While many large corporations will have a tax team, SMEs — the backbone of economies — are left unsure of how to manage their compliance responsibilities when they don’t have an in-house finance team.
So what is the cost of not managing I2P (invoice-to-payment) mandates, and how can smaller businesses handle their invoicing to comply? Watch our recent webinar with Ruud van Hilten of Tungsten Network for the full story about the non-compliance issues facing businesses UK wide, and keep reading to learn more.
What are the costs of non-compliance?
When a business doesn’t comply with financial responsibilities, there are penalties. The penalties can be in the form of fines or fees but will trickle down into your business operation. For example, if you aren’t able to manage e-invoicing, as per government mandates, you won’t be able to send invoices to your clientele and be paid for your hard work, ultimately damaging your cash flow.
The mildest consequence of non-compliance is that you’ll be in the bad books of the tax authority, and they can audit you, which can be costly and disruptive to your everyday business operation.
Ruud van Hilten notes that “once you are in their bad books — you’ll stay there for some time” and could be subject to close scrutiny for a lengthy period.
The worst-case scenario for businesses that don’t comply is criminal damage. The tax authorities could seek convictions if you flagrantly disregard the rules, which could affect your reputation, public image, career and have a knock-on effect on your customers and suppliers. Even if you aren’t wilfully ignoring government regulations, you could still suffer the consequences of legal action, which is costly in more ways than just money.
Why businesses shouldn’t take their e-invoicing in-house
While the tech to connect business ERP systems to the government portal is available, the question of ‘can you do it yourself?’ and ‘should you do it yourself?’ should be addressed. For SMEs, a more relevant question may be ‘can you afford to do it yourself?’. And more often than not, the answer to these questions is no.
Changing how you manage your financial documents and invoices to abide by legislation is time-consuming, legally complex, expensive, and constantly updated, so the process is never ‘complete’. You’ll always have to stay on top of it tech-wise and legally speaking, which will utilise a lot of time and resources that smaller businesses just don’t have without an in-house finance team.
So, what is the answer? The best advice we could give is outsourcing.
Give the elements that you cannot manage in-house to a third party specialising in managing government-mandated finance documents. They’ll have all the tools they need to add value to your operation, such as creating compliant invoices and connecting with the government for you, allowing you to develop efficient processes instead of wasting resources on time-consuming admin. As a result, you’ll not only save your business time, money and stress, but you’ll be able to run a much more efficient Accounts Payable or Accounts Receivable process.
Manage e-invoicing easily with Tungsten Network
Most governments with mandates offer a portal that you can connect with manually to enter your invoices. So the technology, albeit not very elegant, is available — but in the real world of the SME, no one wants to or has the resources to enter invoices into a government portal manually.
Managing mandate compliance can be a painful exercise, particularly for smaller firms that may not have the IT capacity, staff, or budget to comply. However, we’ve built the world’s largest, compliant business transaction network helping global businesses progress on their journey to world-class performance. Find out how Tungsten Network could support your invoicing and financial processes by contacting us today.
If you’d like to hear more about the pressure on CFOs as government scrutiny rises when it comes to invoicing measures, then you can watch the full webinar with Ruud van Hilten here.