E-Invoicing – Will it simplify or complicate your purchase cycle?

by Isha Jagi Blogger

The clock is ticking. As well as the taxpayers are preparing to set their systems and processes set up for creating Invoice Reference Number (IRN) to change the usual invoice into a legitimate e-invoice. Government has made evaluation portal to test throughout the trial.

For a fast recap, e-invoicing mandate is for taxpayers getting turnover over $100 cr where they will need to acquire their B2B bills registered with Government portal i.e. that the Invoice Registration Portal (IRP). Alongside a QR code comprising particulars of the bill and the statement information accepted by the Authorities a IRN will be issued on registration.

Inter-operability and easy exchange of information, for the companies but also for not just the Government, is the reason for execution of information standards similar to this. That's the reason why and it is suggested to keep QR and the IRN code back in ERP systems and the origin accounting.

While the Significant debate and updates to get e-invoicing are observed from providers and outward earnings standpoint, impact on the incoming statements i.e. the purchase cycle needs care

Effect of e-invoice on the buy cycle

1. Identify if your sellers Has to Be e-invoice compliant

Once an IRN is created for the same an e-invoice is considered legal. It is crucial to acquire the QR and IRN code published on the invoice that is last. Once you're on the receiving side of this bicycle, having IRN to get a statement will be essential to maintain ITC.

Now, the mandate, as we all know, is related to providers. Invoices received from providers must get an IRN. Even though it can be expected that some functionality could be given by the authorities to assess whether the taxpayer (i.e. provider ) is insured under e-invoicing, it's advised as a preparatory step to reassess your seller master and establish the sellers who should satisfy e-invoicing mandate.

2. Verify the IRN and QR code on invoices

Content of QR code and the logic for IRN is regular and is released by the Government in public domain. This means an IRN and QR code can be generated by any system. But, QR code that is digitally-signed is available for IRP invoices.

It is suggested to confirm the QR and IRN code that's contained on the statements. We're currently hoping the Government portal is going to have a centre for affirmation. IRIS Onyx that the solution of IRIS will have an in-built performance with this investigation.

Advantages of e-invoicing to be leveraged for purchase cycle

The practice of IRN production is to be carried out by issuers of this bill i.e. the provider or seller. The simple fact that taxpayers will get signed, readable statements and digitally readable, is yet another facet of the einvoicing implementation

1. Building efficient procedures

Mandate requires the providers to supply data according to the specified data fields that are standard. The material for QR along with the logic for IRN is normal for invoices created by any seller. Getting data in format is among the requirements for almost any processing.

As a receiver of e-invoices that are regular, purchase statements in the bookkeeping systems' listing may be this itself may lead to attaining efficiency and precision of information in distribution systems and automatic. Submitting it and reading data is use-case for citizens to take into account.

2. Obtaining better results

Matching purchase filed with GSTR 2A (or at future ANX 2) is a vital activity which citizens will need to perform, for precise ITC claim. The variable used to recognize invoices is your invoice number, invoice date, and GSTIN of counterparty for fitting the information. The fitting of data is the next step when invoices that are comparable are found.

Among the challenges in reconciliation is to recognize the invoices that are comparable because the number is not the same as the amount. To manage such circumstances the alternative providers such as us, have been supplying mixtures and logic which may raise the probability of discovering the invoices.

If IRN can be utilized as the foundation of locating invoice this challenge is easily overcome. In order for this to take place, the IRN has to be labeled.

Some gaps to be managed

Mandate is relevant to informed course of trade types and taxpayers. There might be while flow of information from e-invoice into ANX 1 will be implemented by Government.

Invoice data edited following IRN generation

IRN Is Composed of Supplier's GSTIN, Fiscal Year, Document Type and Invoice Number. Post creation of IRN, although not recommended, edits will be permitted whilst preparing ANX 1, to be made. This may lead to differences between the true invoice as well as the auto-populated ANX two (in the edited ANX 1). Such differences could be recognized with matching of bill disciplines. IRN is going to be handy for picking up invoices that are comparable.

IRN Won't be accessible on all purchase bills

For statements from providers that aren't covered under mandate that is e-invoice, IRN won't be accessible. Taxpayers also have a consistency in documenting all buy transactions and also can think about deriving IRN with the logic by the Government. This will guarantee reconciliation flow could be followed in similar manner for all buy entrances.

Non-availability of IRN can cause challenges in getting automation. Given that e-invoice is a normal that is country-wide, taxpayers, within coverages and their provisions, can ask their vendors to prepare bill according to standard that is e-invoice when IRN isn't to be produced by these.

Taxpayers working within a distribution chain that is dependent, can get sellers to prepare bill in accordance with their criteria which could enable automation.

Emergence of new benchmark

E-invoice brings in standardisation for producing the invoices and the second step is currently sharing of bills involving the parties. The IRP process is for registering the bill, your portal site, and dissemination of this bill to other parties isn't the function. As per the present execution, IRP is anticipated to store data just. IRP won't ever be the repository of your bills.

Taking into consideration the requirement of producing the data by the programs and sharing the information between the counterparties, the benchmark is being proposed by Government .

Standard Invoice Messaging Protocol (SIMPoL), since it's called, will be a mechanism which will enable peer sharing of bill, with no need for any fundamental intermediary in the area. Recipients systems and the providers may embrace this specification to split the invoices.

SIMPoL is presently published as a suggested frame and available for public remarks.

The notion of standard will not seem promising. Our solutions have sharing attribute if it has finalized and will be improved to embrace standard as and which we predict because My Network.

EINVOICING IS ANOTHER GAME-CHANGER

As a theory, e-invoicing has lots of benefits to offer to the participants -- the Authorities, recipients along with providers. Additionally, it opens up paths to supply services and solutions using the current and processable bill information.

The mandate is applicable to taxpayers and trade types that are given. Not all sellers are within the purview of both mandate rather than all information could be accessible in format.

Taxpayers should appraise solutions that provide for revenue and buy facet of e-invoicing and additionally all procedure and system changes.

A GSP, IRIS GST, enriching and is set to create your travel effortless. For Additional Information about e-invoicing mandate, download our eBook on e-invoicing Guide today