With the implementation of E-invoicing in Saudi Arabia by the Zakat, Tax and Customs Authority (ZATCA), the operations of businesses are currently dramatically changing in their management of their financial processes. With the Kingdom moving towards a digitally-driven economy in line with the vision 2030, there is a new expectation of an organization in addition to generating structured e-invoices now being required to submit in real-time or near real-time via integrated systems.
To businesses that are already using ERP (Enterprise Resource Planning) systems, it is a challenge and opportunity to integrate the same capability through the use of e-invoicing system with the use of ERP systems. In this blog, we are going to look at why this integration is important, the factors that Saudi businesses need to take into consideration and what they can do to make sure that they are successful in their compliance with the changing ZATCAs mandate of e-invoicing.
Value of E-Invoicing Integration with ERP.
ERP systems are the central nervous system of a business undertaking everything in the business such as finance and accounting, inventory, sales, procurement, and HR. Through the integration of e-invoices into the business of ERP, the companies:
- Automate the cycle of invoices Automate the invoicing lifecycle
- Reduce Human errors
- Satisfy tax compliance in real time
- Evade penalties and procrastination
- see all money movement and taxes payable
Due to the fact that E-invoicing is now obligatory in Saudi Arabia, companies may no longer ignore the optimization of e-invoicing as an independent task. The best way to simplify things and remain compliant is through integration
The main advantages of Key Integration to Saudi businesses would be as follows:
1. Fee-foundation Tax Compliance
Real-time submission to ZATCA is mandatory, so ERP integration is no longer necessary to accompany manual posting or third parties, which process the data. Invoicing and their delivery are automated and this minimizes compliance risk.
2. Information and Overlapping
The ERP systems extract customer, inventory and VAT information, which is accessed in a central location; thus, the e-invoices are accurate and consistent with other business data.
3. Faster Inventory
Auto invoicing and submittal spoils bills and improves customer experience and cash flow.
4. Audit Readiness
Invoices, signatures and hash values are all stored safely in the ERP and this constitutes a tamper-proof audit that is AZATCA’s expectation.
5. Operational Efficiency
Avoiding manual processes also saves a company time by eliminating manual steps involved in invoice validation, reconciliation, and correction so that the business is able to use theextra resources on other strategic processes.
Factors that Saudi Businesses Should Consider before Integration
1. Are You ZATCA-Compliant In Your ERP System?
Not every ERP system is capable of supporting the technical and regulatory features of e-invoicing in Saudi Arabia. It must have a solution that:
- Causes XML based invoices
- It was supported by the generation of QR codes and digital signature
- Safely integrates in the API of ZATCA
- Handles the creation of UUIDs and chaining of invoices
Use of middleware or an upgrade to a newer version of your current ERP should also be considered, in the event that it does not support these.
2. Cloud vs. On-Premise ERP
ERP systems based in the cloud are also more integrated with ZATCA because they are easier to integrate to the cloud application infrastructure, more constantly updated, and can be accessed in real-time. On-premise platforms could necessitate more modification, infrastructure, and IT skills to comply with the regulations.
3. Security and Data Privacy
Your system would have to have very strong standards of cybersecurity since tax information is being transferred electronically. Make sure that the ERP and e-invoicing integration you have will offer you
· Encrypted communication
- Role based access control
- Security of store and backup
· Availability in the fast moving online world of local data residency requirements
4. Back up and scale
Select an ERP system and integration-partner that is scalable with your businesses, and that has the capacity to respond to waves of further regulations of ZATCA. It is important to update the system as frequently as possible and have the local support.
The Process to Combine E-Invoicing and ERP in KSA
This are the basic steps Saudi companies should follow in the integration of e-invoicing:
Step 1: Gap Analysis
Evaluate your current ERP functioning in accordance with those needed by ZATCA. False alarms will be removed to identify omissions in features, and non-compliance.
Step 2: Select a Vendor that ZATCA Accepts
Use a software provider or vendor, approved by the ZATCA, who is also knowledgeable about the subject of e-invoicing in Saudi Arabia.
Step 3: Single-Time API Integration Develop and Test
The FATOORA platform connection. You can use ZATCA sandbox environment to test invoice creation, digital signatures, and data submission.
Step 4: Train the Users
Train the finance teams, sales teams, and IT to work the new flows. To limit mistakes that a user can make and to facilitate seamless adoption, training is important.
Step 5: Watch and Play Movies.
Commission an implemented system and continuously track compliance, invoice validation status and performance of the system.
Final Thoughts
E-invoicing in Saudi Arabia combined with ERP systems is no longer a luxury; now, it is the necessity. To the businesses that desire to make payments fully compliant, eliminate manual submission, and optimize business in the future, an uninterrupted ERP-e-invoicing is the future.
As an SME or big company, investing in the best technology and expertise can enable you through this change of regulation swiftly and with fewer issues and will also be the foundation of a more connected, data-driven future.
