e-invoicing

E-invoicing is a term that refers to electronic invoicing. Unlike traditional paper-based invoicing, e-invoices are created, sent and received electronically.

E-invoicing offers numerous benefits for companies, including faster and more efficient processing of invoices, greater transparency and accuracy in accounting and improved cost control.

But how exactly does e-invoicing work? What is the most important information on this topic?

  • Formats for e-invoicing: There are various formats for e-invoicing, including XML, EDI, PDF and UBL. It is important that companies ensure they are using the right format for their specific needs.
  • Legal requirements: In some countries, there are specific legal requirements for e-invoicing. Companies should therefore always inform themselves about the relevant regulations in their country.
  • Security: E-invoicing must be secure. Companies should ensure that they implement all necessary security measures to protect their data. This includes encryption and authentication.
  • Automation: E-invoicing can be integrated into an automated process. When companies automate their e-invoicing processes, they can speed up their processing and reduce errors.
  • Integration: E-invoicing systems should be seamlessly integrated into other company systems. This allows companies to fully utilise the benefits of e-invoicing.

E-invoicing is an important development in the world of accounting and business processes. It offers companies a faster, more efficient and more secure way of issuing invoices. If you are not yet using e-invoicing systems, you should consider whether it makes sense for your organisation and what benefits you could gain from it.

electronic invoices

Germany is facing a significant change in the area of invoicing, particularly in the B2B sector. Electronic invoices should be mandatory in the future. The recently passed Growth Opportunities Act, which was passed by the Bundestag on 17 November 2023, provides for VAT regulations that are intended to regulate the mandatory introduction of electronic invoices (e-invoices) in the B2B sector. However, on 24 November 2023, the Bundesrat referred the law to the mediation committee, which means further discussions about the planned changes.

Background to the amendment

The initiative is part of the EU Commission and its ViDA initiative. The aim is to implement an electronic reporting system to replace the previous recapitulative statements, among other things. The timetable envisages that these changes will be implemented by 2028. A revised definition of the term “electronic invoices” is already planned from 2024.

A discussion draft on mandatory electronic invoicing has been circulating in Germany since mid-April. This draft was included in the ministerial draft of the Growth Opportunities Act and subsequently in the government draft. The implementation of mandatory e-invoicing required explicit approval from the EU Council, which was granted in July 2023.

Electronic invoices – What is changing?

The planned changes involve new definitions of terms. From 1 January 2025, a distinction will be made between electronic invoices (e-invoices) and other invoices. An e-invoice is defined as a structured electronic format that complies with the European standard for electronic invoicing.

It is important to note that the structured electronic format can also be agreed between the invoice issuer and invoice recipient. In this case, the information required under the VAT Act must be extracted into a format that complies with the European standard.

From 2025, a PDF invoice sent by email will no longer be accepted as an e-invoice.

Obligation to issue e-invoices

From 1 January 2025, companies that provide services to other companies are obliged to issue invoices electronically. This obligation applies to B2B transactions where the supplier and recipient are based in Germany.

The transitional regulations allow companies to use paper invoices for B2B transactions until the end of 2026. Electronic invoices that do not comply with the new format are also permitted during this period, but only with the consent of the invoice recipient. These regulations will remain in place until the end of 2027, but with the additional condition that the invoice issuer has a maximum turnover of EUR 800,000 in the previous year.

What applies to invoice recipients?

From 1 January 2025, domestic business invoice recipients must be able to receive and process electronic invoices in accordance with the new requirements. Unlike previously, the invoice recipient’s consent is no longer required for all e-invoices.

Exceptions and outlook

Not all invoices must be electronic. Small-value invoices and certain other cases can still be sent in paper form.

The introduction of mandatory e-invoicing may be a challenge for companies, but it offers considerable efficiency benefits. The changeover requires time and resources, so it is advisable to implement project structures at an early stage.

The Federal Council has proposed postponing the implementation by two years, as there are doubts about the timely technical implementation. This proposal could also affect the planned introduction of a transaction-based cross-border reporting system.

Time is of the essence and companies should prepare for the inevitable change in order to fulfil the legal requirements and take advantage of the benefits of electronic invoicing.

introducing e-invoicing

In times of advancing digitalisation and automation, it is more important than ever for companies to optimise their business processes. One way to achieve this is through introducing e-invoicing.

In the following, we will look at the advantages of this practice and why every company should think about it.

  1. Time and cost savings: One of the biggest advantages of e-invoicing is that it saves time and money. Compared to manual invoicing, the effort of printing, enveloping and sending invoices is eliminated. Instead, invoicing is done automatically, resulting in significant time savings. In addition, e-invoicing also allows companies to save costs by using less paper, postage and printer ink.
  2. Better monitoring of invoices: Electronic invoicing enables better monitoring of invoices as all invoices can be stored centrally and retrieved quickly. This allows the company to keep track of outstanding invoices at all times and to react more quickly if necessary.
  3. Higher data security: Electronic invoicing offers higher data security than manual invoicing. Paper invoices can easily be lost or stolen, leading to security risks. Electronic invoices, on the other hand, are usually encrypted and can only be opened by authorised persons.
  4. Easier integration with other business processes: Electronic invoices are easier to integrate with other business processes than paper invoices. For example, they can be transferred directly into the company’s accounting software. This simplifies accounting and minimises errors.
  5. Positive impact on the environment: Electronic invoicing also has a positive impact on the environment. By saving paper, printer ink and postage, less waste is produced and the company’s carbon footprint is reduced.

In summary, there are many advantages to adopting e-invoicing. Time and cost savings, better monitoring of invoices, increased data security, easier integration with other business processes and a positive impact on the environment are just some of the reasons why every company should consider introducing e-invoicing.