From July 1, companies must step up digitalization once again: electricity and natural gas providers will only be allowed to issue electronic invoices to non-residential customers. This means that these organizations must be prepared to receive and archive electronic invoices. With some preparation, this task is not only manageable but can also simplify everyday business operations, says Szabolcs Czöndör, head of the Tax Professional Innovation Department at the National Tax and Customs Administration (NAV).
◼︎ Mandatory e-invoice reception is coming
The regulation—originally set to take effect on January 1 but postponed to July 1—primarily imposes obligations on invoice issuers, with tasks for businesses resulting from this, explains Szabolcs Czöndör at the outset. According to the law, companies providing electricity and gas services must issue electronic invoices to non-residential customers; this means that landlords who re-invoice electricity or gas are not covered by the regulation.
An important element of the regulation is that it gives providers full freedom in designing the electronic invoice and invoice image, and the customer is obliged to adapt to whatever format the provider implements. “There won’t be any major differences, of course. An invoice image must always be sent to the customer, which will most likely be a PDF document. The issuer must guarantee the integrity of the invoice data, but this does not necessarily mean the invoice will be digitally signed. The invoice image may either be sent via email or made available in a secure repository where the customer can download it,” Czöndör Szabolcs mentions as two options.
When the invoice arrives
The first question companies need to prepare for is the invoice reception process. They must ensure the invoice has arrived; then it must be forwarded to the accountant or made accessible to internal accounting workflows.
Micro and small enterprises with a single location and one monthly electricity or gas bill are in the simplest situation. They can even print the invoice and process it through their regular paper-based workflow, for example by manually entering the data into the relevant software. A more advanced method is to use a sufficiently capable OCR program to scan and import the invoice data into the financial system.
Another possible solution is to link invoice reception with querying the NAV Online Invoice system. “These energy invoices will also appear in the NAV system, from which their data can be downloaded in a standardized format and then transferred to the accounting system. In this case, the electronic invoice is only used for validation, there is no manual data entry, which reduces the risk of error,” notes Czöndör Szabolcs. The expert has also seen solutions where OCR-scanned data was cross-checked with data from the NAV Online Invoice system—if there was no discrepancy, the invoice was processed without human interaction.
When setting up invoice reception, it’s important to consider the risks of poorly designed processes. Obviously, manual solutions carry the highest likelihood of administrative errors, which is why it is crucial for accountants to integrate Online Invoice data directly into their document processing and record-keeping workflows.
Archiving is a must
The second major issue regarding electronic invoices is their storage and archiving. The relevant sections of the VAT Act are the guiding regulations here—and they stipulate that electronic invoices must be stored in electronic form for the same duration as paper-based documents.
Precise archiving only…When digitally archiving documents such as invoices, the following principles must be observed under the law: |
The regulations do not prescribe the specific processes or technologies. If data integrity is ensured (e.g., via digital signature), then the rules of digital archiving must be followed (see our box article) — but every business may decide how to comply, says Szabolcs Czöndör. Here again, it is possible to delegate invoice storage to an external provider; even cloud services can be used. Naturally, this is an attractive option for smaller companies; however, it is extremely important to ensure that the provider can guarantee the integrity and protection of the invoices against deletion, as the ultimate responsibility lies with the invoice recipient, the expert warns.
Trusted archival service providers represent a special category: they must demonstrably meet requirements that assure their clients their invoices (and any other documents) are securely stored. Accounting firms may also contract with these archival service providers and resell their invoice storage services to their own clients.
Of course, there’s nothing stopping an organization from creating its own archiving infrastructure for storing electronic invoices—though this is naturally only worthwhile for larger companies. Furthermore, there is also the theoretical possibility that the energy provider itself may take responsibility for storing the invoices.
Now is the time to start
As the above illustrates, the impact of mandatory e-invoice reception varies greatly among Hungarian businesses and organizations. Smaller firms can switch to the new method without major IT developments or difficulties. The real challenges begin for companies with 30–40 locations, where the number of invoices to be handled electronically may exceed 100 per month.
Szabolcs Czöndör firmly asserts that it’s not only those firms that should think long-term. “Even though it’s relatively easy to comply with this current obligation, we must recognize that by 2030, almost all B2B invoicing will shift to electronic formats. This gives everyone, at most, five years to prepare their processes and IT systems for electronic invoicing and archiving. Energy bills provide an excellent opportunity for companies to develop and test such systems and processes on a small scale. This way, when e-invoicing becomes universally mandatory, they will already be prepared. They won’t have to build a complex new system from scratch—they will just need to scale and improve their existing solution,” he emphasizes.
Meanwhile, forward-looking companies may discover additional benefits. They can set up systems not only to store electronic invoices, but also scanned and certified versions of paper invoices. They can even begin issuing electronic invoices themselves, simplifying their administrative workflows and saving on operational costs.
