The U.S. is a leader in many areas, but sometimes this can create a perception that it is a leader in all areas. But even in the world of accounting technology, there are still realms where the U.S. is well behind the rest of the world. However Kim Austin, Avalara's director of global strategic accounting partnerships, is confident that in at least one area it will soon be catching up: e-invoicing.
From a global perspective, she said, e-invoicing — the exchange of documentation between buyers and suppliers in an integrated, electronic format — is relatively common, yet she said it's only just getting started in the U.S. One reason why is that the U.S. market so far has had different priorities compared to, say, the European Union. Because of the EU's higher level of regulation and oversight, e-invoicing was seen as a way to facilitate compliance as well as to mitigate fraud. While both things are very important in the U.S. as well, Austin said the market here has tended to focus more on efficiency of process. Another factor could be the size of the U.S. market, which, compared to smaller ones, may take more time to absorb change. Regardless, though, Austin believes that soon the U.S. will likely become a lot more familiar with e-invoicing.
"From a global perspective, [e-invoicing] is everywhere and it will soon be hitting the United States more and more. … E-invoicing will lead to e-compliance, and it will be a full circle, a closed loop of compliance processes in government, business and technology. [But] anyone talking about e-invoicing in the States is on the bleeding edge," she said.
For Austin, the issue calls to mind situations where software developers in the accounting space don't account for the particularities of the U.S. market. For instance, when an accounting solutions provider from outside the country is launching in the U.S., they might neglect to add options for paper checks because they're unaware of just how many people here still use them. While this may not seem like a big deal to the company — which may have fallen down on its market research — it is a very big deal to people in the U.S.
"Most people think of the U.S. as leading the way, but I think a lot of times we're actually behind and some of the other countries, like Brazil. They're just able to move faster in a lot of ways, maybe due to size," she said.
Some of this might come from confusion over who a solution's customer ultimately is. Austin talked about what she said was the "church and state" line between the client and the accountant, a line that she said can get blurry when considering software that could be used by both. The ideal state, she said, is to have the client or small-business owner using a front-facing industry-specific solution for things like point of sale systems. Meanwhile, the accountant "owns the back office" and manages the books. Austin said that, right now, there are "a lot of cooks in the kitchen," which leads to a lot of commingling of systems.
"In an ideal state, the clients would stay out of the books and firms would leverage technology to feed those books," she said.
On the other end of things, however, many firms have been slow to adopt the new technology that could have facilitated the spread of e-invoicing sooner. This is part of an overall divergence she has observed between firms that are reluctant to introduce other tools like robotic process automation — whether due to a desire to maintain things as they are or a fear of spending too much money — and those who enthusiastically adopt them.
"The profession is still struggling to truly grasp the value of the tech stack. They can really expand the services they offer by using technology but I think some firms are dragging their feet in doing so. I think, ultimately, they will be left behind," she said.
People do learn, however. While the U.S. may have been slow to adopt e-invoicing before, she felt the conditions would soon be in place for it to become as common here as it is in other countries. While few are talking about it now, she predicted it will be a major topic of discussion in about five years. And the developers who are already familiar with how these solutions work will be waiting. At that point, companies that do e-invoicing could become household names, which will only further cement its place in the market, pointing to other apps that have already done so.
"Apps like Bill [formerly Bill.com] or Smart Vault where they're household names, everyone understands the value and so it's kind of a no-brainer to implement something like that. I think they're really paving the way in the tax and accounting space to be widely and broadly adopted," she said.
