How to Choose an e-Invoicing Vendor in Saudi Arabia?

Updated on: Nov 2nd, 2023


10 min read

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Zakat, Tax and Customs Authority (ZATCA) initiated phase I of e-invoicing in December 2021. Further, it announced eight waves under phase II to cover businesses with more than SAR 40 million turnover under e-invoicing. 

ZATCA made phase II live for businesses whose turnover is more than SAR 3 billion, w.e.f 1st January 2023. Accordingly, businesses had to check the e-invoicing applicability and integrate with ZATCA.

Among many e-invoicing vendors available in Saudi, you need to understand the critical factors to consider, key metrics to look out for, and the evaluation process to select a suitable e-invoicing vendor. This article explains all these and helps you choose a suitable vendor.

What are the factors to consider while choosing an e-invoicing solution provider?

You might look at only monetary aspects while deciding on the e-invoicing solution, such as how much can be saved using the existing infrastructure. However, you miss out on the fact that e-invoicing is a critical continuous process having multi-dimensional effects on business processes. 

Hence, you need a proactive and scalable solution that is future-proof. Here are the four key fronts you must see while choosing an e-invoicing solution provider

Best-in-class product & technology

You should always look for a scalable, reliable & fast tool that supports business growth and ensures business continuity while issuing e-invoices. This factor helps you avoid searching for a tool every six months/ whenever there’s significant growth in business. Further, this factor helps you avoid disruptions in daily operations and smoothen the implementation.

Seamless integration capability with any source system

If you have multiple source systems and complex business process flows, you must be extra careful while selecting an e-invoicing partner. You need a partner to implement custom solutions compatible with systems such as API, DB, FTP, and Excel.

Post-go-live support capability

You should consider robust alerting systems and speedy resolution of tickets as key criteria while evaluating the e-invoicing solution provider. This factor is crucial as any delay in support, even by a few seconds, can result in significant revenue losses.

Past experience in tax compliance technology

It is expected that deeper regulations on VAT filing for vendors & customers will follow e-invoicing. Hence, you need a digital tax compliance strategy and a partner with both technology and functional expertise. This move helps you avoid the overhead of comprehending each update from ZATCA and implementing it.

Key metrics to compare between e-invoicing solution providers

The four key fronts are further classified into 16 metrics to consider while evaluating the e-invoicing solution providers. Here’s the list of the key metrics:

Best-in-class product & technology

Seamless integration capability

  • Success rate with ZATCA, i.e., % invoices acceptance
  • Average response time to generate an e-invoice
  • ZATCA-compliant Phase-II e-invoices generated so far, both B2B and B2C
  • Maximum number of e-invoices processed per second 
  • Key features to ease error correction on failed invoices
  • Total e-invoicing integration projects completed
  • Total e-invoicing integration projects completed for relevant ERP/source systems
  • Time to complete integration projects

Post-go-live support capability

Past experience of tax-compliance tech

  • Response & resolution SLAs
  • Support team structure, i.e., capability, number of resources deployed 
  • Experience in resolving issues liaising with ZATCA
  • Frequency of updates and releases
  • Product roadmap beyond “Phase-II e-invoicing”
  • Number of global e-invoicing  customers
  • Number of KSA e-invoicing customers 
  • Total customers live on e-invoicing Phase-II in KSA

Please note that the above list is not an exhaustive one. You can add more metrics as per your requirements.

What is the process for evaluating e-invoicing solution providers in Saudi Arabia?

You should follow the process mentioned below to evaluate various e-invoicing solution providers available in the market and choose the best-suited one.

Step 1: First, download our Excel template and keep it handy.

e-Invoicing vendor checklist

Step 2: Get detailed responses from all vendors and populate them under the respective metrics. You may schedule technical meetings with solution providers to understand their capabilities.

Step 3:  Assign weightage to each metric as per their business criticality and give a score to each vendor on each metric out of 10.

Step 4: Calculate the adjusted score for each metric, i.e., score (out of 10) * % weightage of metric. Next, add the total of adjusted scores for each metric.

Step 5: Now, compare across vendors using the final scores and arrange meetings to understand their capability further. After that, you can choose the best-suited solution provider.

What happens if you don’t choose a suitable e-invoicing vendor?  

If you don’t select a suitable vendor, you end up not complying with ZATCA e-invoicing regulations. Any non-compliance with the e-invoicing rules leads to notice at the first instance. After that, ZATCA imposes a penalty of SAR 1,000, which may increase the penalty to SAR 40,000 based on the repetition of violation. 

Please note that ZATCA waived the penalties for e-invoicing non-compliance only till December 2023. Hence, you need a proactive e-invoicing vendor to mitigate e-invoicing errors and generate phase II compliant invoices.