Exploring the problems with invoicing
October 1, 2020

Exploring the problems with invoicing

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Having spent the last 15 years working on a wide range of different e-commerce projects, from my own invoices as a freelancer, selling flowers, conference tickets, and rides, and integrating with tax agencies in Latin America, my consistent feeling is that invoicing should be way more user friendly than it currently is.

We’re all aware of the constant shift towards digitization in every aspect of life, as computing makes it easier to share data in a more connected world. Invoicing is no exception, and indeed, you’ve no doubt received lots of PDF invoices after online purchases or after your Cabify rides. By definition, these invoices are digital as you’re receiving them in an electronic format, and indeed, the companies that send you these invoices certainly do not print them out beforehand. They are all created digitally.

However, because these invoices don’t contain structured data when you come to forward your expenses to your accounting or receipt management software or team, they will actually perform an OCR scan or get a human to copy and paste the details of the invoice to your accounting platform so it can be added to your expense reports.

Think about this for a minute. The company billing you creates their invoice digitally, but when they send them to you, they use a printed format that is only suitable for humans. The ultimate destination for these details is a software accounting platform that can only handle structured data.

This is clearly very inefficient.

Why does this happen? We believe that the current electronic invoicing solutions out there are too complicated, and companies lack incentives to invest the developer time required. And who can blame them? It’s hard enough as it is to build a product that people want to buy from you in the first place.

The problems around sending invoices aren’t just about what customers receive either, I’ve spoken to many large companies who have spent weeks or months building an integration with their ERP or accounting platform for their own bookkeeping. Each software provider has their own APIs and specific ways of receiving invoices, making it very time-consuming to get an integration working. If you’re a smaller company, forget it; continue sending spreadsheets to your accountant while you feel guilty that you just can’t spend the time on a decent integration.

And, of course, if you’re a startup either with or aspiring for global presence, don’t forget that each country you launch in has its own set of local tools preferred by accountants. Like me, you might have heard every single accountant in the UK recommend Xero, which is great if you’re in one of the countries they support, but the reality is that in Europe, Latin America, Africa, and most of Asia each has their own set of tools recommended by accountants.

Finally, once you’ve figured out all your integrations with third parties and how to send the invoices, as a developer, you still have to deal with changes in regulation, validation rules, and different tax rates in your software. Sure, all this information is public, but keeping on top of all these changes requires effort that could otherwise be spent on improving your product.

There are initiatives to try and solve these problems. PEPPOL, a European project with global ambitions, is making big strides, and EDI has been in use for decades between large companies. But again, our belief is that these technologies are just too challenging to use quickly and easily.

In summary, it is our view that there is a lot to fix for electronic invoicing to become commonplace, but when it happens, the benefits to businesses will be huge.

Juan Moliner