Before you can get started detailing the nuances and specifics of compliance within the supply chain, you need a thorough understanding of the various terms and buzzwords you may encounter. Below we offer a detailed definition of terms you will need to know when analyzing and ensuring compliance.
Compliance In the context of the Tradeshift Pay™ solution, we can divide compliance-related tools and services into two categories:
E-invoicing compliance refers to the laws and regulations that suppliers and buyers must comply with when sending and receiving electronic invoices. Typically, e-invoicing compliance focuses on four requirements:
Authenticity of origin — ensuring that both the sender and the recipient of a document are authentic, that the stated sender is in fact sending the document in question, and that the intended recipient receives the document.
Integrity of content — ensuring that no alterations to the content occur once the document has been issued. In other words, no tampering or altering of the information within the document has taken place while in transit, receipt, and storage.
Readability — all electronic invoices must be accompanied by a human-readable representation of the data (typically a PDF) through their entire existence, from issuance through the end of the storage period.
Storage — this requirement ensures that the electronic documents are stored safely, guaranteeing integrity and an audit trail. This ensures that documents can later be accessed if needed for any reason — tax audits are one example.
At Tradeshift, we work to provide features that enable customers to address all the requirements in e-invoicing. Sample formulations of the above four requirements can be seen in the EU Directive 45/2010
Tax compliance refers to the laws and regulations associated with sales or value-added tax that buyers and suppliers must adhere to. At a high level, this includes all laws and regulations that help ensure taxes are paid and reported correctly. For e-invoicing, these laws dictate specific information that needs to be included in all sent documents. The specific requirements can vary greatly from country to country, but commonly required information includes tax registration numbers and tax rates.
When it comes to tax compliance, confirming that all requirements are met is a process that is done by the buyer (and the buyer’s tax advisors) in collaboration with Tradeshift’s professional services team. This is achieved through several business controls, managed by the buyer, using the Tradeshift document validations. In addition, we maintain country-specific checklists and best practice information available to the buyer to help with this evaluation and requirement management process.
Who is responsible for compliance?
Given the complexities surrounding tax and e-invoicing compliance, the best solutions rely on the efforts of all parties involved in any given transaction— the supplier, the buyer, and Tradeshift as the service provider. Through the Tradeshift Pay™ solution, we provide several ways to enable, encourage, and help the transacting parties enforce compliant e-invoicing.
While we have designed the solution to apply some controls unilaterally, some require that both buyer and supplier be committed to taking steps independently to achieve regulatory compliance. Tradeshift provides helpful tools, but it is ultimately the trading parties that may be subject to tax audit and therefore have the responsibility to know and meet their own compliance obligations.
Sources of information
Achieving compliance is difficult in large part due to the numerous regulations that exist per country, the variability from country to country, and the accelerating pace of regulatory changes. For this reason, it is crucial that you have a thorough and reliable knowledge base. We prioritize transparency for our customers, so ensuring you have access to the necessary information is the first step in enabling compliant e-document exchange. For most relevant countries, we draw upon strong partnerships to provide extensive, up-to-date knowledge on a range of countries and territories. For example, using our relationship with Sovos Trustweaver and Deloitte, we can obtain e-invoicing and tax compliance expertise and industry approaches.
Sovos Trustweaver — Through the use of Sovos Trustweaver’s two main deliverables, we have access to a detailed and up-to-date database of compliance requirements that covers 55+ countries in North America, EMEA, APAC, and LATAM regions.
Deloitte — For countries and aspects not covered by Sovos Trustweaver’s services, we utilize Deloitte’s consulting services and internal research to obtain guidance regarding tax and e-Invoicing compliance.
Our Tradeshift product development teams leverage these learnings and sources of information as they work to enhance the Tradeshift Pay product to help address the compliance needs of our customers.
Utilizing compliance partners and subcontractors
To more thoroughly approach compliance regulations and requirements in some countries, we engage the services of regional consulting partners and operational subcontractors. As well as providing the knowledge base for ensuring compliance, our partner Sovos Trustweaver also offers an e-invoicing compliance service that is available to customers on request. This service enables e-signatures or digital signatures and is the default option for countries where e-signatures are required by law.
Additionally, we partner with various other organizations in countries where there is an e-invoicing mandate or clearance requirements. For a complete list of our partners and subcontractors who help enable the end-to-end Tradeshift service, please refer to our e-invoicing compliance partners page that is regularly maintained.
On the surface, compliance might seem scary, but with the proper tools and support, you can ensure your supply chain adheres to every regulation requirement. Tradeshift helps to provide the digital tools and platform you need to access information regarding compliance requirements in many different countries. And, our Tradeshift support team is always ready to help answer any questions you may have.
For more information on how our Tradeshift product suite can help you build a secure and reliant supply chain, reach out to our team of professionals and request a demo today.