Digitalising paper invoicing across Southeast Asia’s millions of small and medium sized enterprises (SMEs) is a major opportunity in the post-COVID era as economies ramp up digital transformation efforts to better weather future shocks.
Finance departments serve a fundamental role in every company, processing and issuing invoices in paper or traditional digital formats like PDF, but now businesses need to resolve the issue of extracting raw data efficiently and accurately.
Digitalising and transforming their invoice management processes will ensure resilience and business continuity as we forge through global economic challenges.
Moreover, extracted invoice data can then be stored and managed securely in the cloud from a centralised platform, enabling more efficient workflows.
While talks of digital invoicing have been floating around for years, we are only just seeing it being put into action as an effect of the pandemic as businesses in Southeast Asia look to learn from lessons of this difficult period.
The pandemic has accelerated digital invoicing
As advancements in automation continue, e-invoicing workflows are being optimised through technologies including optical character recognition (OCR) and artificial intelligence (AI).
As the leader in digital transformation within ASEAN, Singapore was already enroute to establishing and integrating the Peppol system for the public and private sectors.
Mandatory for all government sectors, Peppol is an invoice standard that requires little-to-no manual processing and relies largely on automation, supporting digital transformation efforts.
In other ASEAN countries, governments are also pushing the digital invoicing agenda: in Thailand, for example, a new scheme to promote e-invoicing was introduced under the Thailand 4.0 push.
Although it’s not a mandatory move, VAT registered businesses can now choose to adopt the nation’s e-tax system for issuance and receipt of invoices and receipts.
Meanwhile, the Philippine Department of Finance introduced the Comprehensive Tax Reform Program which implements a new e-invoicing system that is planned to roll out to all B2B transactions by next year in phases.
Vietnam’s Ministry of Industry and Trade, in a bid to promote a transparent and fair business environment, introduced an official portal for e-invoicing services along with the etax-mobile app.
This is in line with Vietnam’s digital transformation strategy to increase efficiency within government administrative processes and the country’s overall productivity as well.
The e-Faktur Pajak system in Indonesia, an e-invoicing system based on a clearance model, was introduced as mandatory in 2015 and will mean tax authorities have to certify all invoices from businesses before they can be sent on to customers.
Lastly, Malaysia will also be joining the ranks as they target to progressively roll out their e-invoicing programme from next year following the format being permitted but not mandatory since 2015.
Governments are leading the e-invoicing push
We can see that governments are prioritising digital invoicing solutions as we emerge from a particularly turbulent time that brought to the forefront the need for more digital infrastructure – and highlighted the fact that too many companies had been complacent on this front.
Businesses would do well to follow governments’ lead on this issue.
Although pivoting business functions into new digital frameworks requires some upfront costs of upgrading, in the long run it can help to support environmental, social, and governance (ESG) efforts and increase overall efficiency by freeing up employees to focus on higher value tasks.
During COVID, we conducted a study and found that by employing a combination of cloud, AI, and OCR technologies, companies that adopted digital invoicing saved thousands of man hours each year.
Thailand and the Philippines are two markets with particularly exciting prospects for further digital transformation of their economies, especially in making the jump to e-invoicing.
Sectors such as maritime, shipping, construction, and real estate are just some of the traditional industries that were hit hardest by the pandemic due to trailing performance on digitalising operations.
These legacy segments of the economy should now double down on investing in digital transformation initiatives, as part of broader business continuity planning, if they are to regain their footing post-pandemic.
Via our regional headquarters in Singapore, we’ve seen first-hand that many local businesses have intentions to expand into regional markets in the next year, with plenty exploring digital investments to strengthen their operational infrastructure and competitiveness as they do so.
As digital transformation agendas remain high on the list of boardroom priorities, e-invoicing is an easy and productive entry point with strong government backing that business leaders would do well not to ignore.