How to think Implementing E-Invoice phase 2.

If you are a VAT registered entity in the Kingdom of Saudi Arabia chances are that one thing on your mind right now must be ZATCA E Invoice Phase 2 Implementation. Having a third-party solution that was good for Phase 1 or a reputable ERP does not mean that nothing needs to be done at your end.

So, what exactly is Phase 2 – simply put known as Integration Phase it requires an entity to transfer their invoices in an XML format to ZATCA. Two things here then a) conversion in an XML format as per the ZATCA requirements and b) ability to integrate with ZATCA.

You can walkthrough this mind map to make things clearer

The first question to be addressed is whether the entity’s current system has the capability to integrate with ZATCA through an API. If the answer is “No,” then one needs to start the process of evaluating third party solutions available in the market. In case of “Yes”, if  ERP solution provider has informed that system is capable to be compliant with Phase 2, one has to ask a question whether it is validated against the ZATCA provided tool kit , if “Yes” and there is no separate pricing for the solution then one can feel comfortable that they are in good hands.

In case E – Invoicing Module is not readily available then one has to ask the implementation partner if they can implement and need to see if they have an internal capacity to manage this change. If the answer to either of the two scenarios is “No” then again, it is time to evaluate third party solutions.

With the third-party solution either you can use a system where invoice is generated end to end within that system or data can be transferred from your system to the solution provider to convert an invoice to an XML and meet other compliance requirements.

In addition to being compliant with ZATCA requirements entities may also consider this opportunity as a blessing in disguise and look for solutions that may solve the problems, they face in an end-to-end invoice value chain. Some of the examples may be

  • Ease with which information is translated into Arabic
  • Workflow management
  • Segregation of duties between the creator, approver and the one entering the data in customer and products database
  • Availability of contract management within the solution

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