The restaurant industry struggled to adapt to the COVID-19 pandemic when it first hit. In 2020, The National Restaurant Association published worrying statistics on the state of the industry on a global level, revealing that more than 110,000 food & beverage establishments closed their doors, dropping the industry’s sales by $240 billion in that year alone.
However, the COVID-19 disruption did not discourage businesses in the restaurant industry from introducing changes. In fact, many businesses have experienced significant advantages from adopting a model that champions digital transformation. According to a survey conducted by Mckinsey, many business owners and executives have declared that going digital not only threw a much-needed lifeline for their companies, but also transformed how they approach guest experiences and store operations.
Regionally, the restaurant industry suffered similar consequences from COVID-19. Restaurants’ in-store revenues for the year 2019-2020 took a direct hit from the lockdown restrictions and social distancing. A Saudi Foodservice company, Herfy Services, reported a decline in its in-store sales during that year up to 16.40%, according to Mordor Intelligence. A report published in that same year by KPMG reflected similar worrying statistics expecting F&B businesses to reduce their sales by 40% to 60% in 2020 with only 37% of respondents foreseeing high-medium term growth.
However, Saudi Arabia was able to control that decrease due to its solid digital infrastructure and already booming delivery market. The implementation of the Saudi Vision 2030 in recent years, as well as investments in infrastructure and the digital economy, are key reasons for the Kingdom’s ability to properly confront the pandemic’s challenges.
As a result, the total demand for online food ordering and delivery in Saudi Arabia has surged. According to a recent analysis, the online food ordering and delivery market was valued at $511.21 million last year and is expected to increase at a rate of 10.05% per annum until 2026. With online presence becoming a necessity, online and digital payments should become the new normal in our everyday transactions.
In support of that digital shift, Zakat, Tax and Customs Authority (ZATCA) announced KSA’s new e-invoicing project, Fatoorah, which is set to be effective starting December 4th, 2021.
What Is E-invoicing (Fatoorah)?
The new regulations published by ZATCA suggest that buyers and sellers will now have a digitized system that allows invoices, credit notes, and debit notes to be exchanged and processed quickly and safely without the need for a paper trail. This project does not ban paper invoices but includes the choice to either print a physical invoice with a QR code for the client or just use the electronic version.
How Does E-Invoicing (Fatoorah) Work?
- Generation Phase
For the first phase, which begins on December 4th, 2021, electronic invoice issuance for all taxpayers (excluding non-resident taxpayers) and any other parties issuing tax invoices on behalf of suppliers subject to VAT will be very similar to what it is today, with invoices issued through a compliant electronic solution and including additional fields depending on the type of transaction.
- Integration Phase
Phase 2 will involve the introduction of technical and business requirements for e-invoices and electronic solutions, as well as the integration of these electronic solutions with ZATCA’s systems, which will be rolled out in waves by targeted taxpayer groups. Taxpayers will be notified of their Phase 2 wave at least six months in advance, and the first target group’s enforcement date will not be before January 1st, 2023.
Benefits of E-invoicing (Fatoorah) for Businesses
Saudi financial analyst Talat Zaki Hafiz commented on the benefits of e-invoicing saying that “[it] shortens payment cycles, improves accounts reconciliation, enhances compliance, and cuts the amount of physical storage space required.”
At Foodics, we are proud to constantly provide businesses in the F&B industry with the latest technologies to pioneer digital transformation. Our products have been made compliant with ZATCA’s e-invoicing regulations in order to incentivize restaurants to go digital all the way!
Here are the key benefits of e-invoicing:
- Faster Payment Processes:
E-invoice processing will result in faster invoice distribution and a shorter payment cycle, leading to an increase in cash flow.
- Fraud Reduction:
E-invoicing operates via a secure system that reduces the risk of fraud and document fabrication. E-invoices, unlike paper invoices, are PDF invoices with one-of-a-kind seals and certifications.
- Reduced Costs:
With the implementation of e-invoices, businesses would save money on print, post, and storage costs. In addition, since e-invoices can be directly entered into the company’s ERP system, processing expenses will be reduced.
- More Efficiency:
On an organizational level, e-invoicing will result in better transparency and more compliant operations.
While digital transformation for other sectors seems to present a number of challenges, the F&B industry was one of its early adopters lending it an advantage in combating the rough implications of the pandemic.
Here comes the all-in-one POS by Foodics to offer the best response to this market need by digitizing all your restaurant or cafe’s activities and streamlining operations. For Foodics clients in KSA, they can rest assured that they are using a platform that is fully compliant to ZATCA e-invoicing rules and regulations. In other words, if you already have a Foodics POS, you only need to update your console with your entity’s Tax number and you’re all set.
Are you a restaurant owner or passionate about starting your cafe and being fully compliant with ZATCA’s rules and regulations from day one? Request a demo of Foodics or contact us so we can help you take off!