Did you know that in 2021 the use of electronic invoicing increased by 30%, according to the Comparative study on the use of electronic invoicing in Spain? The use of electronic invoicing helps to save paper, protect the environment and reduce management costs for any type of company. With the recently approved “Crea y Crece” Law, electronic invoicing has become mandatory for companies and freelancers. In this post we tell you what is new in the law, when it comes into force and how electronic invoicing helps to fight against late payment in commercial transactions.
What is electronic invoicing and why is it important?
The electronic invoice is a digital document that endorses a commercial transaction between two parties, the one that offers a product or service and the one that acquires it. It generates obligations for both parties: one must deliver the product or service and the other must pay.
The electronic invoice is a fundamental element in the fight against tax fraud and, in addition, its digital format makes the invoicing process simpler and more secure.
The fundamental elements of an electronic invoice are the following:
- Invoice number.
- Date of issue.
- Data of the issuer and the receiver.
- Amounts and taxes.
- Type of currency.
- Method and term of payment.
- Due date.
Electronic invoicing brings benefits such as cost reduction, increased efficiency in invoice management, elimination of errors, customer satisfaction and environmental care.
What is the ” Crea y Crece” Law (formerly known as the “Business Growth Act”)?
The “Crea y Crece” Law is a new regulation that is part of the Recovery, Transformation and Resilience Plan and regulates various aspects related to companies:
- The incorporation of limited companies digitally with a minimum share capital of one euro (until now, 3,000 euros were required) and in less than ten days. This measure boosts the creation of companies and reduces the notary and registry costs involved in such creation.
- New measures to combat commercial delinquency.
- The extension of the obligation to issue and send electronic invoices to all companies and self-employed workers, which will lead to an improvement in the control of payments. In this sense, the law also establishes the obligation for platforms offering electronic invoicing services to be able to operate among themselves free of charge. Failure to comply with the obligation to issue invoices may result in the imposition of penalties of up to 10,000 euros.
- The impossibility of accessing aid from the Recovery, Transformation and Resilience Plan for companies that do not comply with the legal deadlines established by the state law against late payment.
- Measures to promote alternative financing to bank financing with financing instruments such as crowdfunding or venture capital.
- Expansion of activities for which no license is necessary.
When does the “Crea y Crece” Law come into force?
The “Crea y Crece” Law was published in the BOE last Friday, September 30, and will enter into force as of November 10, 2022, except for Article 12, regarding electronic invoicing, which will enter into force as follows:
- Companies with an annual turnover of more than eight million euros: one year from the publication of the law in the BOE.
- Companies with an annual turnover of less than eight million euros: two years from publication in the BOE.
These deadlines may be subject to variations.
How does electronic invoicing relate to the prevention of delinquency?
According to data published by Cepyme, commercial delinquency increased by 42% in the first quarter of 2022. This increase is due to several factors such as price increases, the economic slowdown and the reduction in companies’ liquidity.
In order to control commercial delinquency and promote business growth, the “Crea y Crece” Law establishes the obligation to issue and send electronic invoices, which contributes to the traceability and control of payments. On the other hand, companies must guarantee access to electronic invoices for a period of four years, even if the recipients are no longer customers of the issuing company.
Finally, the “Crea y Crece” Law establishes, as mentioned above, the impossibility of accessing aid under the Recovery, Transformation and Resilience Plan for companies that do not comply with the legal payment deadline. In addition, a National Late Payment Observatory will be created to monitor payment data and to promote good practices in terms of invoice payment among companies.
As a consequence of all of the above, it is important to have the help of a business consultancy to guide you on the obligation to issue and send electronic invoices in order to comply with the law and promote the digitalization of your company.