Product coding is a key requirement for businesses to comply with Saudi Arabia’s e-invoicing regulations. It ensures accurate data, simplifies tax audits, and aligns with the Integration Phase of e-invoicing.
This guide explains the concept of product coding, the standards set by ZATCA, and practical steps to implement it smoothly in your business.
What Is Product Coding for E-Invoicing?
Product coding refers to the use of unique identifiers to classify goods and services in electronic invoices based on specific standards. It helps in standardizing data, minimizing errors, and improving tax and inventory management.
Saudi Arabia follows the GS1 GTIN (Global Trade Item Number) standard, which enables accurate product tracking throughout the supply chain and enhances financial reporting.
Product Coding Standards in Saudi Arabia
To meet e-invoicing compliance, ZATCA has set the following standards:
– GTIN (Global Trade Item Number): An international system using GS1 barcodes to facilitate seamless data exchange.
– Internal Coding System: Businesses without GTIN can develop their own coding method, provided each product has a unique identifier.
– Integration with FATOORA Portal: Codes must be electronically readable to comply with ZATCA’s invoicing requirements.
Also read: Your Guide to Full Integration with Fatoora Portal
How to Implement Product Coding for E-Invoicing
To ensure compliance, businesses should follow these structured steps:
1. List All Products
Prepare a detailed inventory, including product names, categories, pricing, and supplier details. A well-organized inventory simplifies coding and prevents duplication.
2. Choose the Right Coding System
Decide whether to use GTIN or develop an internal system. If your business deals with international suppliers, adopting GTIN ensures compatibility with global standards.
3. Assign Unique Identifiers
Give each product a distinct code according to the selected system. Store these codes in a centralized database for easy access and updates.
4. Integrate Codes into Your Invoicing System
Ensure your coding method is incorporated into your e-invoicing and accounting software. Businesses using ERP systems should connect coding with sales and inventory processes.
Also read: Guide to ERP Integration with the E-Invoicing System
5. Test the System for Compliance
Before full implementation, verify that invoices contain the correct product codes. Automated auditing tools can help detect and correct errors before submission.
6. Train Your Team on Product Coding
Provide training to relevant staff to ensure accurate data entry and prevent manual errors that could impact compliance.
7. Keep Codes Updated
Regularly review and update product codes to align with ZATCA’s latest requirements, especially when adding new items or modifying existing ones.
Common Challenges and How to Overcome Them
Some businesses may face difficulties when applying product coding, such as:
– Transitioning old inventory: A phased approach can help integrate the new system gradually.
– Managing large product catalogs: Using specialized software can simplify the process.
– Ensuring accuracy: Automated validation tools can prevent errors.
– Outdated invoicing systems: Upgrading to a compliant ERP solution can ensure seamless integration.
EZ Integrated: Your Partner for Product Coding & E-Invoicing Compliance
For businesses in Saudi Arabia, a reliable solution is essential to meet ZATCA’s requirements. EZ Integrated provides a comprehensive e-invoicing system designed for smooth implementation.
Why Choose EZ Integrated?
– Fully Compliant with ZATCA’s Standards: Supports GS1 GTIN for accurate coding.
– Advanced Validation Tools: Ensures error-free invoicing.
– Seamless Integration with FATOORA Portal: Automates invoice submission and verification.
– Expert Training and Technical Support: Helps your team implement coding efficiently.
– Need assistance in aligning your invoicing system with Saudi regulations? Contact us today for a free consultation and streamline your invoicing process!