There`s no need for concern about an electronic invoice being a valid replacement for a paper invoice. The Value-Added Tax Act of 1991 requires an invoice to be presented as a `document`, and does not stipulate that the document has to be a paper one. In terms of the change in delivery mode, moving from paper to electronic will not reduce the validity of the invoice.
An electronic invoice, debit or credit note must contain the mandatory information as required by the Act for that type of document. This information is no different to what is required on a paper invoice, such as the name, address and VAT registration number of biller and customer, a unique invoice number and a description of the goods or services supplied.
It is important to note that this only refers to tax invoices, debit or credit notes, and does not apply to statements, itemised transaction listings and other document types that do not include a VAT payable amount.
While the information required on the invoice is the same regardless of the delivery method, when going electronic, companies also have to comply with the directive from the South African Revenue Service (SARS) on what constitutes a valid electronic tax invoice.
The SARS directive aims to ensure that should a query arise on the contents of an electronic invoice, an audit by SARS will be possible and legitimate. To this end, SARS requires that:
* Electronic invoices are encrypted using at least 128-bit encryption so that the contents of the invoice cannot be tampered with while in transit.
* Recipients of an electronic bill must provide written confirmation to the biller that they will accept electronic invoices.
* Both the biller and the recipient must keep records of the electronic invoice for a period of five years.
* Only one instance of the original invoice exists and subsequent versions must be marked as copies.
Once the invoice is compliant, companies also need to adhere to rules around electronic communication in general.
Alison Treadaway, MD, Striata
The primary objective of these requirements is to ensure that when a SARS audit encounters invoices that were generated and delivered electronically, these invoices are accurate and complete in terms of content, and the process has not compromised the integrity of the invoice.
Once the invoice is compliant, companies also need to adhere to rules around electronic communication in general.
The Electronic Communication and Transactions (ECT) Act outlines acceptable practices when communicating electronically, be it e-mail or SMS messages.
The ECT Act aims to protect a person`s right to refuse electronic communication, and because e-billing requires that companies communicate by e-mail, this needs to be incorporated into the process.
The first point to consider is to make the unsubscribe path easy to execute. If someone wants to revert back to paper billing, make the process clear and simple.
Because the ECT Act allows for a penalty or fine to be imposed should a party send unsolicited e-mail to another party after having been told that this communication was unwelcome, it`s good practice to make sure there is the facility to record `unsubscribes`. Don`t just change the customer`s data indicator back to paper billing, as they may get caught up in a future e-billing adoption drive. Rather have a third indicator that shows that the customer specifically requested to be moved back to paper.
Make sure the unsubscribe function is integrated with the backend technology or back-office processes, so that human error is eliminated. Also make sure the customer support agents have received training on dealing with customers that want to move back to paper billing.
It would be good input to the overall e-billing strategy, to include a couple questions about why the customer does not want to receive e-billing. These answers can help refine the e-billing process as well as develop a set of frequently asked questions that can be made available to customers to reduce support calls.
It is important to address compliance requirements when starting an e-billing offering, but also just as important to apply common sense and general communication best practices.
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