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Changes Are Coming to E-Invoicing in Saudi Arabia. Are You Ready?

Very soon, big changes are coming to e-invoicing in Saudi Arabia. Making the necessary preparations will require a lot of work, but organizations should view this as an opportunity and not just an obligation.

In May, the Saudi Arabian Zakat, Tax and Customs Authority (ZATCA) published guidelines and standards for the kingdom’s new e-invoicing regulations, which come into effect this December. The rollout has two phases. The initial phase specifies how invoices should be issued and stored. The second phase begins in 2023 and requires all organisations to integrate with ZATCA to send and share invoices.

Preparing for these new regulations will require many system and process changes if companies operating in Saudi Arabia are to be compliant. However, businesses preparing for these new regulations shouldn’t simply be treating it as a compliance exercise. Instead, they should think ahead to how this can help digitally transform the finance department.

E-invoicing projects are a prime example. They help companies achieve efficiency gains through more modern business practices, including benefits like:

  • More accurate and timely accounts payables data
  • Automated invoice processing, reducing invoice processing time and costs
  • Fewer exceptions and blocked payments in accounts payable and receivable processes
  • The ability to convert purchase orders or ERP feeds directly into invoices
  • Potentially improved cash flow by taking advantage of early payment terms

Kofax is a global leader in the financial process automation space. We process over 60 million invoices annually on behalf of more than 7,500 customers. All that experience has helped us identify some key steps to successfully deliver an e-invoicing project:

Audit internal systems and processes: “As-is” analysis should include all systems, teams and processes involved in purchasing and sales to identify which transactions require the new regulations.

Identify desired capabilities and vendor selection: What are the capabilities you need to be compliant and to future proof your implementation? At minimum, consider requirements for:

  • An automated system or service to generate e-invoices using ERP or point-of-sale data
  • QR code generation to embed key invoice data (seller details, VAT numbers, totals, etc.)
  • Creating UBL2.1 representations of the invoice in XML
  • Packaging print and XML versions of the invoice in PDF/A-3 formats
  • Signing and locking invoices to make them tamperproof
  • Where and how generated invoices should be archived
  • The ability to process incoming invoices, extracting key data including information in Arabic, and to cross check this data against the ERP, purchase orders and delivery notes
  • Speed of implementation, minimising IT, training and customisation overheads
  • Flexibility to model your business’s workflows and integrate to your chosen ERPs
  • Which aspects of your business processes can be completely automated and which will still need human experts for approvals, coding or exception handling?
  • Ability to connect to existing e-invoicing networks as well as the new ZATCA API
  • If self-hosted, cloud or software-as-a-service models are most appropriate for your business

Project phasing, testing and training: With tight timelines, sensible phasing is needed to roll out new functionality with sufficient time for user training while running parallel with existing processes.

Ongoing optimisation: Continually seek opportunities to improve efficiency by automating exception handling, transparently sharing invoice status with suppliers, removing redundant steps or automating manual ones.

By planning ahead and considering the broader possibilities, the changes in ZATCA regulations should be a springboard for intelligently automating your wider accounts payable business processes and workflows. Doing so helps achieve long-lasting business transformation benefits. If you’d like to learn more about how Kofax and our partners can help you on this journey, contact us or see an on-demand demonstration of how we generate ZATCA compliant invoices for you today.

Check out this video to learn more about the changes and requirements.

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