Are you set up for international e-invoicing?
Electronic invoicing is being widely adopted in many industries as a more efficient and greener method of handling payments. Like any new process, it’s important to ensure the approach is properly implemented, particularly when doing business overseas.
Here’s what you need to know when invoicing a customer beyond your domestic boundaries.
Certain conditions apply
Every EU member state allows electronic invoices to be sent between nations, however, certain conditions do apply. These conditions are typically dictated by the country the supplier is based in, so if you are exporting out of the UK, your invoices would follow British stipulations.
However, it would still be wise to check that the buyer can accept the format your e-invoice is sent in. The tax authorities in some EU countries will only accept invoices sent using EDI or those that can include an electronic signature. Perform your due diligence first to make sure there’s no payment disruption.
What your e-invoices need to include
Ensuring each electronic invoice you send contains all the necessary information is one other way you can avoid any hit to cash flow while waiting for errors to be corrected. Here’s what must be included:
- The letters ‘GB’ at the start of your VAT registration number
- Your buyer’s VAT registration number if they have one, including a country identifier at the start (such as ‘FR’ to denote a French customer)
You can view all EU country codes online, and also see exactly which countries are members.
When invoicing outside the EU
Should your business trade outside of the EU, similar conditions apply to the above. However, it is best to check whether the tax authorities permit e-invoicing before entering into an agreement. You’ll find plenty of information on the HM Revenue and Customs website relating to international trade, including how to manage VAT.
Adopt e-invoicing, avoid late payment
The benefits of e-invoicing are clear. It not only speeds up the accounting process and helps you avoid late payment and bad debt, but can also free up your accounts team to focus on other projects as actions can become automated. As more and more firms take this approach, it’s increasingly likely you will too if you haven’t already, and being prepared will make the changeover period run smoothly.
Do you want to know how to avoid the common pitfalls which companies fail to overcome when trading abroad and what you should look out for? Go directly to our download center and download the eBook for free!