced vary. They could, they could include periodic reporting or, or real time reporting of transactions. And they, or they could include full clearance where they, where the government's receiving invoices in, near, near to real time as part of the invoice lifecycle lifecycle.
The, the rate of change is now accelerating and with more and more countries to announcing plans to introduce clearance in over the next few years. Highlighted in blue. Here are those countries that we've heard are going to introduce plans. But I think this is the modest view and we'll see more announced over the next 12 months, [00:09:00] especially with The need to gain prior approval in Europe for implementing e-invoicing being removed within the next couple of years.
So for companies based in the country's changing regulations, it's challenging to understand what needs to be done and by when in one country and by when in one country, with regulations not being clear. Intentions to introduce these changes are announced as firm plans and conveyed as firm plans when they in fact aren't they're, they are just an intention.
So for companies that operate globally, monitoring and managing the changes can be very daunting.
And here here's the challenge for governments. Huge, huge gaps in v a t. Revenues are the main driver behind the changes. This is the, the EU's latest VAT gap report. Just under 93 billion of lost VAT revenues been reported, and it's not surprising. And that the, the countries for [00:10:00] largest gaps.
So the ones that we the ones that are already announced intentions to bring in controls, Italy, they've introduced their clearance process. France, Poland, Germany, Spain, Portugal, and Romania have all announced intentions to, to bring in new controls as well as Greece and a few, a couple of other countries that you can see here.
I don't think anyone would argue that increasing v a t revenues is the main driver of the changes, but there are silver linings for businesses. I think we'd be remiss without having, having a chat about the benefits of fee invoicing. As these regulations are brought in,
When, when it comes to clearance, the tax authorities introduce normally a standard format that documents need to need to adhere to. And e-invoicing has obvious environmental benefits, so of eliminating paper, but having that standardized format is also providing an opportunity for, for governments in the [00:11:00] future.
To introduce more data points that will be required on invoices like carbon footprint data points in, in order to, in order to have even more environmentally green impacts when everything is digital, there's not much chance for an invoice going missing anymore, and documents arrived or arrive almost instantly.
The platforms usually usually guarantee the integrity of content and they provide audit trails for what's happened with that document. So in theory, this will enable faster payments allowing supply chains to work more in a more agile way. The biggest driver of digitization projects has has been to reduce the processing cost of invoices.
Introduction and clearance controls provides a brilliant opportunity to get the data that you've been asking your supply chain for if you've been running a digitization project. Like purchase order numbers because everybody is now gonna be using [00:12:00] that same format, and it'll be very easy to say, we need you to send this data point in this field which will allow you to automate your business, your business processes, and depending on the type of control being introduced and the, the, the specifics of regulation.
It could also mean that a hundred percent of your documents will be received digitally from day one. Which will mean, which will mean the removal of lengthy supplier onboarding projects and significantly reduce the time to value realization. I think these benefits are often forgotten. When, when looking at the complexity of the how and what needs to change.
Sure. There's definitely a cost of implementing new processes. It mainly falls on the shoulders of businesses to bear those costs with often a little, little perceived short-term financial upside. [00:13:00] But an interesting question to ask is, well, where, where is that breakeven point? When will I see the benefits to doing this?
And I think that really depends on the size of your business and how, how many suppliers you have on the, in your supply chain. If you're, if you're able to adopt a fully digitized process then that's the, the breakeven point's always been based on the percentage of your, the percentage of your documents that can, that are digitized.
Because that will, that's where you, where you start reducing your operating costs. And so the introduction of grant government mandates. Presents an excellent opportunity to, to, to accelerate that, that accelerate that breakeven point. Every coun, every country that's looking to introduce changes has different requirements and it's difficult to keep an eye on exactly what those requirements are.
We'll take a look at a couple of countries in a moment that have [00:14:00] announced their new, their new clearance controls, and they've a, they've published their requirements. So we've had a chance to study them and look at exactly what's required. But I think before we move on, Suzy, I think we've got time for a poll.
Susie West: We certainly do. Marcus. So up on your screen now if you could let us know please, what percentage your invoices are received via email or paper today. Maybe you are highly electronic and it's between zero and 25%. Maybe you are kind of partially electronic and it's between 26 and 50%, maybe 51 to 75% of your invoices are received through email or paper today, or maybe 76 to 99% are received through email or paper today.
Or maybe you are completely 100% email or paper based. Today, and you haven't [00:15:00] yet started on any kind of electronic invoicing program. So if you're 100% electronic today, go ahead, tick that last box, and if not, tick the boxes above which you're appropriate to your own situation. So what percentage of your invoices are received via email or paper today?
Closing the poll in 3, 2, 1. Results coming up. Now, a bit of a bell curve going on there, which is suggesting that what 14% of you are are completely paper-based stroke, email, PDF based. 30% of you are in low volumes of electronic with about 76 to 99% of your invoices coming in really through paper or email pdf.
34% of you are seeing about 50% to. 75% of your invoice volumes are still very much as manual paper and [00:16:00] an email pdf. 14% of you are heading more towards an environment which is much more electronic, and 9% of you are quite heavily electronic, it would seem, with only well between zero to 25% of of invoices coming in being paper or email pdf.
Back to you please, Marcus.
Marcus Gray: Thank you, and definitely interesting results there. I think one, one of the things is being is being cited in the new regulations that are being introduced is PDF structured PDFs have a limited shelf life in the future as well. And governments are looking for a true digital invoice as, as, as time moves on.
And that, that's reinforced by the regulations being introduced in France. France is probably the biggest change happening in Europe at the moment. The, they are introducing clearance controls in July, 2024. All suppliers will need to be ready to [00:17:00] receive documents from the, from the government portal on this date because the biggest companies in France will need to be sending.
And then there's a phased rollout depending on the country size for wh- when other companies need to send their documents. France's requirements are very lengthy. They, because they, the, the reforms are extremely thorough. There's three different invoice formats. Those were international standards supported within the, within the regulations.
Clearance is required for the invoice to be recognized under the VAT law. Invoices need to be submitted and received from the tax authority portal, which is called the PPF or Portail Public de Facturation. My French is not great. I don't, excuse me, for anybody that's French speaking on the call. Reporting must be provided by both invoice issuers and invoice receivers.
Which is a, a key point to remember [00:18:00] as we, as we move on, to look at Poland in a moment, and also that regulations are covering domestic business to business invoices, international business to business invoices, and business to consumer transactions as well. So the clearance controls being introduced in France should capture everything that's on a VAT return.
In contrast, the requirements published by Poland are very different. So plans to introduce clearance in Poland have been delayed multiple times. The latest in planned implementation date is now July, 2024. But there's a question mark about that still. If the changes go ahead, then all invoices will be in a structured format that that's been introduced by the Polish Tax Authority clearance.
Yeah. The documents need to be cleared to be recognized as as under, VAT law. The type of clearance in Poland [00:19:00] is pre-clearance, meaning that suppliers must register the invoice before sending it to a customer. There's no changes required on what is sent to a customer or what a receiving customer needs to do when they receive an invoice.
And regulations are only covering domestic business to business invoices, so the Polish changes are, are going to be easier to adopt for many businesses. But VAT and Slage, as we mentioned earlier For those that aren't too familiar, this is an EU initiative that's been going on for a while, and it is examined, the challenges faced by all of the differing approaches to introducing these types of controls with a view to harmonization with the ultimate goal of reducing that v a t gap that we've mentioned.
One of the things that they have Recommended that's currently going through the next consultation phase, [00:20:00] and we're going to the, out in a more detailed moment is that pre-clearance controls such as the control being introduced by Poland is not the most efficient way of introducing clearance controls with in order to get the best results for reducing the VAT gap.
They have said that these types of changes will be allowed until 2024. But it's yet to be seen and that's where the question mark comes in. Whether Poland will pivot it's approach to align with the recommendations or whether they will go ahead and look to implement in 2024 and the changes being introduced by ViDA.
Add another dimension of complexity when you are, when we're keeping an eye on, on the trends here. So yeah, the ViDA has the, the ultimate goal is to reduce the VAT gap, and the ViDA report came in three pillars. And the the recommendations are currently going [00:21:00] through the final steps of public consultation. So, They are, there are about 18 18 issues that the report looks to address and we're, we'll look at just a few of them today.
So the pillars are single v a t registration, so simplifying the requirements for VAT registration for companies transferring goods within Europe. So. The platform economy and how to address accommodation and transport platforms in order to make them accountable for v a t collection and recommendations on digital reporting and e-invoicing requirements.
So the, I think the, the most, the most relevant recommendations within the report when we look at the invoicing and the regulatory trends are, The, the single v a t registration that should be in place by 2025, we expect this to, to make it through, into law, means that [00:22:00] one company would, which would previously had one VAT number, France, Italy and any other country that they were, they were operating in, will now just have one single VAT registration based on the first country of registration.
And that's gonna require changes to IT systems. And an update on , on supplier and customer data. Nevertheless this is viewed very positively as it will reduce a lot of initial compliance costs and make it easier to reducing the barriers to trade. There's also a lot of support for bringing in a standardized format for documents.
It's been recommended to use EN 16931 which is a format designed for business to government transactions would need to be adapted slightly but it'll be a very welcome change for businesses if they didn't have to redesign their, their data, their [00:23:00] data points, and their data processes.
Each time a regulation comes into play. I think we'll also see digital reporting requirements for intra community transactions come into law. That's where you, you'd have to provide reporting to at the e level for any transactions between, between countries within the eu. The initial recommendation has been to mandate that to within two working days which has been some pushback on.
So we might see that coming, coming into, into law with a slightly longer timeframe. The pro the proposal to not allow pre-clearance, so where an invoice is registered with the authorities. Before being sent to a customer has got a lot of support behind us as well. Not from some of the countries that have already announced or been considering introducing those plans, though.
We expect this to [00:24:00] make it through. But any countries that have already announced plans to be allowed to continue. So there is, as I said, there's 18 other changes. We, we haven't got time to go through all of them in today's session. But the next date for your diaries is the 24th of October, 2023.
Not least because it's my birthday, but it's also when the recommendations of ViDA are going to be voted on, so that that's a date for the diary to keep an eye on what that, what, what happens following that.
So, 18 countries have announced intentions to introduce some form of controls. And it's likely that more countries will announce changes. This, this timeline shows the intended dates that have been announced and to the market. The types of changes vary from by each country. But most countries in, in this view are looking to introduce continuous transaction controls, [00:25:00] where the government will have access to the invoices in real time.
The Dominican Republic had been expected to, to try again to roll out a, a clearance process this year, but that may well slip as there's been no formal announcement, it's just voluntary. At the moment, Guatemala are continuing to roll out the final steps of their clearance process. Bahrain are in the, still in the process of public consultation for pre-clearance controls.
Similar to, similar to Poland and Denmark are intending on introducing. Periodic reporting periodic reporting requirements in the first half of 2024, the 1st of July, 2024 seems to be a favored date. And it's the date that if all of these changes go ahead, there's gonna be a lot of strain on finance and IT systems.
We don't expect them all to go ahead on this timeline. There's often delays. But what happens if companies don't adopt the reforms? [00:26:00] Yes, penalties. So today, the penalties for complying with reforms vary significantly depending on the country. In France is a 60,000 a year penalty for a large enterprise.
Really enough of a deterrent. Or what, because the cost of implementing the processes involved that's being introduced by the French government is gonna be a lot more than that. And then in by contrast Poland are looking to introduce a penalty of a hundred percent of the invoice value, value which is gonna be very difficult, I would imagine, to enforce.
They are saying that there will be a six month grace period between when the, when the controls come into place and the four penalties will be issued. Though regardless of what the penalties are, these aren't optional reforms. And in the case of France, if, if you're not going to adapt to how you're going to receive your invoices, because that will be how you receive them.
So compliance is, non-compliance isn't really an [00:27:00] option. And it's hope d by tax authorities that the need for those, those penalties is not necessary.
So as we seeing there's a lot of changes happening and there seems to be new news announced every single week. But what do you actually need to pay attention to right now? Well, it's important that to understand that. It, it is important to understand what's coming up and what changes have been announced so that you can ensure that you have resources in place to manage them in the future.
But first, the understanding your systems what systems the proposed changes are going to impact is important for you to, to find and find the best solution and plan ahead. Invoice flows and the content of invoices are, are most likely to be affected when when the tax authorities introduce continuous transaction controls.
An example might be a requirement to introduce a QR [00:28:00] code into your invoices which, which should Switzerland, Portugal, and multiple other countries have introduced to date. And or, or are planning to in the near future, or the requirement to include a clearance reference number, which associated with pre-clearance pre pre-clearance controls into the invoice before sending it to a customer may also mean that you'll need to adapt the way that you're sending and creating documents. If a reform relates to digital reporting requirements and making sure are giving the, the data to the tax authorities, it might mean that you don't need to let, you don't need to touch your invoice content at all because you can deliver that reporting directly from your ERP.
So there wouldn't be any impact on the way you transact with your supply chain. But it may be a requirement to have a look at, well, if, if this reform is requiring me to [00:29:00] provide reporting on both B2B transactions, international, domestic, and business consumer transactions, is all my data in those same place, what do I need to do in order to fulfill the requirements?
And how am I gonna go about me ensuring that you're, I'm ready to, to, to provide that data in the structure format being requested.
So we, we've been working on providing clearance services for the upcoming changes in France and Poland, and, and looking at those requirements in depth. Over the last few months. And an important question to consider when we look at those changes specifically, as well as other changes and controls already in place in the markets, is whether you change whether the change is actually impacting the accounts receivable, accounts payable processes, or both processes.
So in France the controls specify the format to use and require businesses. [00:30:00] To both receive and send documents in, in the end via the French French portal. But in Poland, on the other hand they, they have pre-clearance controls and the only, only firm requirement, the only, the only legal requirement is for for businesses to send the invoice by the Polish portal for a pre-clearance check.
There are no legal requirements to introduce new fields onto the invoice or, or receive invoices via the clearance portal. Although businesses do have the option to look to connect to the, the Polish portal and receive all documents that have been submitted but they have to agree to do so.
In order for that, in order for the customer in order for, to apply to, to use that option.
As we've seen today there's a, a lot of plans being announced which are often subject to changes and delays. In order to avoid panic and [00:31:00] stay focused on what matters, I think there's one initial question that you should always be asking, and it will save you a lot of time in the long run.
And that is, have the technical specifications been published yet, even if it have these specifications may well go through several iterations prior to launch, but no work can be, no work on implementing any changes can begin until those technical specifications have been released by been published by the authorities.
So my advice would be if they haven't been, if they haven't been published yet, Don't panic, hold tight. Hope that the tax authorities timelines will be kind to kind to the businesses and wait until they have been published before assigning IT resources to spend any, any good chunk of time on looking at what needs to be done.
So before, before we look at how we've supported some of our customers and how the [00:32:00] tradeshift platform supports compliance delivery of documents, I think it would be good to have another poll, Susie. Great.
Susie West: Marcus. So third poll coming up on your screen now. Please if you could participate in that.
We're curious to know how many live suppliers you are currently trading with. How many live suppliers are you currently trading with today? So is it less than a thousand, 1000 to 2000, 2000 to 5,000, 5,000 to 10,000, or is it more than 10,000? Suppliers that you are trading with today. So if you could participate in that, and I'll be closing the poll shortly.
Just a reminder, how many live suppliers are you currently trading with today? Closing the poll in 3, 2, 1. Let's have a look at the results coming up on the screen now. So just under a third of you are trading [00:33:00] with fewer than 1000 suppliers. And then we've got 21% of you are trading with more than 10,000 suppliers, and the rest of you are somewhere in the middle.
So an interesting spread there. Thank you. And back to you please, Marcus.
Marcus Gray: Thanks.
So Tradeshift facilitates compliance in multiple ways for our customers. The way Tradeshift works is it's a platform and you invite your supply chain to create your own network on the Tradeshift platform. And it's highly adaptable. So, Use the customer, configure, can configure your own business rules.
We ensure that the accounts are created with the correct identifiers. And then you could, you can add extra compliance rules if you wanted to be stricter. And Tradeshift gives you the flexibility of doing that. But we also have predefined compliance packages applied on [00:34:00] document exchange.
This means that we are actively, we actively monitor the regulations in the market in over 50 countries, and we apply the compliance requirements at document creation stages to ensure that they the documents comply with the regulations in the country. And this is particularly relevant for post audit compliance requirements.
And then we offer as an accounts payable solution, we offer inbound clearance services. So that's where we will help you connect to the government clearance portal to download and extract all documents addressed to you. And in some, in some countries some for Latin countries, we offer validation services.
So if you are sent a document with a clearance number on it, And the regulations state that you need to verify that document has gone through clearance. We provide you with the ability to connect with the authorities and validate that that document has in fact been cleared. And it is a [00:35:00] valid tax document.
One of our customers Scheffler a live now in 13 countries and they leverage clearance services in China. They're assured that they are meeting all of the local requirements. They've said that by onboarding any supplier to Tradeshift all, all Schaeffler regions benefit through that digitization effort and Tradeshift's helped them facilitate cost savings whilst prevailing excellent user experience for, for their supply chain.
And Tradeshift supports over 3,500 customers. The Tradeshift Network has been growing consistently
and has, has supported transactions with value exceeding, exceeding 1 trillion US dollars representing some of the, some of the world's most recognized brands. As you can see on this screen, Our, our focus remains unchanged which is to help customers move away from legacy means of [00:36:00] transacting with each other, and provide a, a platform to allow them to connect and collaborate in the most efficient way possible.
Every month, we facilitate 3 million transactions for, for, for our customer base.
I think with that Susie, I'll hand back to you for, for some q and a.
Susie West: That's great. Thank you so much. And we've got a good amount of questions come through, but whilst you're pondering on your question, let me just put the final poll question up on the screen. What would you like to do next? We sent more information about Tradeshift compliance.
Speak to Marcus and his team. Request a demo with Tradeshift or sign up to the Tradeshift newsletter. So please let us know which one you'd like to, to take forward. There. I'll leave that poll question open for a little bit and we'll go ahead and start asking our questions. So first question to you how straightforward is it for suppliers to use the Tradeshift platform?
Marcus Gray: So suppliers on, on the Tradeshift platform, they're, they're able to create an account with in a [00:37:00] very short period, period. It is very fast to create an account. And then they're able to start sending documents immediately. Normally our customer would send out an invitation to connect with them and by following the link and the invitation, You'll, you'll then be take guided through the intuitive registration process and you'll have, you'll be able, you'll have tools there to support you in creating your own, your documents.
An invoice can be created in as little as five or six clicks and sent to a customer. Okay. Thank
Susie West: you. And we were talking about responsibility beyond the supplier stroke buyer side. So just kind of nailing it down then. Are, are you saying you're seeing it mainly on the supplier side or a little bit on the buyer side?
Who ultimately is responsible? Does that change country to country?
Marcus Gray: So I've spoken to multiple legal teams and tax teams on this, that according to legislation in most, in a lot of the countries, The legal requirement is on [00:38:00] the supplier. However, the buyer also has an obligation to ensure that they're trading with ethical companies.
And so the legal teams I've spoken to often want additional controls in place within their own processes to ensure their suppliers have actually done what's required by often by law. Which I know is, there's a gray, gray space in there, but it's, it is very much open to open to interpretation of legalese.
Susie West: Okay. So one viewer who's saying most of this seems to be to relate to ap, I'm looking at ar only. How is this relevant to me at this stage? I suppose the answer is very,
Marcus Gray: Yeah, absolutely because you'll, you'll be required to send your documents to these clearance portals depending on the size of your business.
There's different options as, especially with the upcoming changes. So, [00:39:00] but, so the, the authorities are often allowing businesses to connect via via web portal. And create documents one by one manually within that portal and submit them to the authorities. But if you're, look, depending on the change you're looking at you may and how many invoice volumes you've got, you'll still need to be looking at building APIs to be able to send the data points that comply with the regulation.
Tradeshift also helps with that via our Babelway technology. And we are able to offer e g I connections for outbound invoicing. Mm-hmm.
Susie West: Okay. Gonna put a question to you now. It kind of links back to the, the visa slides where you were talking about the N 1 16 9 31 format. So I'll put this question to you, and I know with some of these questions it might be a follow up situation, but I'll go ahead and ask this one anyway.
As per ViDA, we could decide to issue e an e invoice without customer consent. As of the 1st of January, [00:40:00] 2024, if we were to do this and EN16931 format, would we then be compliant with the Polish, French, Spanish, et cetera mandates?
Marcus Gray: It's too early to say, I think is is the answer. ViDA's made the recommendation, but they can't make law in all of the countries.
The, those recommendations are still going through public consultation, and if you were to send a document in that format today then it wouldn't meet the needs of many businesses because the format that's been cited in the, in the, in the ViDa package is a format used that has all the fields required for a government organization.
Yeah. Common widely used by government organizations. But it hasn't been assessed for the needs of other businesses within the market. Yeah. So we expect at the end of October for that, those votes to take place on the proposals, but it'll be some time before that gets into law [00:41:00] into EU law. Yeah. So pending.
Susie West: Yeah. Yeah. Okay. Great. Thank you, Marcus. So moving on. So if we are a supplier in the UK trading with Europe, we don't seem to have liability at this stage as these are EU based. What's your view on that?
Marcus Gray: You, you don't have liability at this stage to connect to all of these all of these portals and that it's unlikely that that will be introduced by most authorities as well, because how are they gonna enforce it?
But what you do need to ensure is that you are complying with the regulations for sending documents within the uk. And that's regardless of where you're sending to because the, the, there was, they will still tally up the, the VAT numbers of UK businesses and there will be reporting on that level.
The UK haven't announced any plans to introduce clearance controls, and we wouldn't expect them to do, [00:42:00] to announce anything within, within this go within with the government that's sitting, but you never, you can never rule it out as after the election and moving forward.
Susie West: Okay. Thank you. Let's move on.
So I know that this has come up as a talking point, quite a lot. So for large global companies, would you advise this to be run as a global. Centralized coordinated program or a separate projects run by countries within countries. This particular viewer is currently running it as separate projects, but they're considering changing it to a globally run program, or at least just add onto that, or at least a regionally run
Marcus Gray: program.
I think combining all of these things all at once is complex and it should be done thoughtfully and over time. But there are, there are massive benefits to having everything in one place. Having one provider that's keeping an eye on everything for you. Tradeshift uses, for [00:43:00] example, we use, we use other service providers to, to provide services in countries where we haven't built the solutions ourselves.
So different service providers will be able to help you provide services in different areas. But there may be, there, it may be the case that no service provider will be able to service every country depending on how many countries you are in. That, that you're looking to, to adhere to clearance controls in.
Susie West: Okay. So, so it sounds like from what you're saying, Marcus, it, they are like benefits to trying to run it, run it in a more centralized way, like a center of excellence kind of way
Marcus Gray: within organization. Yeah. Benefit would be you'd have the, you'd be able to implement and look at a overall business automation process strategy, because all of your data will be in one place.
Yeah. Whereas, but the, the, the downside might be cost because having a global solution or, or is, and rather than the teams going out and locally sourcing [00:44:00] providers maybe more may, may cost more. Yeah.
Susie West: Okay. So another view is asking about when is this likely to come to the uk. I think you've answered that.
Probably not within the next couple of years or so, at least till the next general election. The further question is, do these regulations apply to freight, transportation invoices,
Marcus Gray: invoice? Yes. They, they apply to everything and there's, there's further levels apply, further controls being added. To freight and transportation invoices like eWAY bills and, and transport reporting that is, is being required that sits outside of her definition of clearance controls, but definitely something that needs to be considered as well.
Susie West: Great. I think we're going to leave it there. So thank you very much indeed. To, to Marcus, that was a really great kinda update as to where we're at and thank you so much for zeroing in on those two countries and that was incredibly useful. If you would like further information and you didn't respond to the [00:45:00] poll, please do email chi lee tradeshift.com.
And she can and help you with your inquiry as well. And we've got small webinars coming up in the next couple of weeks that will likely be of interest to you or somebody in your finance team. So please do go on to shared services link.com and register for them there. Thanks a lot for your time and attention today and we look forward to welcoming you next time.
Thanks and goodbye.