As we head into 2024, many changes are on the horizon that will impact how businesses handle their finances and process invoices. Between shifting regulations, ongoing digital transformation trends, and new technologies, the finance landscape is constantly evolving.
Regardless of industry or size, virtually all companies rely on invoices to get paid for services rendered or goods sold. However, the invoice process itself is undergoing significant changes that will reshape how businesses manage accounts receivable and payable. By understanding these changes in advance, finance teams can ensure a smooth transition and stay ahead of new requirements and opportunities.
This post covers:
- Regulatory changes affecting electronic invoicing
- Continued digitization and automation trends
- Emerging invoice technologies
- Steps to future-proof invoice processes
- FAQs about key issues businesses may face
Let’s dive into each area to gain insight into what finance invoices may look like in 2024 and strategies to prepare.
Regulatory Changes Continue to Drive eInvoicing Adoption
One of the biggest factors shaping the future of finance invoices is regulatory changes aimed at encouraging electronic invoicing (eInvoicing) standards. Governments worldwide see standardized eInvoicing as a way to reduce costs, increase efficiencies, and limit tax evasion. Expect to see more jurisdictions passing laws requiring B2B and B2G transactions to utilize established eInvoicing formats.
Europe Leads the Charge
The European Union has been at the forefront of mandating eInvoicing over paper for years now. In 2024, the revised EU VAT Directive’s “one-stop shop” rules will take full effect, requiring all companies selling digital services or intangible goods across EU country borders to manage VAT via a single EU portal. This adds complexity for multinationals and makes eInvoicing even more critical to remain compliant.
The EU also continues expanding its qualified electronic signature and advanced electronic signature laws, making electronic documents legally equivalent to paper with a qualified trust service provider digital signature. This removes barriers to digitizing processes like invoicing that previously required a “wet” signature.
US Catching Up Through State Mandates
While the US has been slower to mandate eInvoicing at the federal level, state governments are increasingly passing their own rules. By 2024, over 20 states are projected to require eInvoices for specific entity types like state agencies, healthcare providers, or companies above a certain size threshold. California made headlines as the largest state economy to require eInvoices for all businesses by 2022. Other populous states like New York and Texas are weighing similar omnibus invoicing bills.
On a national scale, federal agencies are also driving eInvoicing adoption through programs that only accept standardized XML invoices from qualified vendors. This pressures large contractors and suppliers to get on board with approved eInvoicing formats to remain eligible. With the private sector following the government’s lead, paper may no longer be a viable long-term invoice method for US businesses either.
Adapt Strategies Early
The regulatory tide is clearly shifting towards digital, and delaying compliance can result in penalties. Finance teams should already be analyzing which eInvoicing standards will apply to their jurisdiction(s), evaluating supported software, and developing implementation plans. Starting in 2023 gives time to test, train staff, and deploy before deadlines hit in 2024 and beyond. Those that get ahead stand to gain competitive advantages as laggards struggle to catch up once rules take effect.
Digitization Trends Continue Apace
Aside from regulatory drivers, eInvoicing adoption is also being pulled forward by ongoing digitization trends across all sectors of the global economy. Paper-based processes have been gradually going digital for years now thanks to improvements in technology, security, and cloud infrastructure. More businesses want the efficiencies, controls and insights that technology offers finance workflows as well.
Employees Demand Modern Tools
Younger employees entering the workforce have come to expect seamless digital experiences when collaborating with clients and colleagues. Manual, paper-based tasks are less appealing and may impact retention for roles handling key finance functions like accounts payable and receivable. Employees will value employers that offer user-friendly fintech solutions instead of outdated paper pushing.
Customers Prefer Self-Service
Customers now routinely manage their finances through online and mobile banking portals. They increasingly resent businesses that still rely on paper-based processes they must call or visit in person. Automated systems allowing online payment, invoice viewing, and queries are table stakes to meet rising customer experience (CX) expectations. With competition fierce, businesses risk losing customers who grow tired of paper-oriented finance departments frustrating their needs.
Partners Demand Visibility
Suppliers, distributors, and partners also place higher value on digitally integrated finance workflows for real-time visibility into order statuses, payments, reconciliation, and more. Manual handoffs leave room for errors and reduce accountability compared to tracking everything digitally end-to-end. Strategic partners may pull business from inefficient organizations hampering collaboration and prefer alliances enabling 24/7 visibility through technology instead.
By 2024, few if any companies will be able to ignore the tremendous benefits of digitizing core financial processes like invoicing that touch customers, employees, and other stakeholders. Those retaining paper-based systems will fall behind peers empowering all relationships through integrated finance technologies.
Emerging Technologies Reshape Possibilities
A diverse array of emerging technologies stands to further revolutionize how businesses invoice and manage finances over the next few years. Some notable technologies finance teams should watch include:
Artificial Intelligence (AI) – AI is being applied to intake and extract critical data from invoices in any format via optical character recognition (OCR) or language parsing. This enables automatic data population into accounting systems for near real-time processing. AI can also detect anomalies, flag errors, and recommend actions to finance staff. As AI models are refined with more data, accuracy will only increase to reduce manual workloads.
Robotic Process Automation (RPA) – RPA streamlines repetitive data entry, validation, and auditing tasks by “robots” that emulate human actions within finance systems. This allows valuable staff time to shift focus to more strategic work instead of mundane administrative busywork. Early adopters report productivity boosts of 20-30% from integrating RPA bots into AP/AR workflows.
Blockchain – The distributed ledger technology behind cryptocurrencies also shows promise for invoicing use cases by establishing trusted, immutable audit trails. Blockchain could facilitate automatic invoice payment triggers, and smart contracts and eliminate reconciliation headaches. It remains an emerging area but one to watch as technologies like blockchain gain broader adoption over the next few years.
Cloud Computing – Migrating finance systems fully to the cloud opens up massive possibilities by removing infrastructure constraints and enabling online/mobile access anywhere. Cloud-based financial software as a service (SaaS) lowers costs while continuously upgrading features seamlessly via the provider. Look for more robust AI/ML, RPA, and analytics capabilities embedded directly into next-gen cloud fintech platforms.
By planning how emerging innovations may augment existing stacks, forward-thinking finance teams can both maximize current systems and skillfully pilot high-impact prospects. Those piloting the most advanced technologies also position themselves at the forefront of the finance function’s digital evolution in their industries.
Taking Action to Future-Proof Invoice Processes
To ready invoice processes for the coming year and stay ahead of continuous change, finance leaders should focus efforts on key areas to future-proof operations:
Standardize on Qualified eInvoicing
Evaluate top eInvoicing standards gaining regulatory traction and identify a format to standardize on by end of 2023. Consider factors like ease of implementation, compliance capabilities, and support ecosystems. Standardization will streamline supplier onboarding when mandates take effect and open the door to advanced capabilities.
Automate Workflows End-to-End
Map out all steps in the invoice lifecycle from creation to payment to identify manual touchpoints ripe for automation. Integrate data capture technologies, deploy RPA for repetitive work, and configure workflow rules and alerts to minimize human involvement as much as possible. The goal should be straight-through processing from order to accounting.
Modernize Finance Systems
Assess any legacy on-premise systems hampering innovation and consider modern cloud-based financial software instead. Next-gen platforms seamlessly incorporate emerging technologies, easily scale with business growth, and continuously upgrade without costly IT projects. Alternatively, look for integrations bridging gaps between existing and new systems.
Invest in Analytical Insights
Leverage connected finance data through enterprise performance management tools to gain actionable insights. Dashboards highlighting key metrics like DSO, billing exceptions, top customers and payment trends help optimize processes and cash flow in real time. Advanced analytics can also surface risks, predict issues, and recommend process improvements.
Develop Digital Skills
Evaluate finance team competencies and bolster skills like data analytics, RPA training, cloud technologies, and change management through targeted learning programs. Skilled employees drive successful digital transformation initiatives and strengthen their abilities to pilot innovative processes. Outsourcing non-core work also frees capacity for high-impact projects.
Proactively taking steps to digitally evolve invoice operations positions finance departments as strategic business partners instead of back-office cost centers. By 2024, those lacking enabling technologies risk disrupting customer, partner, and regulator relationships that will demand modern, digital-first finance services.