In this episode of VAT Talks we speak with Peter Potters, Chief Commercial Officer and Co-owner of the Dutch bookkeeping software provider Informer. As Informer is one of the most innovative bookkeeping software providers in the Netherlands, Peter is the perfect person to discuss the latest industry developments with. In the following we discuss why Peter decided to join Informer after 20 years of working with Unilever, why there are still not many companies in the Netherlands that make use of e-invoicing and why we should be very careful when it comes to sharing data with governments.

Could you tell a bit more about your background and how you ended up at Informer?

“After I finished my study in Mechanical Engineering at the TU Delft, I started working for the B2B marketing department of Unilever. I worked there for 20 years and I really enjoyed my time there. At Unilever I developed a new methodology for business planning. At some point I was thinking about applying that methodology to other cases as well, when I heard that my neighbour (Informer founder Remco Frühauf) was working on a new business model. He wanted to move from a standalone to a SaaS solution. This situation allowed me to test my methodology as a SaaS solution requires a completely different business strategy than a standalone solution. That was actually the start of a very interesting discussion. In fact, we already worked together through our charity foundation (which is now the Informer Foundation), but from then on we also became business partners. So that’s how, after 20 years of working with Unilever, I got the opportunity to run my own business, which is very pleasant I have to say.”

You have an academic background in Mechanical Engineering, how did you end up in the field of accounting?

“Well, I graduated on the subject of robotics and currently robotic accounting is a hot topic in the accounting world. That’s where I see the link between my background in mechanical engineering and accounting. It is good to see that discussions in the accounting world involve talking about technologies such as Artificial Intelligence (AI) and blockchain, which are issues that are very interesting for someone who studied at a Technical University.”

What are the most interesting developments in your field of work at the moment?

“When speaking about professions that might be replaced by automation and AI, then accountants are often mentioned. New developments, such as bookkeeping software solutions that can recognize invoices, really make accounting easier. We, as Informer, try to use these technological developments not to make it easier for accountants but for the business owners themselves. Although, in general, business owners have less knowledge about accounting, we are convinced that putting business owners in charge of their bookkeeping can be very beneficial for them. This will give them insights into their business operations, which will force them to really deal with these operations and allow them to run their business more effectively. This is really a macro development.”

“More specifically, I really like what is currently happening regarding online invoicing. Especially concerning the Peppol network which was introduced by the European Commission (EC). We think this is a very clever idea, which we really support. Closely related is the development of the UBL standard, which allows you to send all data in “computer language” to your supplier. These developments significantly accelerate the entire process and provide enormous benefits to businesses. It means: no more printing, no more optical character recognition (OCR). Invoices will be sent directly from one system to the other.”

Are there many businesses that already use Peppol and/or UBL?

“Only very few, which really surprises us. This is especially remarkable as we (Informer) are one of the few bookkeeping software packages that allows for UBL by default. We are also one of the few that offer Peppol for free. Related, we recently conducted a little research regarding Peppol and the government, because the government is now required to accept invoices via Peppol by law. Well, that appeared to be quite a confusing landscape of solutions and non-solutions. So, I still see quite some room for improvement there.”

Do you think that making e-invoicing mandatory would be a good solution to this problem, like is being implemented in France from 2023 onwards for example?

“E-invoicing is already mandatory for governments, they need to be able to accept invoices sent via Peppol. I think for governments, making e-invoicing is a good option because it creates awareness which will help to increase usage of e-invoicing by businesses as well. However, I’m always quite hesitant when it comes to forcing citizens or business owners to do something. That’s why we always say: we need to show and prove that it works ourselves. In case of Informer: we just want to show and prove that when you make use of UBL and Peppol you will simply receive your money faster.”

Informer is working closely together with the tax authority. Could you tell a bit more about what this collaboration entails?

“What we strive for is to help people to prepare their VAT return in a timely and correct manner, especially for people that unconsciously make errors. There is still a lot of room for improvement in helping those people that are trying to comply, but simply lack the accounting knowledge, tools or interest to actually do the right thing. That is the focus of our collaboration with the tax authority. We’re not trying to solve fraud, but we are really doing our best to make the right way, the easy way.”

“The tax authority often mentions the term compliance-by-design, of which we are a huge fan. To achieve this compliance-by-design we make use of the Referentie GrootBoekschema (RGS)[1] standard which is a standard way in the Netherlands of describing your general ledger in a certain system. You can then link certain rules to that RGS. For example, you enter a receipt as a ‘business dinner’ in your bookkeeping system. By making use of the RGS standard the system will be able to detect that the VAT amount cannot be deducted. This can help to prevent a lot of mistakes from happening.”

“The second principle which we wholeheartedly support, is the idea of the closed chain. This concerns the information flow related to a transaction: (1) the receipt is received at the restaurant, (2) it is uploaded to the accounting software, (3) it goes to the tax return software and (4) then ends up with the tax authority. These are all separate steps, and at every step something could potentially go wrong. The tax authority aims to integrate these separate steps, so that there cannot be any discussion in between those steps. An important element here is to develop a solid interface between the bookkeeping software and the tax return software. Gerard Bottemanne did some great work in this regard, by defining a RGS Brugstaat, which allows companies to move their data from one package to the other. This is a very interesting development that can contribute to achieving this closed chain.”

“Another element that is of importance for the tax authority is timeliness. To enhance in-time VAT returns, we created an API together with the tax authority. When a company wants to file its VAT return at the end of the period, it will see that the VAT return is already prepared. We can then send it directly to the tax authority, which will communicate if the VAT return is in order. Next, the company will receive a link which allows for a direct payment to the tax authority. So, making your VAT return becomes a 2-minute task, which relates again to ‘make the right way, the easy way’.”

“To give one last example of the collaboration with the tax authority, with which we are very pleased: in September 2020 we launched a connection, which gives clients accounting assistance from the tax authority. Based on the previously mentioned RGS, the tax authority helps with checking what is allowed and what isn’t allowed in terms of e.g. VAT deductions. For example, you buy a sweater and you want to print your company name on it. Then you think, ‘good, that is company clothing’. You go to your Informer account and we send you a text from the tax authority ‘you want to enter this as company clothing, but does it comply with this and this’. If this is the case, you can carry on. If not, it should be entered as a private purchase.”

“So, these are all developments which contribute to creating a system where companies are compliant-by-design. Very important to note, is that we are not an instrument of the tax authority, but that we are trying to do everything we can to assist business owners.”

What do you think of the implementation of real-time reporting systems to close the VAT gap?

“At Informer, we’re a bit puritan when it comes to data. We are very careful with our clients’ data. Often we receive suggestions about what we could do with all the data of our clients through e.g. data mining. However, we don’t do anything with this on purpose, because we believe that people will become increasingly more cautious about where their data ends up. We prefer that the data remains with the owner of the data and therefore we don’t want to do anything with that data. In fact, we think that we should help them protect this data. So, the idea that companies will be required to send transaction details to a third party is not very appealing to us. Even if this third party is a trusted party such as the government[2], because maybe there comes a time when we vote for the wrong person which would make the third party no longer trusted.”

“We are, deliberately, placing ourselves at the service of what business owners want and what they need to successfully conduct business. For example, we are supporting the reporting obligations in Austria, simply because it is law. On the other hand, we don’t strive to lead the way and for sure we don’t want to be at the drawing table regarding the centralised sharing and storing of data.”

“The problem is that it provides undesirable possibilities to third parties. Maybe this would not be too big of an issue for larger companies, but for the self employed it could have far-reaching consequences. When you would get hold of the invoice flow of a self employed person, you would actually have a direct insight into its wallet and [laughing] it is not very Dutch to look in each other’s wallet. So, I think it would be worrisome that there is a flow of information going to a third party which can be traced back to an individual just to catch a small group of fraudsters. I’m not sure if that’s proportional. Furthermore, I still believe, and Rutger Bregman wrote a good book about it[3], that most people have good intentions and I think that should be the starting point when designing policy.”

Why is this data security so important for you and for Informer?

“Currently our target group does not really seem to realise how important the quality of data security is. Furthermore, there is also a lack of transparency regarding how products are tested on this aspect. I often compare it with the ncap (crash) test. Before this test existed, when our parents bought a Volkswagen Beetle, everyone presumed that this car was safe. The ncap test showed that you experience a car crash differently in a Beetle, than in a Volvo. For software, we are basically in the pre-ncap era now and we need a similar test to show that one piece of software is safer than the other. I think that this is still missing and that might be a reason why security is not one of the main differentiators in the field of software, although it comes with high investments. For example, we are investing heavily in security, while it actually does not pay off in the market.”

“We thought that the importance of security would be clear for everyone after the operations of the Port of Rotterdam were shut down due to a bug in their bookkeeping software. However, not too much has changed since then. On the other hand, I do see an increasing number of security related initiatives coming from the European Union level, but these will take time to mature.”

We spoke about real-time reporting for domestic transactions, but what do you think of the initiative of the European Commission to develop a proposal for a real-time reporting system for intra-Community transactions, sort of an extension of VIES?

“We are making use of VIES and we are a big fan of the system, because it allows companies to directly check if their registration is correct. So, as long as it serves the companies, we are supporting any development. However, I doubt if this is the case for this initiative. Of course, I get that governments are pushing for this, but I really think that you should strive for a system where the right solution is the easy solution. Currently, the process of sending an invoice to another EU Member State and subsequently correctly entering it into your bookkeeping system is very complex and prone to mistakes. I would prefer that we invest into a system which can handle such transactions easily and correctly. That would be more beneficial than centrally sharing all that data. In other words, the best solution should take compliance-by-design into account.”

Recently the responsibility over Peppol in the Netherlands was moved from a semi-private organisation (Simplerinvoicing) to the Dutch government. What do you think of this development?

“I know that the government is currently investing more time in Peppol and that this move took place. However, I’m not very closely involved so I cannot assess if this is a good development. What I do know is that an increasing number of governments are working on this and we are very much encouraging it because when Peppol is widely used many mistakes can be prevented. It can accelerate the invoice flow and with that, hopefully, the payment flow.“

Why isn’t it widely used yet?

“Because businesses think that it is very complex, and many competitors/colleagues also make it very complex. So we should again, ‘make the right way, the easy way’. That is exactly what we did by offering Peppol for free. I think that is the most we can do. Another solution would be: larger companies requiring their buyers/suppliers to send invoices via Peppol. However, I don’t think that the government should force larger companies to take this route. That approach is too centralised and, [laughing] as you might know by now, I’m not the biggest fan of centralisation.”

What would you say to the reader to excite them for bookkeeping and/or VAT?

“[laughing] I will not excite anyone for bookkeeping, because it’s simply not fun. However, I can excite people for what they can do if they would have a clear overview of their business processes. Unfortunately, I still see too many business owners that only use information from their bank account to measure success, which is of course not a good metric. Therefore, I would like to invite business owners to become financially savvy and to use the right figures to assess the performance of their company. They will notice that it will pay off. Maybe that could be an incentive to invest a bit more time in bookkeeping.”

We would like to thank Peter again for his time and for giving his perspective on VAT. The opinions expressed in this article are personal. If you have any questions, suggestions or if you want to be our next interviewee, do not hesitate to contact us via info@summitto.com

[1] https://referentiegrootboekschema.nl/english.

[2] Read more about why protecting your data from governments is important in one of our blog posts: https://blog.summitto.com/posts/why_protection_of_invoice_information_is_important/

[3] Rugter Bregman, Human Kind. A Hopeful History.