The rapid digitization of our world has brought with it an entirely new perspective: if something can be digitized, then it probably should be digitized. This perspective has not been lost on world governments. With European and U.S. governments processing 25 billion invoices annually, the U.S. has finally decided to establish an electronic invoicing standard.
The wide benefits of e-invoicing have been known for years. Cumulatively, it has saved billions of dollars in processing costs, reduced payment risks, greatly improved tax collection, and has even had a positive effect on the environment through the reduction of paper-based processing. So why hasn’t the world’s most powerful country jumped on board?
The heart of the issue lies with the U.S. not having a single standard for e-invoicing up to this point. Without one standard to adhere to, businesses are free to use whichever format they prefer — leading to friction among businesses caused by a market-wide lack of uniformity. It’s an outdated process that can be easily mended with a single strong standard.
Adopting a standard for e-invoicing may be complex, but many countries have already achieved this milestone. In Europe, a mandate for e-invoicing in B2G procurement led to the development of standardizations and widespread adoption. This has put Europe on track to achieve a rate of 95% e-invoicing by 2024. While the U.S. does have a mandate in place, it’s currently limited in scope. Due to this scattershot approach, only 38% of e-invoices will be implemented in the U.S. by 2024.
Although the United States government has yet to solve this issue, it is making strides in the right direction. The Federal Reserve is working on adoption by cataloging existing formats and protocols to be released in a technical report later this year. It’s good to see the U.S. catching up – and perhaps one day it will be a leader in digital invoicing.