The UK is moving closer to finalising measures designed to simplifying VAT measures in the EU. This will pave the way to accept the wider use of e-invoicing or electronic invoicing. The technology to create and use e-invoicing has been around for sometime however very few countries/tax authorities, at present, accept them.

The new scheme adopted by the Council of the European Union will be called the Invoicing Directive and will ensure that e-invoices will be accepted by tax authorities. These will be treated in the same way as traditional invoices.

The new directive will remove obstacles that relate to the transmission and storage of e-invoices. These changes must be reflected in the United Kingdom’s VAT laws by 2013. At present the UK government is working on ways to achieve this. This is seen as a crucial change as industry experts have for a long time expressed concerns about the technological burden under existing invoicing rules.

Governments have been reluctant up until now to acknowledge the use of e-invoicing because of security concerns. Many believed it was just not secure enough. However in recent years security has improved significantly.

This change to invoicing rules would have a significant impact on businesses throughout Europe. Almost every business makes use of invoices in one way or another and this new invoicing initiative should help streamline the process. The transition will take time as businesses will need to learn the new standards.

There are many different types of invoices and they can include a number of things. A typical invoice will include a date of invoice, the title invoice, name and contact details, an invoice description, payment terms, a total amount and a unit price. Invoicing rules vary depending on location. For example in the EU, VAT registered companies must print a VAT identification number on their invoices.

Invoices are used in a variety of ways and many different types exist. Some of the most common types of invoice include collective invoices, progress billing, self-billing invoice, debit memo, credit memo, pro forma and a statement. These different types of invoices are setup to suit particular types of businesses and payment terms.

The government is currently moving much of its processing operations online. Most documents can be processed online these days. Security has improved vastly and makes it much easier for government agencies and organisations to track data.

The new approach proposed by the UK should make financial auditing much easier. This is because instead of following paper trails accountants and specialists will be able to track everything electronically. Most countries in the EU welcome the change and a campaign to promote the changes is expected.

Companies that use e-invoicing will be expected to adhere to certain communications standards. For example the United Nations uses EDIFACT. This provides guidance on message encoding and encryption. Set protocols should be used to ensure that validity of data. These protocols have been developed over time and have a proven track record. Standards such as this are essential if organisations are to trust the new system.

Author Bio: James Dane – Writes about umbrella and tax terms.

Category: Business
Keywords: invoicing, finance, business