VAT in the digital age: what does it mean for your organisation? [2]

We’re on the eve of far-reaching changes to the VAT system, with experts comparing their impact to the introduction of the euro in 2002. If you don’t prepare your organisation in time, you could face major (financial) risks in the future. The new legislation mainly affects processes related to invoicing, compliance and everything connected to them, including Accounts Payable. This has consequences for your people and your processes, but also for the systems that support those processes. In a series of blogs, Menno Steur, Director Solutions at Spendlinq, explains how you can prepare your organisation for the requirements of the new digital VAT system. And more importantly, how you can make these changes work in your favour. In blog 2 of this series, Menno explains what impact – and benefits – the changes could have for your organisation.

VAT in the Digital Age: impact and benefits for your organisation

The fact is that we’re on the eve of far-reaching changes to the (digital) VAT system, thanks to the new legislative proposal VAT in the Digital Age – or ViDA for short. If the proposals are adopted, the future legislation will affect organisations in all processes related to invoicing and compliance – including Accounts Payable – and the systems that support those processes. In addition, with the planned digital reporting requirements in mind, the importance of up-to-date and reliable insight into data will only grow. “To keep up, many organisations will need to take a thorough look at their (financial) processes and systems. It may become necessary to look for new(er) software, or only small changes to processes or configuration may be needed,” says Menno. A number of examples below illustrate what impact – and benefits – the changes could have for your organisation in practice.

• Legal compliance
  The proposed measures provide for a mandatory standard for e-invoicing, which ensures that organisations meet the established criteria for VAT compliance. It specifies guidelines for the structure, content, validity, integrity and archiving of electronic invoices.
• Savings in money and time
  Using e-invoices can drastically reduce the costs associated with paper and PDF invoices, such as scanning & recognition (OCR) and storage. It also saves time by automating administrative work, reducing errors and processing invoices faster.
• Faster payments
  Because invoices are issued immediately and can be seamlessly entered into accounting systems, e-invoicing enables shorter processing cycles. This improves cash flow and reduces the time organisations have to wait for payments.
• Better accuracy
  By automating the invoicing process, e-invoicing reduces the risk of errors and disputes. It cuts data entry errors, guarantees a uniform format and enables automatic validation of invoice data.
• Auditing and reporting become easier
  E-invoicing platforms can work seamlessly with accounting systems and make it possible to manage invoices centrally. This lets you streamline audits, gives you better control over the quality of your data and enables your organisation to prepare accurate VAT returns with ease.
• Cross-border transactions run more smoothly and efficiently
  The new legislation supports a consistent approach to e-invoicing across all EU member states, so cross-border transactions run more smoothly and efficiently. Invoicing requirements will be harmonised, so you no longer need to apply different standards in each jurisdiction.

Tip: don’t wait too long to implement

“At the moment 2028 still seems a long way off, but it’s vital that you start preparing your organisation now for the implementation of the proposed new legislation. Think of the changes needed in your financial management, which can’t be made in a few months,” says Menno.

Read the whitepaper | The new digital VAT system and the future of your Accounts Payable process.

VAT in the Digital Age: are you ready? We’re on the eve of far-reaching changes to the VAT system. The new legislation mainly affects the processes related to invoicing, compliance and everything connected with them, including Accounts Payable. This has consequences for your people and your processes, but also for the systems that support those processes. What will change in the new digital VAT system? What does this mean for your organisation? How can you prepare your organisation for the requirements the new legislation sets? And more importantly, how can you make these changes work to your advantage? In this whitepaper, Menno Steur sets out the answers for you.

Download the whitepaper here.