EU Electronic Invoicing Directive – addressing the most frequently asked questions

EU Electronic Invoicing Directive – addressing the most frequently asked questions

17 Dec 2019
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This year, a new EU directive on electronic invoicing (e-invoicing) was implemented, that mandates European public sector bodies to be compliant in order to receive and process e-invoices from their suppliers.

 

The Irish Office of Government Procurement (OGP) are tasked with ensuring all Irish public sector bodies meet their compliance requirements in accordance with this EU directive. To facilitate this, in early 2019 the OGP, through a tender process, selected Celtrino as the sole provider of e-invoice enabling services to Irish central government bodies, and the rank one supplier to sub-central government bodies and other public institutions.

 

In the interim Celtrino have been working closely with a wide range of public bodies to get them e-invoicing compliant, and at present are busy setting up sub-central government agencies to be compliant by their deadline of April 2020. Naturally, dealing with such a large range of public bodies – and due to our historical background in e-invoicing – we are regularly presented with a wide suite of questions around the directive and e-invoicing itself.

 

We have collated some of the most frequently asked questions we have received, and here are the answers, to make your journey to compliance that bit easier.

 

What exactly is an ‘electronic’ invoice?

 

While electronic invoices are commonly referred to as any invoice in digital format, for the purposes of the EU directive an electronic invoice is one that contains data in machine-readable format that can be automatically processed.

 

As a result sending an invoice in PDF/Word/Spreadsheet/JPG format, for example, by email does not meet the requirements of the EU directive. While these invoices do remove the physical element of the traditional invoice, they still need to be read and processed manually.

 

What is the EU directive?

 

The European Parliament and Council voted on the 16th of April 2014 to implement the directive, which calls for the definition of a common European standard (EN) on e-invoicing.

 

On a technical level, this includes the semantics of the essential information contained in the invoice, as well as a list of syntaxes (format/language) used for the transmission of the invoice. The EN ensures that all European public sector buyers and suppliers can receive and send e-invoices across Europe using a single format.

 

Since April 2019, the adoption of the directive has been mandatory for European public sector buyers, although for sub-central government agencies individual member states have had the option to extend the deadline until April 2020 – which Ireland has availed of.

 

To whom exactly does it apply?

 

According to the OGP, the directive applies to “contracting authorities and contracting entities as defined by the directives on public procurement and whom are subject to public procurement law”.

 

If you are unsure whether this applies to you, it is recommended that you seek advice to confirm your status in this regard.

 

Within Ireland, Celtrino are the sole e-invoice enabling supplier to the 51 Central Government agencies, and the rank one supplier to schools, universities, institutes of technology, and all colleges, as well as education/health department agencies, section 38/section 39 agencies, and other agencies that are under the aegis of central government or health departments but are currently outside the scope of the sector shared service programme plans.

 

What are the benefits of e-invoicing?

 

According to EESPA by adopting e-invoicing users have been able to reduce invoice processing costs by 50-75%, with a return on investment of over 60% per annum. An estimated €920 million in savings has already been recorded over the last three years through e-invoicing.

 

By reducing manual data entry, e-invoicing reduces errors and ensures less time is spent dealing with invoice queries. E-Invoicing allows for much greater transparency throughout the whole purchase-to-pay process.

 

What if I don’t comply?

 

As well as being a legal requirement to comply with the directive, failure to comply leaves you exposed in relation to the government’s prompt payment code should a supplier send qualifying e-invoices to you. E-invoicing is also part of Ireland’s digital government and digital Industry initiatives. It’s good to be compliant.

 

What about suppliers?

 

It is not yet a requirement for suppliers, which – according to the OGP – is in order to allow public bodies to first gain maturity in processing e-invoices. However there is a push to mandate it for suppliers in the near future, and overall the directive has significant benefits for suppliers. Depending on the level of automation, the net benefits can be savings of between €4 – 12 per invoice (EESPA).


 

For more information, we have created a whitepaper that goes into more detail about the e-invoicing directive.

 

Download a free copy here

 

To comply with the directive as per your obligations, you must go through www.ogp.gov.ie

 

If you need any more information, please do not hesitate to contact us, and a member of our team will be in touch.

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