What prevents the UAE from embracing e-invoicing and e-ordering?
The UAE is on track to be one of the world’s ‘smartest’ countries. Individual Emirates are ploughing ahead with various Smart City initiatives, with high level of digital / electronic transactions in the business-to-consumer (B2C) area (invoicing, bill payment, government transactions etc.). In contrast, most business-to-business (B2B) ordering and invoicing processes in the UAE remain paper based, or at best email based.
When much of the world is now embracing e-invoicing and e-ordering, what are the obstacles that prevent the UAE from doing the same and remove paper-based processes, especially when any type of digital transformation provides positive economic benefits?
The following 10 statements are common when Pagero discuss e-order and e-invoice with organisations in the UAE. We provide our common response to each of these statements.
1. My customers and suppliers require paper
This may be the greatest impediment to digitisation, however in most cases, suppliers will accept whatever requests customers make of them, after all they want your orders and wish to deliver invoices to you. More effort may be required to have your customers accept electronic ordering and invoicing, however, once the benefits are explained to them, many will agree. It’s worthwhile noting that in many countries, paper based process have been all but eradicated, and the UAE is likely to follow suit.
“When much of the world is now embracing e-invoicing and e-ordering, what are the obstacles that prevent the UAE from doing the same?”
2. Paper copies, signed and stamped are needed legally
There is no legal requirement for signed and stamped orders and invoices. In fact, in the UAE, like most GCC countries, legislation has been enacted specifically addressing the legality of e-commerce transactions, such as Federal Law No (1) of 2006 on Electronic Commerce and Transactions, and Dubai’s Electronic Transactions and Commerce Law No.2/2002. If both parties agree to work electronically, and meet certain criteria, electronic transactions have the same legal standing as paper-based ones. One important requirement, especially given the upcoming VAT implementation in the GCC area, is the need for proper archiving of invoices. This is where e-invoicing really excels, as all e-invoices are archived for both transaction partners, in their original format, in accordance with record keeping requirements. These records can be instantly retrieved. The alternative is to maintain physical multi-year archives or scan every single page to store electronically.
3. My ERP, finance system does not support electronic ordering and invoicing
There are very few ERP and financial systems that are incapable of exporting or importing orders and invoices, and Pagero supports most systems on the market. We receive orders and invoices in whatever format your systems can provide and deliver documents in the same manner. If your system is incapable of supporting electronic document handling, you can use one of our other means of connecting to the Pagero network, such as our web portal or virtual printer, Pagero Connect.
4. Manual processes are more cost effective
Certainly, with the relatively low cost of manpower in the UAE, smaller organisations with lower transaction volumes may not see savings. However, larger organisations with higher transaction volumes will almost certainly see a positive business case.
“Larger organisations with higher transaction volumes will almost certainly see a positive business case.”
5. My customers or suppliers are unable to send or receive electronic documents
Pagero offers numerous means of connecting any of your trading partners, so they may work electronically with you. This includes providing a free of charge web-portal to your trading partners where they can view incoming electronic orders and invoices, and send electronic orders and invoices. We can even digitise documents sent to you via email into an electronic format using our OCR technologies – and then deliver these to you electronically. This means that 100% of documents can be handled electronically, even if your trading partners are unable to support you directly.
6. We don’t have the time to contact our customers or suppliers to get them to work electronically with us
Pagero would normally do all of this for you. We contact your customers and suppliers on your behalf as part of our customer / supplier on-boarding projects. We handle all the communications, calls and even provide a website where your trading partners can view all instructions for registering and using e-order and e-invoicing services. This is part of our standard service.
“100% of documents can be handled electronically, even if your trading partners are unable to support you directly.”
7. We do not have the time to allocate IT resources to this project
In most cases, there is little or no work for your IT teams. If a partner wishes to introduce fully automated electronic processes, Pagero can normally support whatever order or invoice import or export processes your ERP offers out-of-the-box, meaning that there may only be small amount of configuration and testing work required as Pagero perform most the IT project work. This is part of our standard service. If your ERP does not have these capabilities, Pagero have many less automated means of working electronically, that would still reduce manual work and cost on your side.
8. We already work electronically with our suppliers
In most cases, this means that orders or invoices are sent or received via email. Such processes often require manual work at the receiving end of the transaction (printing, archiving etc.). Email is also very insecure, delivery is not guaranteed and mostly untraceable. In some cases, companies have a dedicated supplier or vendor portal, provided by their ERP vendor, where either manual activity is required to submit or receive orders and invoices or there is a specific format to electronically send or receive documents. In the Pagero case, we support whatever electronic document format and process your business partners have, or if they choose to use our partner portal, they can also trade with any one of the other organisations connected to our network.
9. We are in the middle of changing our ERP/financial system
Great, this is the perfect time to introduce e-order and e-invoice as Pagero can ensure a seamless transaction from one system to another, without interruption for your customers and suppliers. They will interact only with Pagero and will experience no change at all. Should you experience any cut-over problems, these will not be visible to your partners.
“Pagero can ensure that you are capable of issuing VAT compliant invoicing if your systems and process are not ready.”
10. We are busy preparing for the VAT introduction on 1 January 2018
Again, great – Pagero can ease this process for you, and even ensure that you are capable of issuing VAT compliant invoicing if your systems and process are not ready, or will not be ready in time. Please read my blog post Issue GCC VAT compliant invoices now, even if your systems and processes are not ready for more information on this topic. We can assist with invoice validation and enrichments to ensure the correct VAT rates are applied on a line level to your outbound invoices.