For B2B, e-invoicing is already mandatory in some European countries. It is currently being discussed in Germany and, at least in the B2G (business-to-government) sector, it is already mandatory in some cases. We can assume that the business world will soon follow suit. For companies that trade internationally, there will be no avoiding e-invoicing.
But what exactly is e-invoicing? E-invoicing means that a machine-readable format is used for invoices, allowing both vendors and suppliers to fully automate their processes. Invoices must be created, transmitted, and received in a structured data format that enables recipients to process them automatically and electronically. There are various software solutions for creating e-invoices within an ERP system and sending them via one of the possible exchange methods.
Reducing lead times by 50 to 60 percent
Recipients’ software systems, in turn, accept the electronic invoices, process, and integrate them into the company’s own ordering, accounting, and processing systems. Businesses that have installed automated electronic invoice processing systems have reported lead-time reductions of between 50 and 60 percent. They have also seen a significant increase in transparency (which is an advantage in monthly and annual financial statements) and better cash discount utilization. As a software manufacturer specializing in accounts payable invoice automation (APIA), xSuite Group provides its customers with e-invoicing support. Its “Interface E-Invoice” solution retrieves any format of incoming XML invoices, reads their content, and automatically transfers the relevant information to the appropriate fields in SAP. Digital workflows, such as developed by the xSuite Group, then carry out the subsequent processing of the invoice.
Foundation for digital transformation
In the past, a great deal of manual work was required at the various stages of the invoice processing workflow. However, when digital workflow solutions perform these tedious error-prone tasks, companies experience benefits far beyond accounting departments. Automated invoice processing is therefore a crucial step for companies seeking to fully exploit their potential for digitalization and automation. It forms the foundation for digital transformation — and this transformation cannot take place without digitization. Remote work, which has of course become essential over the past two years, is only as effective as in-office work if business documents are generated, sent, and filed in digital, paperless form. This is particularly evident in the case of invoices, an extremely common type of company document. So, the more widely e-invoicing is implemented, the better it is for digitization — and therefore for digital transformation.
Another motivation for introducing e-invoicing processes is the need to comply with ever-changing regulatory and legal requirements. VAT or goods and services taxes now exist all over the world and have rapidly become the most important transaction taxes. They have also become a major source of tax fraud. This is because companies that do not correctly declare their total transaction volume avoid paying some of their tax, which ultimately leads to a growing VAT shortfall.
Mandatory e-invoicing, which is currently being hotly debated as part of a digital reporting system in the EU, can counteract this.
Format and exchange methods
XML has become the standard format globally for electronic invoices, including XRechnung, ZUGFeRD, PEPPOL BIS Billing 3.0, Factur-X, and InvoiceNow. Online portals, ideally those based on Pan-European Public Procurement OnLine (PEPPOL), are the preferred exchange method. Connected organizations can use the PEPPOL network to securely exchange business documents and send electronic invoices to businesses and public-sector organizations. PEPPOL is comparable to registered mail with delivery receipts. According to experts, it will establish itself as the delivery method of the future; indeed, it is also already being used in many places beyond the EU’s borders.
You can find more information on e-invoicing here.