ELECTRONIC BILLING - THE ONLY WAY FORWARD

Adopted by the public sector in January 2020, electronic billing from one business to another will be obligatory from 2024. The Loi de Finances 2020 brought in the progressive generalisation of electronic billing for businesses in the private sector.

This law has a twofold objective. The first is to assist in the move towards a more ecological and paperless society and the second is to make tax and VAT fraud more complicated.

Businesses are having to prepare for this change. It can not be left to the last minute to put in place the software and the methodology for managing electronic billing.

You will already start to see the effect of this law in your daily life, when at the supermarket till you are asked if you want a paper receipt.

Who is affected

Electronic billing concerns all operations between businesses established in France and who are subject to TVA. So that includes the delivery of goods and services in France to someone from a business that is TVA registered to a business or person who is not; including deposit payments.

When does this affect your business

This law is coming in from the 1st July 2024, so just around the corner. It should have been adopted this July, but due to Covid and the world economic crisis, it was delayed a year.

It will become obligatory in different stages:

1st July 2024: obligation to send and receive electronic billing for business categorised les grandes entreprises

1st January 2025: obligation to send and receive electronic billing for business categorised les entreprises intermédiaires

1st January 2026: obligation to send and receive electronic billing for business categorised petites et moyennes entreprises and microenterprises

So this means that even if you are a microenterprise and you bill a business that is a grande or intermédiaire sized business you will have to adopt the electronic billing earlier than your category requires.

You will also receive bills via an electronic billing system.

What do you need to do

You will need to invest in software. There is software that is designed just for billing. There is also accounting software that includes billing as part of their accounting package.

The software is designed for you to be able to produce correctly formatted invoices that follow the legal requirements.

However, its principal advantage from the tax authorities' point of view is that you can not create an invoice and then delete it without there being a record of its existence. This means that businesses can not create an invoice and then delete it because they received a cash payment.

The advantages

There are advantages to this reform.

1. Electronic billing and software allow you to manage your paperwork better. It can be a great time saver for the business. Gone are the days when you have lost a receipt or you have to go back to the supplier to request copies. This means that there is accessible traceability.

2. Very often the billing software is integrated into the accounting software that you or your accountant uses. This means that documents can be shared or transmitted to your accountant or bookkeeper daily, allowing them to work on documents in real-time.

3. The electronic billing software can manage your reconciliation between client billing and payments. This means that if the client is late paying the client will receive an automated reminder email. This, therefore, allows for more efficient management of your debt collection and then also your cash flow.

So, it is now time to react! You will need to look at the options available to you and discuss with your accountant how you will manage this change.