While several South African businesses have already adopted e-invoicing as standard practice, others are still pondering the implications of what impending changes to SARS’ VAT reporting requirements will be. With these changes to the tax authority’s VAT reporting framework likely to be implemented in 2028, it’s becoming more urgent for businesses to consider how they’re going to be ready to comply with e-invoicing, as the ‘when’ is clear and coming closer every day.
E-invoicing allows for greater automation and less manual administration regarding billing, reconciliations, reporting and document capture, while offering increased visibility into transactions via real-time reporting through meaningful dashboards. It allows for faster collections, quicker supplier payments authorisations, and reduced cash leakages arising from processing errors and disputes. Importantly, e-invoicing also allows for increased security, in turn reducing the potential for fraud-related crime.
With businesses’ planning cycles rolling out over years rather than months, the larger organisations – likely to be the first that need to be compliant – should already have plans in place for their ERP environments to adapt to enable e-invoicing. What’s more, they should also be having similar discussions with their suppliers, vendors and key customers.
For those yet to start the process, the first step is to seek and implement an e-invoicing solution that integrates seamlessly with their existing ERP systems. While many may be tempted to task their internal IT teams with doing this, it’s a specialist process already available in the South African market. Choosing to work with an expert will save time and money and avoid unnecessary complexities later on. A local partner will also be more agile in responding to any future SARS regulatory changes.
It’s worth noting that it is possible for both cloud-based and on-site ERP solutions to accommodate integrations with e-invoicing solutions. However, it is essential that a dedicated transmission server is in place for sending invoice and VAT-related data to SARS at the frequency it expects, with some countries’ tax authorities already requiring real-time e-invoice sharing.
While there are international solutions that make e-invoicing possible, given that VAT reporting regulation varies by country/territory, it is important to adopt a solution that takes South Africa-specific regulation into account. Therefore, South African businesses will need to balance the regulated e-invoicing requirements of the environments where their international clients are domiciled (such as in countries across the EU and in South America) with those of the South African tax authority. Choosing a solution developed in South Africa with South African requirements leading the design process will smooth the journey to compliance.
Working with an expert partner to prepare transaction data and set up data transmission protocols for the proposed framework will help avoid the downtime and data loss that is synonymous with a rushed system change. This will also help avoid data extraction and processing challenges as well as formatting issues, with both these considerations being essential to achieving compliance with SARS’ requirements.
While one of the key outcomes of implementing e-invoicing is to boost security and reduce errors by minimising the manual intervention required in invoicing and payments receivable processes, the teams working with the solution need to be effectively trained in its setup and use. This takes time and should be done by an expert who has already led similar migrations. Part of the training and onboarding process should include dry runs, to be sure that each step of the process is running efficiently and is compliant with SARS’ expectations.
These are all things that take time to plan, implement, and run with. It’s important that South Africa’s businesses start their preparations earlier rather than later, so that they can include any costs in their planning, ensure that they have the right expertise onboard through their qualified advisors and intentionally recruited staff, so that new systems can be rolled out gracefully and without expensive mistakes or downtime.
- Shannon Friedman, CEO of VAT Modernisation SA
