How Organizations Can Prepare For E-Invoicing

All organizations which need to get e-invoicing implemented now, or even at a later date, should follow these guidelines in order to ensure a smooth implementation

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To facilitate universal machine-readability of invoices and the interoperability between software and tax systems, the Goods and Services Tax Network (GSTN) has decided to introduce e-invoicing in India from October 2020. This move is expected to plug the gap in data reconciliation, prevent tax evasion and automate the tax return-filing processes. The first phase will cover only those businesses having a turnover exceeding INR 500 crore, with other businesses coming under its scope in due course.

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The reform is the first of its kind in India. Until now, businesses issued invoices from different accounting and billing systems and did not follow a standardized format. Hence, all organizations which need to get e-invoicing implemented now, or even at a later date, should follow these guidelines in order to ensure a smooth implementation.

Determine the organizational readiness for implementing e-invoicing

E-invoicing may not be applicable to all organizations just yet, but if it is, you need to prepare a checklist to evaluate your organization’s readiness for it. Some of the questions will include: Who are the key stakeholders that need to be involved with the transition plan? Which are the departments in my organization that need to be involved in the e-invoicing workflow? Ex: Sales, finance, shipping, etc.; Have my employees got basic training yet on the new changes, formats and processes? Is there a way to reorient my current ERP systems to integrate the e-invoicing schema?

This basic checklist will help determine the next steps the organization should take in the making for effective implementation of e-invoicing.

Analyse the requirements for an effective transition 

Implementing anything new always has its set of challenges. Finding an appropriate vendor to align your ERP systems is a first critical step. The next step is to familiarize your organization with the latest e-invoice schema released by the GSTN. The concerned employees need to be made aware of the mandatory fields to be filled in, and the optional ones which may be applicable to your organization.

Besides the above, figuring out a smart and dynamic workflow which works for your organization in terms of generating e-invoices, e-way bills and filing GST returns is the key. Communicating the requirements to the stakeholders involved, such as sister concerns, customers, vendors, etc., should be done at the initial stage, to avoid issues occurring later on. Last but not least, prepare an implementation plan and timeline and work towards achieving it.

Find an appropriate vendor to integrate ERP systems

There are several ways you can integrate your ERP. If your ERP system can be directly integrated using APIs, the same should be carried out as it allows the generation of e-invoices in real-time. There is also an SFTP-based integration and Excel ingestion which are options that can be considered. However, these options process invoices in batches and not in real-time.

If your present ERP system cannot be integrated, your organization needs to find a new vendor who can provide you with a suitable ERP option that facilitates system integration for e-invoicing. Besides system integration, there are other ways to generate e-invoices such as by using offline tools and mobile apps. These methods are more time consuming, and there is always the chance of human error. Speaking to your vendor will give you an idea of which mode is apt for your organization for generating e-invoices.

Begin system integration and testing 

With just a month to go, it is already high-time that your vendor has begun the system integration for your organisation. System integration can be done by integrating your ERP systems with APIs, or through the integration of a sister concern’s ERP system. The same login credentials can be used if you choose the latter. You can also get API-integration done through a GST Suvidha Provider (GSP).

The e-invoice system mandates the sandbox testing for API-integration that has been done on a taxpayer’s ERP. This process entails the isolated testing of the software, basically experimentation before the actual roll-out, to understand the interfacing process of the e-invoicing and ERP systems. Through the testing process, the taxpayer can also understand how a payload request can be generated and how the encryption and decryption of the requests work. It is vital that this process is carried out before the actual implementation of e-invoicing.

Review performance

Once integration and testing have been done, frequent reviews of the processes should be conducted to assess performance and prevent any systemic glitches. Every document issued should fulfil legal requirements, and the organisation should ensure that the e-invoice integrity is never compromised. Regular workshops should be conducted during the teething stage to communicate updated information, smoothen the workflow, boost morale in case of resistance to change, and inform and guide the concerned employees/stakeholders about the benefits of electronic invoicing.

Archit Gupta

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ClearTax.INis designed for Individuals to prepare and file their Income Tax Returns in the shortest time while maximising their tax deductions. Our aim is to delight our customers with simplicity, accuracy and getting rid of the notion that taxes are complex. Their  team consists of IIT, Harvard, BITS alums and Chartered Accountants.
ClearTax raised an investment from Y Combinator in the summer of 2014 and is backed by PayTm Founder.