The move to electronic invoicing should reduce processing costs and increase traceability by sharing processing statuses. Will it have an impact on invoice payment times? Here's a closer look at the expected changes in payment delays.
New timetable for implementation of the reform
To ensure that the transition to electronic invoicing takes place under the best possible conditions, the Finance Act for 2024 proposes a new timetable for implementing the reform.
The obligation toissue electronic invoices will come into effect on September 1, 2026 for large companies and mid-sized companies, and on September 1, 2027 for small and medium-sized companies and micro-businesses.
The obligation to receive electronic invoices will apply to all companies from September 1, 2026.
The objectives of the reform
The switch to electronic invoicing should offer companies a number of advantages:
- Lower processing costs;
- Better compliance with payment deadlines;
- Improved traceability for a reliable audit trail (PAF);
- New possibilities for cash management;
- Compliance with tax regulations;
- Preparation for e-invoicing and e-reporting obligations.
The tax authorities, for their part, will be able to combat tax fraud more effectively, improve the competitiveness of businesses through dematerialization, and ultimately simplify VAT reporting obligations.
Is reducing payment times a realistic objective?
Payment delays, as measured by Altares, reached 11.7 days in 2022, compared with 12.4 days in 2021. Initial data for 2023 show a slight deterioration, to 12 days. The study also shows that the proportion of delays in excess of 30 days exceeds 7.5%, compared with 6% before the health crisis. In its 2022 annual report, the Observatoire des délais de paiement indicates that all sectors are benefiting from this trend, although the accommodation, catering and transport sectors remain at higher levels (around 16 days).
One of the objectives of the reform is to reduce payment times. However, Italy, one of the first countries to implement e-invoicing in 2019, has failed to achieve this.
" This reform has not led to a reduction in delays, which now stand at around 16.5 days, compared with historical levels of 17 to 18 days," adds Frédéric Visnovsky, National Credit Mediator at the Banque de France, to Les Echos newspaper.
There are other reasons for the strain on companies' cash flow, not least hidden delays. Some companies, having already performed their services and manufactured the goods for their customers, are asked to issue their invoices in January rather than December. However, until the invoice is issued, the payment deadline does not run.