When in-house goes wrong: The advantages of an external e-invoicing provider
With the growing (and widely encouraged) shift towards mandatory e-invoicing frameworks, many businesses may question the necessity of contracting an external e-invoicing provider, given their existing in-house finance and accounting resources. In fact, many may not see the value in the additional cost of an outsourced solution when “they can surely do this themselves.” In reality, though, quite the opposite is true. Here’s how to navigate the role of e-invoicing and the advantages of using an external provider (for your business and your team).
It’s a pivot, not a replacement
When understanding the importance of e-invoicing, it’s best to start by unpacking its role within your ecosystem. Simply put, with upcoming VAT modernisation regulation on the horizon, the need to adopt e-invoicing to ensure future VAT compliance is highly likely. In addition to compliance reasons, traditional invoicing processes are relatively manual when compared to e-invoicing and while traditional manual processes have paid their dues, they simply don’t cut it anymore.
Why? Well, you’ve hired your finance team for a reason – they’re brilliant. However, day-to-day admin and tasks not only eat away at their capacity but can also impact business growth opportunities. What’s needed is a tool that can take over the baton of tedious and time-consuming tasks and run with it, giving your finance team a much-needed change of pace and allowing them to focus on more value-driven, strategic and purposeful tasks.
Cue external e-invoicing providers.
The inevitability of e-invoicing
Before getting into the plethora of business benefits, it’s essential to establish some non-negotiables. Considering the upcoming VAT modernisation plans for SA businesses, the shift to e-invoicing is set to become an inevitable part of business in South Africa. This means that in a few years, all companies will likely be required to implement systems that possess the capability to facilitate the preparation and distribution of e-invoices. Additionally, it should also be able to transmit said data to SARS in real-time.
Although this could be tackled solely by your in-house team, many people underestimate the complexities of setting up a robust and secure e-invoicing system and underestimate the workload this can create for their IT teams.
The complexity and time-consuming nature of compliance will most likely rob you of your time, resources as well as the advantages of relying on an external e-invoicing provider. This brings us to the next point: What are these advantages?
When in-house goes wrong: The advantages of an external e-invoicing provider
The game-changing power of external e-invoicing providers lies not only in helping you meet upcoming regulatory requirements but can also assist in transforming manual AR or AP processes. This is because:
External Providers Are Specialised Experts
External providers have a wealth of experience in the e-invoicing space and know how to implement your e-invoicing solution correctly and efficiently. This results in minimal implementation delays and plenty of time to familiarise yourself and your team with the new solution before the VAT modernisation laws are enacted. Moreover, their specialised expertise in this space will ensure your e-invoicing processes meet your compliance requirements.
On the contrary, with an in-house solution, your team would have to build a solution for the first time from scratch without necessarily having a deeper understanding of the intricate technical aspects or requirements. This opens up room for implementation errors and oversights, which may put you at risk of non-compliance.
Better resource management
Relying solely on in-house processes puts an undeniably heavy demand on your human resources. Their hands are already full with existing projects and day-to-day operations. Add to this the creation, management, and maintenance of your own internal e-invoicing system, and the workload becomes unsustainable and prone to error. AR automation tools help teams utilise the right tools for the specific niche challenges within the AR cycle. This helps break the credit-to-cash bottleneck and frees them up to finally do what they were hired to do. By automating the rule, teams can focus on intentional tasks that speak to the exception while freeing them up for more value-driven and strategic financial tasks.
Long-term cost savings
Naturally, this also leads to significant cost savings. While there is an upfront cost of going with an external provider, given that the external provider offers these solutions for multiple businesses and has experience in e-invoicing implementation, they benefit from economies of scale and shared infrastructure and can offer a solution that is likely more cost-effective than the cost of internal resources you’d require in developing an in-house solution from scratch.
Error-free e-invoicing processes
Errors and SARS compliance processes aren’t something you want going hand-in-hand. As a business with many other core responsibilities on its plate, you want to have peace of mind that your e-invoicing data is being transmitted to SARS accurately – in the correct format and at the right time. Maintaining such a solution in-house, ensuring it is always running correctly, and transmitting data in near real-time are large burdens for your finance team when they should rather be focusing on areas that add value to the core business activities.
In contrast, using an e-invoicing provider allows teams to leverage accurate, real-time information in mere seconds that aligns with the most recent compliance requirements and client information to ensure organisational alignment across all departments. In terms of maintenance, tasks like system maintenance are the responsibility of the e-invoicing provider rather than your team, allowing your team to benefit from a solution that works seamlessly rather than spending their valuable time performing fixes when things break.
Conclusion
Ultimately, challenges are normal but South African businesses can’t afford to ignore them. With all that said, many businesses may wonder where to start when looking for an e-invoicing provider. For tips on what to consider, read our guide on Things to consider when selecting an e-invoicing solution.
