Success with electronic invoicing

The government’s call for evidence on business systems integration should be seen as more than another step towards digital compliance. Digitisation is a pressure for businesses, but it also presents a clear opportunity to evaluate how financial data moves through organisations. When done properly, it can help reduce unnecessary manual work and prepare businesses for mandatory e-invoicing.

 

E-invoicing sits at the centre of this shift. With all VAT invoices set to become mandatory in digital form from 2029, businesses have a window to assess whether their systems and data are ready.

 

However, those gains will not be realised if the systems feeding invoice data through the business are not properly connected. Businesses need to understand the difference between integration and interoperability. Integration is about internal systems all being supplied by one supplier and with all data in one shared database. Interoperability is about different systems being able to exchange data through shared standards and formats irrespective of the separate systems and suppliers. In terms of sharing data, it’s the same outcome but with very different usability and flexibility at the individual system level.

 

In practice, finance teams often still have to manually correct or re-enter data before invoices can even be processed, wasting the very time that should have been saved.

 

 

The call for evidence and practical next steps

HMRC’s call for evidence reflects the government’s continued push towards digitisation, particularly among SMEs across the UK. While the call is aimed at businesses, the results should also provide valuable insights for software providers looking to build better-connected and interoperable products.

 

Businesses responding to the call are being asked whether they have integrated any of their digital systems, what challenges they face when setting up or using integrated systems, how much time they spend on record-keeping and whether integration has helped reduce that time. It should prompt businesses to assess how easily data can move within their organisations and across external platforms.

 

Businesses need to consider whether sales, purchasing, operational and financial systems are equipped to transfer accurate data seamlessly. The challenge is rarely a lack of systems. It’s whether the systems are aligned well enough for data to move between them without manual intervention, and whether they can produce data in a compatible format for external systems.

 

Internal teams should start mapping how data currently moves through the organisation, from order through to sale and invoicing. This helps identify where teams still rely on manual effort, where errors are being corrected by hand, and where systems are not working together properly.

 

Finance teams should then review their accounting software and assess whether it can handle e-invoicing effectively. This will rest on its ability to exchange invoice data using agreed standards and formats, while drawing on reliable data from the operational and commercial systems that feed into it.

 

The call for evidence, which ran until 4 June, should have prompted businesses to conduct due diligence on their systems, identify where improvements are needed and help inform the government’s future approach.

 

 

Disconnected systems and poor-quality data

Disconnected systems jeopardise the potential gains of e-invoicing. If operational, commercial and financial systems aren’t able to communicate effectively with external systems, there is a high risk that finance teams will be tasked with re-entering data or manually checking it at different stages before an e-invoice is generated.

 

This often shows up in mismatches between operational records and financial data, or delays while information is verified across teams before it reaches finance. On the flip side, if e-invoicing is handled properly, it can reduce administrative constraints rather than simply digitising inefficient processes.

 

Businesses shouldn’t focus solely on the e-invoice itself, as they risk missing the wider opportunity. Having the software to generate an e-invoice is only part of the puzzle. Efficiency gains depend on the internal infrastructure and whether the data behind it is reliable. When that data can be exchanged with external systems seamlessly, e-invoicing makes practical sense.

 

 

Integration and interoperability

The real opportunity for businesses moving towards e-invoicing and e-business is making improvements to how sales, operations and finance systems work together, while also ensuring invoice data can be exchanged with external parties through common standards.

 

Digitisation shouldn’t be approached as a tick-box exercise. Implementing e-invoicing without the required digital infrastructure will cause operational problems in the future. But ignoring interoperability could create a bigger problem – businesses could find themselves in a situation where e-invoices are produced but can’t move seamlessly between different platforms.

 

E-invoicing is a natural successor to traditional methods, but it will only deliver meaningful gains if it is backed by reliable internal systems and common external standards. The winners over the next few years will be those who properly review existing infrastructure, improve the quality of their data and build better-connected systems that are ready for e-invoicing and other digital advancements. 

 

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Simon Kearsley is CEO of bluQube

 

Main image courtesy of iStockPhoto.com and HAKINMHAN