How to Integrate with ZATCA Phase 2: A Step-by-Step Guide for Saudi Businesses

The first wave of ZATCA’s e-invoicing (Fatoora) initiative focused on generating and storing compliant invoices. Now, the landscape is shifting dramatically with ZATCA Phase 2, also known as the “Integration & Submission” phase. This is no longer just about creating the right invoice; it’s about connecting your entire financial system directly to ZATCA for real-time clearance.

For businesses across Saudi Arabia, this presents a significant technical challenge. The question is no longer if you need to act, but how to integrate with ZATCA Phase 2 efficiently, securely, and without disrupting your core operations. This guide provides a clear roadmap to achieving seamless compliance.

Understanding the Leap from Phase 1 to Phase 2

Before diving into the “how,” it’s crucial to understand the “what.” The key difference between the phases is the concept of Invoice Clearance.

• Phase 1 (Generation): You generate an e-invoice in a specific format (XML/PDF-A3) with a QR code and store it. The process is largely internal.
• Phase 2 (Integration & Submission): Before sending the invoice to your customer, you must first submit it to ZATCA’s system via an API. ZATCA validates, signs, and either “clears” or rejects the invoice. Only a cleared invoice can be issued.

This real-time, two-way communication requires a robust and reliable integration between your ERP system and ZATCA’s Fatoora Portal.

The Technical Blueprint for ZATCA Phase 2 Integration

Integrating with ZATCA Phase 2 is a multi-step technical process that requires precision and expertise. Here is a simplified breakdown of the workflow:

1. Invoice Creation:The process begins as usual, with an invoice created in your ERP system (e.g., Oracle, SAP, Microsoft Dynamics).
2. Data Transformation:The invoice data is extracted and transformed into the mandatory UBL-standard XML format required by ZATCA. This includes all specific fields, tax codes, and partner information.
3. Digital Signing & Hashing:The XML file is hashed and digitally signed using your company’s unique digital certificate, ensuring its authenticity and integrity.
4. API Submission to ZATCA:The signed XML is securely transmitted to ZATCA’s API endpoint for clearance.
5. Receive Clearance Status:ZATCA’s system processes the submission and sends back an immediate response: either a “cleared” status with a new digital signature from ZATCA or a “rejected” status with an error code.
6. Finalize & Distribute:If cleared, your system updates the invoice record, generates the final PDF (which now includes the ZATCA QR code), and sends it to the customer. If rejected, the system flags the invoice for correction.

Why a DIY Approach to ZATCA Phase 2 is Risky Business

While the steps above may seem straightforward, the execution is highly complex. Attempting to build this integration in-house carries significant risks:

• Technical Complexity: ZATCA’s API has strict requirements for security (TLS 1.2+), encryption, and error handling. A minor coding mistake can lead to mass invoice rejections.
• Constant Regulatory Updates: ZATCA’s technical specifications are evolving. A custom-built solution requires a dedicated team to constantly monitor and implement changes, diverting resources from your core business.
• Business Disruption: A failed integration can halt your entire sales and billing cycle, leading to delayed revenue and frustrated customers.
• Security Vulnerabilities: Handling sensitive financial data and cryptographic keys demands enterprise-grade security. An improperly built integration can expose your business to cyber threats.

The Zatify Solution: Your Expert Partner for ZATCA Phase 2 Integration

Navigating the complexities of Phase 2 requires a specialized partner who lives and breathes e-invoicing compliance. At Zatify, we offer a pre-built, robust, and fully compliant solution designed to integrate seamlessly with your existing ERP.

Our comprehensive ZATCA integration services remove the burden from your IT team and guarantee a smooth transition. We handle everything from the initial setup and testing to the final go-live and ongoing support.

Key Benefits of Partnering with Zatify for Phase 2:

• Flawless Integration: Our solution is built to connect directly with major ERP systems, ensuring data flows seamlessly without manual intervention.
• 100% Compliance: We stay ahead of every update from ZATCA, ensuring your system is always compliant with the latest rules and technical standards.
• Automated Clearance: The entire submission, clearance, and reporting process is fully automated, saving you time and eliminating errors.
• Real-Time Monitoring: Gain full visibility into your invoice status with a centralized dashboard that tracks submissions, clearances, and rejections.
• Unmatched Local Support: We are a Saudi-based company, deeply familiar with the local business and regulatory landscape.

Connect with a ZATCA Integration Expert in Jeddah

Choosing the right partner is a decision that impacts the future of your business. As a leading ZATCA integration expert in Jeddah, we are committed to providing the highest level of service and expertise to our clients in the Kingdom.

Our team is ready to help you navigate the transition to ZATCA Phase 2 with confidence. You can visit our headquarters at Jeddah Square, Ash Shati, Corniche Road, Jeddah, Saudi Arabia, to discuss your specific needs.

Stay informed about the latest developments by following our Zatify LinkedIn page.

Don’t Wait for a Disruption. Act Now.

The shift to ZATCA Phase 2 is a mandatory evolution for all businesses in Saudi Arabia. A proactive, expert-led integration is the only way to ensure compliance, protect your revenue, and maintain operational efficiency.

Contact Zatify today for a free consultation and let us be your trusted guide to a successful ZATCA Phase 2 integration.