Cloud-Based Accounting Software for Your Business

Saudi Arabia is on a journey of digitizing the whole taxation process under its ZATCA scheme. While it might be seen as something welcoming and an aggressive approach to creating a digital, secure, and transparent system, the question that arises is of infrastructure. Do they have compatible systems to work hand-in-hand with ZATCA portals? Can they handle the real-time, error-free invoicing? Is working easy for people with no technical or financial know-how?

If the answer to any of the above-raised questions is not optimistic, even if it is doubtful “NO”, then there are questions to be raised. Not on the idea of ZATCA, but on the implementation of the idea. While the idea seems quite futuristic, even a small error can attract fines between SAR 5,000 to SAR 50,000 per violation. To bring this into a statistical overview, about 1.2 million businesses in KSA are required to comply with the system in 2023, of which 95% of them are struggling with manual invoicing errors.

This gap, calls for a bridge that can bring the expectations of the government and the compliance of citizens on the same page. Something, which can handle the various technical and complex taxing systems. Something that can handle real-time invoicing without errors. Something, like Refrens.

In the following, we will be discussing how Refrens handles the key challenges in the Saudi Arabian invoicing landscape:

1. Real-Time Reporting & System Downtime Risks

As a step towards having an online system, you’d expect ZATCA’s infrastructure to be solid. Something that has near-zero downtime, provided the fact that the business owners are expected to provide real-time updates. However, ZATCA has faced downtime during peak filing periods. This has caused businesses to be unable to submit invoices. For instance, in 2023, the system crashed for over 8 hours during VAT filing season, causing compliance issues.

How Refrens Solves This:

• Refrens ensures instant ZATCA submission. This is mainly done by automatically generating QR codes and submitting the invoices to ZATCA with fail-safe retries.

• Furthermore, it also securely stores invoices for 5 years (as required by ZATCA) with encryption, ensuring audit-ready records as per ZATCA guidelines.

2. Cross-Border GCC Compliance Issues

Saudi Arabia is highly dependent on trade with other countries. This means Saudi businesses will be trading with UAE, Oman, and Bahrain, to name a few countries that are supposed to have some sort of similar invoicing systems. However, the reality is quite different. Businesses struggle with divergent e-invoicing formats. Each GCC country has slightly different VAT and e-invoicing rules, leading to reconciliation issues.

How Refrens Solves This:

• Refrens has multi-country VAT compliance. This feature automatically adjusts invoice formats based on the recipient’s location.

• Refrens also has auto-exchange rate conversion for transactions in a variety of currencies such as USD, AED, etc.

• Refrens supports integration with e-bills for cross-border goods tracking.

3. Payment Delays & Cash Flow Issues

Organisations are involved in businesses with entities around the world. While this seems exciting, there can be issues when collecting, logging, and reporting the payments received. The complexity further increases when there are milestone-based or advanced payments. If not handled correctly, ZATCA might flag you for tax discrepancies. Well, flagging is just the first step. It might also lead to getting your bank accounts frozen.

How Refrens Solves This:

• Refrens updates ledgers in real time. Meaning, it automatically syncs transactions to prevent mismatches.

• Refrens also embeds payment links (such as Stripe, Apple Pay) in invoices and sends automatic reminders to ensure timely payments.

4. Advanced Tax Reporting for ZATCA Compliance

Manual errors can cause big problems for businesses while working with ZATCA. ZATCA employs AI-powered audits that flag 30% of legitimate invoices due to keyword mismatches. Such issues can cause fines to be imposed, which are quite hefty.

How Refrens Solves This:

• Refrens allows the users to generate reports in one click. That essentially means that error-free VAT reports and trial Balance reports are just some seconds away from you.

• Refrens also provides dashboard analytics. This helps the clients to track cash flow, pending invoices and tax liabilities in real time and take actions accordingly.

• Furthermore, Refrens also logs every edit/approval for ZATCA audits.

5. SME Cash Flow Strain Due to Preemptive Tax Holds

If miscellaneous errors seem like a big issue, then let us inform you that banks like Al Rajhi and SABB freeze 10-30% of business accounts if they suspect unpaid taxes. The more interesting part? They do this even before ZATCA issues an official notice.

How Refrens Solves This:

• Refrens has a Real-time ledger that updates and ensures ZATCA-aligned records. Thus, preventing wrongful freezes.

• Refrens supports Automated payment reconciliation. Doing this reduces discrepancies that trigger bank holds.