Doing business in a world that’s more and more connected every day offers new possibilities, but also plenty of complexities. You’ve likely caught wind of upcoming.
We’ve been speaking with many customers like yourself who are operating in Europe and faced with new e-invoicing mandates. Are you based in Germany but also operating in Poland, Romania, and other markets? Or maybe the entire topic of e-invoicing still feels obscure.
Let this article be your guide to upcoming and existing e-invoicing mandates. Start here to understand the current state of the market, streamline invoicing, and learn how you can consolidate e-invoicing and other B2B operations in the process as well.
The origins of e-invoicing
E-invoicing can be traced back to the broader evolution of electronic data interchange (EDI) technologies. The concept of EDI emerged in the 1960s and 1970s as businesses sought more efficient ways to exchange business documents, such as purchase orders and invoices, in a standardized electronic format.
The goal was to replace paper-based processes with digital communication, reducing manual errors, streamlining workflows, and accelerating transaction times.
E-invoicing, as a specific subset of EDI, gained momentum as technology advanced and the internet became more widely accessible.
The evolution of e-invoicing has been influenced by several factors:
Advancements in technology
The increasing sophistication and accessibility of computer systems, software, and communication technologies allowed businesses to explore electronic alternatives to traditional paper-based invoicing.
EDI standards
The development and adoption of standardized data formats and protocols, such as Electronic Data Interchange for Administration, Commerce, and Transport (EDIFACT) and XML, played a crucial role in facilitating the exchange of electronic invoices.
Regulatory initiatives
Governments and regulatory bodies recognized the potential benefits of e-invoicing in terms of efficiency, cost savings, and transparency. Some countries introduced regulations and incentives to encourage businesses to adopt electronic invoicing.
Globalization and international trade
With the growth of international trade, there was a need for standardized processes that could facilitate electronic invoicing across borders. This led to the development of global standards and frameworks.
Business process optimization
As businesses sought ways to optimize their processes, reduce manual intervention, and improve accuracy, e-invoicing emerged as a solution that could contribute to operational efficiency.
Today, e-invoicing has become a common practice adopted by businesses worldwide. Various standards and frameworks, including Peppol, have been established to ensure interoperability and standardization in electronic invoicing processes. The evolution of e-invoicing continues as technology evolves, and regulatory environments adapt to the changing landscape of digital business transactions.
What is electronic invoicing?
Electronic invoicing or ‘e-invoicing’ is the exchange of electronic invoice documents between two parties – a supplier and a buyer. The key word here is electronic, as the whole point of e-invoicing is that the entire process happens digitally.
Which brings us to the next question: what is an e-invoice?
In short, an e-invoice is a commercial document containing transaction data issued, transmitted, and received electronically that comes in a structured format.
As with regular invoices, their electrical counterparts contain information relating to a sale of products or services. The information included on an e-invoice varies from country to country but generally must contain the date of issuance, names and addresses of both parties, VAT registration and information, services rendered, and amount charged, amongst other things.
They also serve the same purpose: they’re a key way for governments to track and calculate VAT.
When a product or service is sold, the seller will issue an invoice to the buyer which includes a VAT charge. It’s part of a wide range of digital reforms seen from the EU and other countries worldwide. The differentiating factor is the format and the way it is processed.
Why e-invoicing and what is EN-16931?
Electronic invoicing is more than sending invoices digitally in a PDF. An XML e-invoice (more precisely UBL or CII syntax) contains structured data in an standardized, machine-readable way. When the recipient of the e-invoice understands the syntax of the sender, receiving, processing, and paying suddenly becomes extremely easy.
This is why many software applications and businesses actively promote and support e-invoicing standards. It makes it possible to automatically process documents in the accounting software.
Europe has defined an e-invoicing standard, the European Norm EN-16931, and every governmental organization in Europe is mandated to support it. EN-16931 provides a good foundation for the Digital Single Market.
A PDF is not an e-invoice:
They are digital from transmission through to receipt, processing, and payment. This contrasts with invoices that are emailed as PDF attachments or other file types. Here, the transmission is electronic, but the processing at the buyer’s end is usually manual; data needs to be extracted from files and uploaded to company systems before it can be processed.
So, even if it is done electronically, sending an invoice in PDF format by e-mail is not e-invoicing. That’s because this unstructured format will not automatically be supported on the customer side.
Key features of e-invoices
The stand-out feature of e-invoices which differentiates them from invoices in any other form is that they use a structured data set. That means they are delivered in a specified and standardized format.
E-invoice formats:
The most common formats are EDI and XML. They are compatible with ERPs and accounting systems which can read the data and automatically extract it.
In terms of the EU Directive, a pictorial representation of the invoice (e.g. scanned JPG or PDF formats) does not meet the European Commission's requirements for an electronic invoice. Some companies choose to include physical invoices (PDF) alongside the electronic version for either ease of use or for archiving purposes.
What is e-Delivery and Peppol?
While e-Invoicing is mandated, there are no rules that prescribe how invoices should be delivered. However, Europe does define best practices for electronic document exchange or e-Delivery. Important elements in the European e-Delivery standard are: proof of sending and receiving, prevention of loss or theft, and preservation of the integrity of content. The e-Delivery architecture guarantees integrity and non-repudiation, so you are sure the document you receive has not changed and is genuine.
Peppol is a pan-European procurement network for exchanging and processing electronic invoices. The Peppol network has adopted the European e-invoicing as well as e-Delivery
standards, and is already well-established across member states. Peppol works with so called access points (AP) for the exchange of e-invoices. Many countries and governments have setup an access point to Peppol, and thus Peppol has become the de facto international standard. The Belgian governments named their access point Mercurius. In The Netherlands it is called SimplerInvoicing.
In the Peppol model, roaming is as easy as with mobile communication. Both the original sender and the final recipient of an e-invoice can select the service provider they prefer (as long as it is a certified access point). These trusted partners guarantee the quality and correct handling of the electronic document exchange.
Depending on e-invoicing deployment model in particular country, Peppol can be used for B2G (business-to-government) and B2B e-invoicing flows.
E-invoice standards:
There are many standards that need to be adhered to. This refers to both what needs to be included on the invoice and how it is delivered. There is no universal standard. Instead, each country has created their own – and they’re often not interoperable.
Examples of the (many) e-invoicing standards include XRechnung (Germany), Factur-X (France), ISDOC (Czechia) and PEPPOL BIS (various countries). This is not a complete list, but just goes to show how diverse the market is – and why the EU is determined to develop a universal standard for the bloc.
Why is this important?
We know that across the world, e-invoicing is becoming the norm. In fact, it is becoming a requirement in some countries. This has led to a ramp-up of interest and attention in the topic and the available solutions. And let’s not forget the benefits it offers over the more traditional invoicing practices.
By now, B2G e-invoicing (Business-To-Government) is already mandatory for all public procurements in the EU.
More and more countries are moving to Continuous Transaction Control (CTC), and B2B e-invoicing is becoming a must-have for businesses. This means that all businesses, either suppliers or buyers, need to be B2B e-invoicing compliant in impacted countries:
- Poland and Romania to be CTC-mandatory from July 2024,
- Germany, Spain, Latvia, and others – there are discussions to be compliant in 2024 and 2025,
- France – initially planned for July 2024, the mandate was moved to September 2026,
- Belgium – B2B mandate was announced, it will take effect in January 2026,
- Italy and Hungary are already CTC-mandatory.
The trend shows that the irreversible process started with the whole EU becoming B2B e-invoicing mandatory, forcing changes in almost every B2B organization.
Does one standard fit all?
Mercurius, XRechnung, UBL.BE, NHS England, Factur-X, ZugFerd, SimplerInvoicing, Chorus Pro, E-Rechnung… are they one and the same standard?
Not really.
Those names correspond to regional implementations. Local legislation or industry specific requirements sometimes call for stricter instructions (CIUS) or extensions (EXT) to the EN-16931 core definition.
That doesn’t have to be a showstopper, though, when your service provider actively supports the regional and sector specific deviations.
And yet… all national brands refer to the same, common standard for e-invoicing: the European Norm EN-16931. And most of them are connected to the Peppol e-Delivery network.
Don’t be put off by their different namings and be confident in knowing that Axway has the expertise to advise you adequately.
Benefits of e-invoices
There are of course three different parties with a stake in the use of e-invoices: the buyer, the supplier, and the government. Each has something to benefit from.
Standardization: For all parties, there is one clear advantage: standardization. It doesn’t make sense to use a differently structured invoice for each and every supplier or even each individual order. Reduced resources: reduce use of paper and other physical supplies allowing a more sustainable approach for businesses.
Cost savings: No need to print invoices, post them, or archive them, which means major cost savings, not to mention the reduction in time spent on admin.
Automation: Standardization means that processes can be automated in way that isn’t possible with unstructured data.
Greater security: Thanks to strong security requirements and the use of private networks and protocols, e-invoices allow for a more secure exchange of data between all involved parties – especially when compared to physical documents.
Trackable and traceable: Electronic invoices are easier to track. The transaction history can be traced across its entire journey, offering peace of mind and a means of evidence.
Implement B2G & B2B e-invoicing with Axway’s help
In addition to expert guidance leveraging years of experience, here is what Axway can offer our customers in this regulatory and market context:
A global, standards-driven, future-proof approach to e-invoicing. Axway eInvoicing entirely eliminates the platform nightmare and vendor sprawl. We take care of all technical aspects of your e-invoicing flows, managing both regional and industry-specific deviations to the European Norm such as CIUs and EXT, and translating your documents into the preferred format for your partners.
A consistent platform experience with the global Axway B2B Integration solution that streamlines EDI, API, and e-invoicing processes.
Support of majority of e-invoicing format and processes, integrated with ERP and other back-office applications, giving full visibility and control.
A certified Peppol Access Point with proven experience with international, industry-specific support.
How do you implement one exchange standard using Axway?
As an internationally recognized service provider, we can guarantee you all of the above. We connect a variety of companies, in many sizes and levels of digitalization!
From SMEs who still use email for their document exchanges, to enterprises who use Peppol for B2G and/or B2B exchanges, nationally as well as cross-border, inbound as well as outbound.
More precisely:
- We migrate any exchange format to any standard EN-16931 syntax (UBL or CII).
- We dynamically create the document formats your partners prefer. Even when this is PDF (it will be a hybrid one).
- We close the digital gap by providing additional solution modules, if you need them to get your backoffice connected.
- We have longstanding experience in industries with specific requirements, such as telecoms, utilities, and leasing.
- We support initiatives that promote onboarding and smooth digitization.
- All of that across European, and not only, markets you operate.
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