Whitepaper

The Digital Outlook:

Asia-Pacific
Trends in financial automation and regulation
2023
Trends in financial automation and regulation - Pagero, 2023
Digital Outlook: Asia-Pacific

The APAC region is undergoing a momentous shift towards financial automation,

Welcome to a and companies must keep up to stay ahead of the competition. But what exactly
is driving this change, and what factors should you consider when it comes to

world in change digitalisation and compliance?

Exploring the rapidly evolving digital
transformation of the Asia-Pacific
(APAC) region.
In this paper, we have compiled articles and information about the current trends in the
APAC region. We’ve tapped into the knowledge of experts who have shared their thoughts
on the latest developments of financial automation and provided valuable advice for
businesses to consider in a fast-changing environment.
So, what is fueling this transformation? Much like in the rest of the world, governments in
the APAC region are introducing new legislation related to e-invoicing and financial
reporting. Meanwhile, businesses are also embracing financial technologies to drive change
and create efficiencies. What sets the APAC region apart is the diverse nature of its
countries and how local differences influence governmental and business initiatives.
Even so, there are some trends that can be seen.

We hope that this paper will provide you with insights that can help your businesses make
smarter decisions going forward.

Table of content
Digital in view 2
A rise in e-invoicing regulations 3
Looking through the regulatory lens 5
The growing trend of financial automation 7
The future is an ecosystem of smart, open networks 11

Pagero, 2023
Trends in financial automation and regulation - 2023
Digital Outlook: Asia-Pacific

Digital in view

$28bn 200bn
The market in China has a size of over

$4bn+
Estimated that e-invoicing could save the Aus-
tralian economy 28 billion dollars over 10 years 200 billion invoices annually,
according to Deloitte Access Economics according to Billentis

According to Insight Partners, the

35%
e-invoicing market is projected to

60-80%
reach $4,075.8 million by 2027 in
Asia-Pacific

APAC is estimated to contribute 35% to the

On average, global statistics suggest 60-80% growth of the global e-invoicing market
cost savings achieved with e-invoicing compared during the forecast 2023 - 2027, according
to conventional paper processing to Technavio

$128m 9 days 55k+

Days Sales Outstanding reduced
Over 5,000 tonnes of carbon by an average of 9 days by moving Businesses registered for InvoiceNow in Singa-
avoided and a total carbon saving to electronic pore - following IMDA’s introduction of nation-
of $128m annually through digitalisation wide e-invoicing

Trends in financial automation and regulation - 2023 /2

Digital Outlook: Asia-Pacific

The e-invoicing revolution is well underway in the APAC region, and

governments are increasingly enacting changes and mandates. This shift
from traditional paper-based invoicing to digital processes presents both
opportunities and challenges for companies doing business in the region.
But what are the drivers, challenges and most prominent trends?

The last few years have presented global businesses with massive digitisation efforts.
As a result, countries around the world are initiating e-invoicing mandates to harness
the technological tools available today, and the APAC region is no exception.

In general, there are three primary drivers behind the push toward e-invoicing:
• Closing the VAT gap

A rise in e-invoicing • Combating corruption and fraudulent business practices

• Creating efficiencies in business

regulations These drivers have different levels of importance in the region. In countries like India,
combating corruption is possibly the primary driver, whereas efficiencies of digitisation
play a more prominent role in Australia, New Zealand and Singapore.

Written by:
Raymond Lam, Managing Director ASEAN, Pagero
Bertrand Gauch, Managing Director ANZ, Pagero
Especially for businesses, it’s also worth mentioning sustainability as a possible fourth
driver. According to our calculations at Pagero, e-invoicing is four times more
environmentally friendly compared to traditional paper invoices.
Many different approaches, but there are also some trends

The different levels of importance of the drivers also means that countries approach
e-invoicing differently. The APAC region doesn’t benefit from having an overarching
governmental structure like the EU, which is likely to consolidate systems over time. This
was most recently expressed in the ViDA proposal by the European Commission.

Instead, the solutions naturally vary. China, India and the Philippines have chosen more
authoritative mandates, whereas Australia has chosen a staged approach. E-invoicing is
currently mandated for federal government agencies and some state agencies in
Australia, and further mandates are expected within the private sector in the near future.
In this somewhat fragmented situation, certain trends can nevertheless be observed as
several APAC countries have chosen similar strategies. One such trend that we will take
a closer look at is the adoption of Peppol.

Pagero, 2023
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Digital Outlook: Asia-Pacific
How does Peppol work?
Peppol is a is a set of specifications for transactional documents across jurisdictions.
It was initially developed in the EU to enable the efficient exchange of such documents
between public procurement organizations and their suppliers but has since shifted to
include B2B transactions.
In brief, Peppol uses a model that enables the secure exchange of documents, such
as e-invoices, e-orders, and agreements, in a standardised BIS format. The sender uses
a Peppol Access Point to distribute the document, and the recipient’s Access Point is
identified using a Peppol ID. The recipient can then access the document in their own
system, be it an ERP, financial system, order management system, or accounts payable
software.
The Peppol
Sender Receiver
4-corner model
Access Point Sender Peppol Network Access Point Receiver
This “four-corner” model allows for a seamless transaction without the need for additional
agreements between the service providers, making it a very open system. Currently, the
Peppol network is also looking to add tax authorities as a potential fifth corner to simplify
tax-related activities in procurement.
Why are APAC countries opting for Peppol?
Peppol is still most commonly used in the EU, but as of March 2022, there are 78 countries
that have implemented Peppol globally. In the APAC region, Singapore first adopted it in
2018, followed by Australia, New Zealand and Japan. Countries such as China and India have
chosen other solutions using government portals for real-time audits of e-invoicing, where
transactional parties will have to send invoices to a centralised portal.
Trends in financial automation and regulation - 2023
The main reasons for countries choosing Peppol is likely learnings from other countries in
similar situations. Simplifying procurement operations can also be a motivating factor, but
an even more important one is the relative openness of Peppol, since APAC countries need
to take into account the perspectives of their neighbours.
What should companies think about going forward?
For companies doing business in the region, it’s important to understand that there is a lot
going on now. The shift towards e-invoicing has already exploded and will continue to move
rapidly forward over the coming years.
The complexities and various solutions implemented in the APAC region mean that the
selection of a third-party vendor is one of the most important decisions in the digitisation
process of companies. The choice of a vendor can impact the ability to operate across
markets, especially since everything isn’t set in stone yet, and we can expect more changes
in a relatively short period of time.
Here’s what you should think about when selecting a vendor:
• Openness across systems
• Interoperability
• Compliance
• Vendor presence in the region
• Security
What is e-invoicing?
An e-invoice is a digital invoice containing information presented
in a structured format which is sent electronically. The format also
must be legible for a machine, meaning that it is not enough to send
an invoice as a PDF to qualify it as an e-invoice.
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Digital Outlook: Asia-Pacific

Looking through
the regulatory lens
Written by:
Abby Lee, Senior Regulatory Associate, Pagero

E-invoicing is a global trend Observation and outlook

The EU Commission launched the ViDA proposal in December last year to indicate the Without being regulated by tax authorities, it could be hard to push businesses towards
intention to fight tax fraud and benefit businesses adapting to the digital age. This change e-invoicing. However, as time goes on, more and more companies have realized the
will impact the EU regardless of accounts receivable (AR) or accounts payable (AP), benefits they can have from digitalisation and automation in increasing efficiency and
purchase or sales invoices. reducing costs.

The APAC region is not falling behind. Some countries have implemented country-wide
e-invoicing obligations, for instance, India and Vietnam, and some of them do not have
the mandate in place, but the governments have already accelerated issuing invoices
electronically, like Singapore and Australia.
In some countries, invoices are regulated in a way that is not only on the content level
but also the layout and template, whereby businesses cannot create invoices based on
their business requirements in their environment. However, this could make it easier for
businesses to adopt since they can waive a lot of invoice onboarding processes, for
example, lining up for pre-printed invoices and specific manual work.

To fully unleash opportunities, further digitalisation and automation efforts are required on
both sides. These efforts should not focus solely on transforming tax compliance processes
but must also capture more exhaustive processes and business efficiencies. This includes
AR and AP processes, especially on the business side, which are essential for many
countries in this export-heavy region.

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Digital Outlook: Asia-Pacific

CTC models and Peppol

There are several e-invoicing or CTC (continuous transaction controls) models

already operational all over the world. Countries in the region also have
deployed the same or similar CTC models.

Latin America (LATAM) is the first region to introduce the Clearance model, and
this is also popular in the APAC region, for instance, China, India, and Vietnam, in
which invoices have to be cleared by the government before distributing to the
recipients. It is worth mentioning that China has launched a new hybrid
centralized e-fapiao system in which trading parties can exchange e-invoices
via their digital tax account.

Real-time reporting has been adopted in countries like the Philippines,

South Korea, Taiwan, and Thailand; VAT registrants must report e-invoices to
the government in real time.

On the other hand, Peppol is also very active and has been implemented
among countries in APAC. Peppol is a common framework for the secure
exchange of electronic business documents. Its original purpose in 2008 was
to make trade easier between European governments, but today it has evolved
to enable simple, safe e-document exchange between public and private
entities globally. Australia, New Zealand, Singapore, and Japan have established
Peppol Authority with different Service Provider accreditation and
acknowledgement processes under their jurisdictions.

Trends in financial automation and regulation - 2023

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Digital Outlook: Asia-Pacific

Country overview
1 China 5 South Korea
Fapiao is an official invoice administered by the National tax tracking system, including The government of South Korea introduced the electronic tax invoice system in 2010 and
General VAT Fapiao and Special VAT Fapiao. China launched the OFD fapiao system in became one of the earliest countries to introduce the e-invoicing mandate in this region. It
September 2020, in which invoices can be issued in OFD format (similar to PDF) via an started with large corporations and has been extended to more businesses by reducing the
Ukey device. At the end of 2021, the Chinese government introduced a new advanced obligation thresholds gradually. In light of the success of the National e-invoicing system,
e-invoicing program to encourage taxpayers to issue fully digitalised e-invoices (e-fapiao). there are also discussions on e-invoice exchanging via Peppol on cross-border transactions.
Unlike OFD fapiao, e-fapiao is a ‘true’ electronic invoice issued in a structured format (XML).
The program is still in the pilot phase but can be foreseen replacing the Ukey and printed
paper invoices. 6 Taiwan
Taiwan has a special VAT invoice system called Government Uniform Invoice (GUI), with the
government regulating GUI numbers (same as invoice numbers). Along with the eGUI
2 India launch, most businesses have moved to e-invoicing today.
The Indian government has rolled out the e-invoicing mandate gradually since January 2021
to boost economic growth and address the tax gap issues, starting from turnover
exceeding 100 crores (c.a. EUR 12M) to the latest one INR 5 crores (ca. EUR 560 000).
Following the roadmap, it can be expected that the government intends to cover all
businesses to adopt electronic invoices.

3 Thailand
Thai taxpayers can issue e-invoices and submit them to the e-Tax system voluntarily. 4
The Thai e-invoicing programs were launched in 2017 and have become a mature system.
Similar to South Korea and the Philippines, after issuing the e-invoice to the buyer, the 1 5
supplier must report the invoice to the government in a local XML format by the 15th day
of the following tax month. To encourage businesses to adopt e-invoicing, the government
extends the measures on tax reduction to promote e-Tax systems.

6
4 Japan 2
Along with the QIS (Qualified Invoice System) launches in October 2023, the Japanese
government established the Digital Agency, which later obtained the Peppol Authority 3
status in Japan, to prompt e-invoices to accelerate digitalisation and streamline processes.
Japan is the first country to implement Peppol PINT, and the government has recommended
Peppol invoices as their preferred format and a national e-invoice standard.

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Digital Outlook: Asia-Pacific

12
8

7 Australia 10
Australia adopted Peppol invoices in 2019, and from July 2022, all Commonwealth
government agencies have been able to receive and process electronic invoices. Contractual
suppliers can start sending e-invoices via Peppol to the Commonwealth Government
agencies. Meanwhile, the Australian Treasury has released a consultation on Business
e-invoicing Rights (BER), introducing a legal framework whereby Australian businesses
reserve the legal right to request to receive electronic invoices via the Peppol Network.

8 Philippines
7
The Philippines implemented Electronic Invoicing/Receipting System (EIS) pilot project in
July 2022. The project was kicked off from a pilot project on selected 100 businesses and
has expanded to more taxpayers. Taxpayers using the EIS system must issue receipts and
invoices electronically and transmit the data in JSON format within three calendar days
from the transaction date.
11
9 Malaysia
With the 2023 Pre-Budget statement issuance, Malaysia joins a growing list of countries that
are digitalising their tax administrations by switching to e-invoicing. The Malaysian National
e-invoicing Initiative plans to introduce a hybrid centralized CTC model combined with the
Peppol network. The pilot project will be with selected taxpayers at the beginning of 2024
11 New Zealand
and introduce the mandatory implementation gradually, based on the business revenue. Like Australia, New Zealand established Peppol as a preferred format in 2019 and has been
taking part in the global Peppol network. According to the latest statistics, 60% of Central
Government Agencies have been enabled to receive e-invoices via Peppol already.
10 Singapore
Singapore was the first country outside of Europe to obtain Peppol Authority. The government
implemented the nationwide E-invoicing network (InvoiceNow) established on the Peppol
12 Vietnam
framework in 2019 to help businesses improve efficiency and reduce costs. InvoiceNow is the Vietnam had pre-printed paper invoices replaced with electronic ones in July 2022. All
preferred method for e-invoice submission to public sector recipients and will soon become businesses must adopt e-invoicing without thresholds. Businesses falling under the scope
the default channel. Furthermore, not only invoices but the recognition of the importance of of e-invoicing need to send e-invoices in mandatory format to the government for approval,
adapting invoice responses and purchase orders are also addressed by the government. and an authentication code will be returned after validation.

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Digital Outlook: Asia-Pacific
The growing trend of
Financial Automation
Written by:
Roly Smoldon, General Manager of Digital Services, Ricoh
The APAC region has experienced a significant rise in the adoption of financial
automation, driven by market dynamics and government initiatives. In this article, we
will delve deeper into the reasons behind this surge and explore the advantages that
automation brings to businesses.
It is clear to most businesses today that financial automation offers numerous benefits,
including real-time data analysis and enhanced accuracy of financial information. One of
the most important underlying reasons for this insight is actually digitisation itself. After
automating some areas, companies are starting to expect the same intuitiveness and
smooth operations across functions.
Let’s look at some of the other reasons behind the trend:
Mitigating rising labour costs
Another issue following the COVID-19 pandemic is that many larger businesses are
grappling with labour shortages. Rising living costs have also resulted in increased wages,
making it crucial for companies to minimize non-value-added tasks and becoming more
efficient. Automation, for example e-invoicing, has become the perfect way for businesses
to save costs and use their resources more efficiently.
Trends in financial automation and regulation - 2023
The millennials are now in charge
The younger workforce finds it hard to comprehend why companies still require them to
perform mundane and repetitive tasks that seem unnecessary. However, by automating
processes such as verifying numbers, completing fields, and sending invoices, businesses
can free up their employees’ time and allow them to focus on core activities that contribute
directly to the success of the business. This shift not only boosts workplace satisfaction
but also empowers employees to take on more analytical roles, leveraging real-time data
and statistics to make well-informed decisions that drive value.
Small businesses are driving change
Contrary to expectations, small businesses play a pivotal role in propelling the adoption of
financial automation in the APAC region. In countries like New Zealand and Australia, small
businesses form a significant portion of the business landscape.
This dynamic creates a scenario where larger companies heavily rely on deliveries from
numerous small-scale businesses, resulting in a complex system of 3-way matching
between invoices, purchase orders, and proof of delivery. Automating these processes
helps streamline operations, leading to better management and a clearer understanding
of the company’s performance.
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Digital Outlook: Asia-Pacific

There is a thriving gig economy

Although the reliance on smaller business is nothing new in the region, the rise of simple
digital tools has also fuelled the growth of the gig economy. Accounting tools, digital
banking and other easily accessible services have led to more people being ready to go
into business on their own.

The pandemic also accelerated this trend, as individuals discovered opportunities to

monetize their skills and expertise in the remote-work landscape. The demand for flexibility
and remote work is unlikely to decrease, underscoring the ongoing importance of financial
automation in supporting the gig economy.
Security and white-collar crime
Automation serves as a valuable ally in mitigating the risks associated with human errors
and malicious intent in various processes. White-collar crimes, such as intercepting
invoices and manipulating account details, have unfortunately become increasingly
common. Attacks like this can take up precious resources, and even if the money is
retrieved, the damage is done in loss of time, effort, hassle, and reputational damage.
Automation, particularly through the implementation of e-invoicing, significantly reduces
vulnerabilities to fraud and security attacks that are often challenging for humans to detect.
In the future, it’s likely that insurance claim pay-outs won’t be possible if necessary,
measures against vulnerabilities have been neglected. Premiums may even become so
prohibitive in terms of the required measures that it is pointless to insure against cyber-
crimes since it’s better to take the necessary measures and avoid the risks to begin with.
In summary, APAC is
embracing the change
In conclusion, the APAC region is all in on financial
automation, and it’s no wonder why. There are a whole range
of reasons behind this trend: the advantages it brings, the
big presence of small businesses, the buzzing gig economy,
the rise in labour costs, worries about security, and the
support from governments. As companies catch on to the
benefits of automating financial tasks, they’re setting
themselves up for major wins in terms of efficiency,
accuracy, and productivity. It’s all about embracing the
digital game and coming out on top!

Government initiatives
Governments across the APAC region are actively promoting the adoption of digital
payment methods, such as e-invoicing. Singapore has been driving an e-invoicing initiative
since 2018 with plans to make this the default method for the public sector, Malaysia is
introducing mandatory e-invoicing from 2024 and many other countries are planning
similar initiatives. There are many reasons behind this, such as fighting tax fraud and
corruption, and inherent security and efficiency advantages over traditional paper-based
payments.

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Digital Outlook: Asia-Pacific

The APAC region is at a fascinating tipping point with increasing financial

automation and governments introducing new e-invoicing regulations.
The move towards e-invoicing presents an opportunity for organisations
operating in the region to drastically improve their sales cycles and create
efficiencies. Still, for many businesses, the fast changes are unnerving.
In this article, we will look at the best moves you can make to harness the
power of digitisation. And how to avoid the pitfalls.

The road to e-invoicing and digitisation is not straightforward. Although the general trend
towards digitisation is clear, countries across the APAC region are taking different routes
and creating diverse solutions. When navigating this changing world of e-invoicing, busi-
nesses depend on third-party vendors that can overlap the regulatory disparities. But not
all e-invoicing providers are created equal, and companies that rely on closed systems

The future is an
may find themselves trapped in a solution which limits them as regulations change or they
expand their business. This is why open networks are an alternative for achieving ongoing
compliance and operational excellence.

ecosystem of What is an open network?

smart, open networks At Pagero, we have created an open, global business network that helps businesses ex-
change trading documents smoothly – e-invoices, purchase orders, sales orders and more.

The complexities of the current regulatory

and business requirements are likely to con-
Written by: tinue indefinitely. We believe the only way to
Alex Pavel, Managing Director MEAAI, Pagero bridge these differences is to ensure all
systems can communicate freely. And there
is no reason to think that we will see a glo-
balised standard for e-invoicing any time
soon. Or, for that matter, that businesses will
stop doing business across borders.

One way of explaining an open network is to look at telecommunication. When you make
a phone call, it doesn’t matter what type of brand of phone you are using, the operator you
have chosen, or which country you are calling to. Roaming agreements ensure that you can
communicate across borders hassle-free.

An open e-invoicing system is similar. It connects all the different systems used by
companies and tax authorities and translates the information contained in the business
documents to make interoperability work smoothly for the trading partners – regardless
of their platform or location.
Trends in financial automation and regulation - 2023
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Digital Outlook: Asia-Pacific
Why is this relevant in the APAC region in particular?
The APAC region is possibly the most diverse region in the world, and it is going through
massive changes right now. It is also projected to have the sharpest increase in
e-invoicing by document volume, according to analysts such as Billentis. The variations in
formats and data schemas of different ERP systems and country legislative requirements
mean that choosing an open network is essential for businesses, especially for those
trading across borders.
A global e-invoicing service provider with an open, interoperable business network
combines separate services of multiple service providers and vendors into one complete
solution. This means client companies can handle local requirements across the APAC
region and stay two steps ahead of technical and regulatory developments.
What are the challenges?
1 Not all countries (will) have a standardised e-invoice format
This means that the buyer will n­­­eed to create the capability to receive invoices
in different formats, both digital and non-digital (e.g., PDF, OCR scanning).
2 There are many different solutions
Due to the variations in the market, different countries are opting for different
solutions. Some countries are already issuing mandating e-invoicing and building
government platforms at the tax authority level to close the tax gap by increasing
compliance among their taxpayer base for e-invoicing, whereas other governments
are only provide the opportunity to encourage the use e-invoicing without legal
enforcement at this current point in time.
3 Regulations are expected to change over time
On top of the current changes, we can expect regulations to change over time.
These changes may be implemented quickly, and staying on top of them can be
a challenge for finance, tax and IT teams.
Trends in financial automation and regulation - 2023
Why do we believe so strongly in smart open business networks?
Open systems give businesses a network that extends beyond your service provider
network. Truly open networks integrate seamlessly with new technologies and solutions
as they emerge. This gives companies the freedom to choose their own operations
without the burden of needing to consider what systems or processes their business
partners are using.
A smart, open business network takes responsibility for tracking and ensuring compliance
across markets, regardless of regulatory changes. This means businesses can focus on
doing business while reducing administration and costs. It also helps to significantly
improve data quality in your procurement and finance systems, facilitating better decision
making across your operations.
Why Pagero?
At Pagero, we provide a single platform that lets your business become and
remain compliant for e-invoicing, automating several business documents
as required, and connect to a worldwide network of trading partners,
governmental hubs and other service providers and business networks.
As you embark on your digitalisation journey, Pagero is your trusted partner
for achieving compliance and creating efficiencies in your business!
Learn more
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Trends in financial automation and regulation - Pagero, 2023