Adoption of Electronic Invoicing UAE
As many new developments are happening very quickly in the region, many companies are still adjusting to new taxes and compliance requirements. It seems there is no end in sight for these new developments.
With the Ministry of Finance’s recent announcement at the electronic invoicing summit in Dubai regarding the timeline for implementing electronic invoicing (see diagram below), many companies are waiting for further announcements by the Tax Authorities on e-invoicing requirements. However, there are certain aspects that companies can begin reviewing now to aid in their preparedness for when the new legislation comes into effect, even before selecting an e-invoicing provider.
Implementing Electronic Invoicing UAE
Here are the current challenges that companies should address before the implementation of the electronic invoicing in the UAE:
1) Invoicing process:
Given the decentralized systems, many organizations in the UAE are facing the three main following challenges:
o Lack of clear visibility into the design of the invoicing process
o Poor quality of their master data, leading to inconsistencies across the invoicing process.
o Difficulty in tracking invoices through approval process due to manual intervention.
2) Systems (ERP)
Prior to the introduction of taxes in the UAE, companies used legacy systems that were not configured for tax purposes. Currently, companies are still using disconnected multiple systems.
Main challenges from the technology/infrastructure perspective:
o Legacy systems: Lack of integration and connectivity between accounting systems, invoicing systems, customs, and third-party solutions. Some options companies can consider are to implement integration middleware, standardize data formats, use API’s, etc.
o Processing data: Systems don’t have the capacity to process high volume of data. It can slow down the invoicing process.
o Master data: lack of unified, trusted, and reliable master data to feed different processes. It can lead to errors and discrepancies in invoices, it will obstruct the automation of the invoicing process.
o Tax configuration: Many systems still don’t have the correct tax determination. Therefore, it can lead to compliance issues. It can also result in delays and errors in invoicing process.
o Upgrading ERP systems: Currently, there is a trend where many companies are upgrading their ERP systems to SAP, Oracle, or Microsoft Dynamics. However, ERP implementations typically require significant time (at least 2 to 3 years) and it is likely that these ERP implementations will not be completed by the time the new e-invoicing system is set to take place.
3) People
In my experience during tax technology implementations, many companies faced the main following issues:
o Communication gaps – Lack of communication and collaboration between different departments that are involved in the invoicing process.
o Training – Employees involved in the invoicing process may not be familiar with the tax and technical requirements for a new development. It is highly recommended that training in electronic invoicing be conducted at all levels.
o Resistance to change – Employees may resist adopting new electronic invoicing processes, especially in companies that currently rely on manual processes.
Liwa Solutions offers international best practice experience in implementing electronic invoicing tailored to local requirements.
