WONDER WHAT’S STOPPING E-INVOICING FROM TAKING OVER NIGERIA?
E-invoicing has been around for a long time. In the early 1970s, companies began exchanging data electronically using a language called UN/EDIFACT, or EDI. These companies also exchanged invoice data through a point-to-point connection between two companies.
You would think that by now, e-invoicing ought to have taken over the world but sadly, this is far from the case. E-invoicing is not fully implemented in many countries in the West and as Nigeria is a developing nation, we lag way behind the numbers of e-invoice adoption in the developed world.
What are some of the reasons responsible for poor adoption of e-invoicing in Nigeria?
Slow implementation of e-invoicing by the government.
The slow adoption of e-invoicing by the Nigerian government is a major factor in why this technology hasn’t yet taken over Nigeria. It is true that some governmental agencies have adopted e-invoicing but real change will take place when all governmental agencies and parastatals mandate that a supplier issue an e-invoice for business transactions.
Not only that, it will be of great benefit for the Nigerian government to mandate the issuance of e-invoices for all business transactions by registered companies within the country.
Fraud perpetrated in the shadow economy.
Just in case you didn’t know what a shadow economy meant, it refers to the production and trade in legal goods and services that are intentionally and often illegally hidden from public authorities.
Shadow economy hurts a country’s economy as the VAT the seller collects from the buyer isn’t remitted to the government authorities but kept undeclared.
This yields a VAT gap i.e the difference between what the government ought to receive and what it actually does receive. The lost funds in the VAT gap can be used to grow the Nigerian economy but this doesn’t happen.
As e-invoicing leads to greater transparency in tax and audit purposes, it is understandable that businesses in the shadow economy will be reluctant to implement their use.
Resistance to change.
Human beings generally claim they want change but are mostly strongly resistant to implementing changes whenever they do occur. Without a strong incentive brought about by an unpleasant experience, the majority of human beings are content to conduct their business transactions exactly as they did many years ago.
This tendency towards inertia is a strong reason why many Nigerian businesses are yet to come aboard the e-invoicing train.
Unfortunately, the more the world implements digital technology in financial transactions, the harder it will be for Nigerian businesses that are yet to implement e-invoicing to catch up with those who had a head start on the technology.
Let your business maximize the benefits of e-invoicing by getting a head start on it today! Why don’t you join the Cashflow e-invoicing platform at www.cashflow.ng as you send e-invoices and get paid on the platform? You’d be glad you did!
