Jotun India makes the transition to e-invoicing ahead of time

In 2019, Norwegian multinational chemicals company Jotun signed a framework agreement with Pagero to handle compliance worldwide. Among the first national entities to fully take advantage of the offering was Jotun in India. One of the driving factors was the Indian government’s push towards digitalization of the economy through mandatory registration of invoices in a government portal.

India’s economic growth has been remarkable over the last decades, and the potential for continuous development is immense. Simultaneously, the country has been facing challenges with corruption, ranked 78th out of 180 nations according to the Corruption Perceptions Index (2018). To further boost economic growth and simultaneously address these issues, the government has sped up the digitalization process.

During 2020, the first steps towards e-invoicing were implemented. This shift towards a digital economy has also meant that companies need to adapt quickly, and big players should pave the way for modernizing their business and the way transactions are made.

“The GDP growth forecasts have been significant”, says Sudhir Kothare, finance director at Jotun India. “Before the lockdown, we were talking about seven or eight per cent GDP growth, which was by far the highest in the world. So that’s the kind of potential that India as a country has to offer, and the effects of digitalization can therefore have a huge impact.”

However, a significant change in how invoicing is done is not without hurdles. The new infrastructure also has to harmonize with other national requirements, as well as with the existing systems used by the company.

For example, when shipping products in India, commercial tax invoices must accompany the goods in transit. For Jotun, that means the invoice generated in the internal ERP is sent to the government Invoice Registration Portal for approval. The invoice is then returned with a QR code and a registration number, then sent with the shipment from the factory or warehouse to the customer’s point of delivery. This process ensures compliance with the Goods and Services Taxation legislation, but the implementation of this system was complex and faced time pressure.

For Jotun, however, the challenge of complying with the new legislation wasn’t primarily to tick all the boxes required by the authorities, but to do so with minimal disruption to business and ongoing processes. The goal was to integrate seamlessly and to have no downtime affecting supplies to their customers.

“Jotun is very much perceived as a good, prominent multinational brand in India. It was absolutely mandatory for us to meet the expectations of our customers. They should know that all invoices and deliveries from Jotun were compliant with the new legislation, on the day it came into effect”, says Kothare.

Despite the complexity of the project, the transition to the new system went without any major hitches and Jotun was able to meet the initial October 2020 deadline. The government then postponed the date to 1 January 2021, since many service providers had problems making the necessary changes. By then, Jotun had already been up and running for several months. According to Kothare, the close collaboration with the tight-knit Pagero team was essential for success.

“There were primarily two people that we were interacting with and that made the task much easier. We also had a single contact at Pagero for all of our questions, regardless of if they were technical, commercial or related to the notification issued by the government. This person made it easy to coordinate and set up meetings at regular intervals – obviously with the consent and buy-in from all the concerned stakeholders”, he says.

Another factor which made the project proceed smoothly was Pagero’s extensive experience integrating with IFS, thanks to a longstanding partnership.

“When we decided to find a strategic partner for the e-invoice requirements, several international players were evaluated. Pagero was chosen due to their commitment to Jotun and because of their strategic partnership with IFS. The latter was important since integration between governmental and ERP systems is often both complicated and costly. The project in India demonstrated the value of the close cooperation between Pagero and IFS, and it greatly benefited us during implementation,” says Trond Aune, global ERP manager at Jotun AS.

Beyond a smooth transition and compliance with regulations as they were introduced, there are other benefits of using Pagero, according to Kothare. One example relates to tax returns, where the amount of tax credit can be challenged if the opposite party has not supported the right amount of returns.

“About one to two per cent of the GST credit that we would receive was previously susceptible to this type of lowering of the credited amount, which was rightly due to us. That’s a considerable amount in my assessment, and it is now going to be available to us as savings. It’s much more efficient than getting into a process one or two years down the line of reconciling records and asking for our customers’ and suppliers’ ledgers and tax status, just to document the right amount of credit that we have taken”, he says.

After a successful start, the framework agreement between Jotun and Pagero also means that the collaboration to streamline business will continue globally.

“The interaction with Pagero has been very pleasant. I would say that the team was efficient, approachable, competent and very knowledgeable, which made the experience so good”, says Kothare. “I would recommend Pagero for any company going through a similar process”, he concludes.