When Will the Paperless Office Arrive in Russia?

Irene Matinpalo
Head of Moscow Office
Basware Corporation

The paperless office is the office environment of the future, where advances in office automation make paper redundant for routine tasks such as record keeping and bookkeeping. As we know, Russian businesses and government institutions are still very heavily paper-based — in fact, paper consumption is actually growing. Indeed, an increasing number of companies store their financial documentation electronically despite legislative requirements to maintain paper copies. Where business leads, however, legislation often follows.

In the current economy every enterprise is focused on cost cutting while maintaining performance. And this pressure to deliver more while reducing costs is here to stay. Fortunately, research shows, for example, that enterprises which have completely automated their accounts payable processes have on average 50 to 70 percent reduction in invoice processing cost and cycle times, meaning help with cost-cutting is at hand.

Russian Accounts Payable Process, invoice receipt and approval can be quite a challenge. The document requirements include invoices, VAT invoices (schyot-faktura) and certificates (akt) or waybills (nakladnaya), depending on whether the company is buying goods or services. Pre-payment is also frequently used, meaning that financial documents often arrive at different times; a problem that is exacerbated when paper documentation is used, as this is often lost in the mail. What’s more, manual invoice processing and approval often lacks appropriate controls to ensure that each invoice is both reviewed and approved only by authorized employees. As a result, auditors cannot view invoice history as a valid audit trail often does not exist.

Also, as these invoice approval cycles are time-consuming, payments are often late and companies are not able to make use of cash discounts or end up with late payment penalties. A real-time view on cash flow is usually missing which makes it difficult, if not impossible, to manage solvency effectively. In order to provide their financial processes with more transparency and accuracy, several companies in Russia have chosen to automate their financial processes, with many more interested to do so in the near future.

There have been recent indications that Russia will take steps towards more widespread use of automation with invoices, certificates and waybills already available to send electrically between suitably networked companies. According to plans from the Ministry of Finance of the Russian Federation, VAT-invoices will be allowed in electronic form in Russia by next year and will soon be accepted by tax inspectors for VAT refunds. This would allow companies to receive all invoice documents electronically from their vendors. There is skepticism within Russian business circles about the proposed time frame for these initiatives but some experts remain optimistic, suggesting we may see implementation by 2011. In Scandinavian countries we have already seen growing popularity for e-invoicing. The state of Denmark is accepting only e-invoices and the Finnish Government is taking the same approach from the beginning of next year. Even one of the largest paper companies in Scandinavia is enforcing a strict “e-invoices only” approach towards its suppliers.