Time and again, new examples of digitalization have emerged in the world of corporate payments. Mobile payments. Corporate and virtual cards. And, of course, electronic invoicing.
Sure, electronic invoicing is hardly new anymore. Companies have been digitizing their invoice processes by ditching paper for PDFs for decades.
But due to advancements in technology the standard of modern e-invoicing has reached new heights, fast becoming a must-have for businesses across the globe.
Businesses are now embracing e-invoicing, making the switch from PDFs to a structured data process.
This type of structured data solution supports customers looking to streamline their invoicing processes, reducing costs and improving efficiency.
But what exactly is e-invoicing and what does it entail?
Join us as we take an in-depth look at e-invoicing and why every business should be jumping on board.
What is e-invoicing?
Simply put, 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 onto our next question.
What is an e-invoice?
An electronic invoice is a document that facilitates a seamless exchange of information between a supplier and a buyer. It is issued, transmitted, received, processed, and stored using specific data formats. And unlike other types of invoices, an e-invoice remains digital throughout its entire life cycle, from issuance to archiving.
The main differentiating factor between e-invoicing and any other is the format and the way it is processed.
A e-invoice is:
- Structured invoice data issued in Electronic Data Interchange (EDI) or XML formats
- Structured invoice data issued using standard Internet-based web forms
An e-invoice is not:
- Unstructured invoice data issued in PDF or Word formats
- Paper invoices sent via fax machines
- Scanned paper invoices
What information does an e-invoice include?
As with regular paper invoices, an e-invoice contains information relating to the sale of products or services.
To be compliant, e-invoices need to contain specific information.
E-invoices must include:
- Invoice number
- Issue date
- VAT rate
- Amount owed or paid, excluding VAT
- Total amount of VAT charged
- Supplier’s VAT number
- Description of the product/service
- Quantity of product/service sold
- Price
- Time of supply
- Supplier’s name and address
- Customer’s name and address
- Any discounts applied
Key features of e-invoices
The stand-out differentiating feature of e-invoices is that they use a structured data set. This means they are delivered in a specified and standardized format.
Here are the main features of e-invoices:
E-invoice formats
The major reason behind standardized formats is to ensure consistency for e-invoice structure and content. This enables the seamless exchange of data between different systems.
Some of the more widely used e-invoicing formats include:
- EDIFACT
EDIFACT serves as a worldwide standard for electronic data interchange (EDI), and is used across many industries. - JSON (Javascript Object Notation)
JSON is most commonly associated with web apps, but is now becoming popular with electronic invoicing because it's straightforward and works well with modern computer languages.
- XML (eXtensible Markup Language)
XML is best known for its ability to organize and describe data in a way that people can easily read. It's very handy for electronic invoicing because it can adapt to different needs and add extra information as needed.
E-invoice standards
On top of the formats used, 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 far from an exhaustive 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.
Here’s a full list of e-invoicing factsheets by country in 2023.
E-invoicing: The benefits
So, we know that across the world, e-invoicing is becoming the norm.
In fact, it’s even a requirement in some countries. This has led to a ramp-up of interest and attention in the topic and the available solutions.
The adoption of electronic invoicing has huge benefits to businesses of all shapes and sizes.
In today’s business landscape, getting to grips with e-invoicing is becoming increasingly crucial as the demand for streamlined solutions grows.
Here are the benefits:
- Cost-savings
A recent report revealed that a switch to e-invoicing will result in cost savings of between 60-80% for the typical business.
Savings on resources also helps your bottom line. If you don’t need to print invoices out, post them or archive them, you’ll be saving on costs and pocketing the money you would otherwise be spending. That’s not to mention the reduced time spent on admin.
- Standardization across the board
For all parties, there is one clear advantage: standardization. It doesn’t make sense to use a differently structured invoice which each and every supplier or even each individual order.
- Stepping closer to sustainability
Like any other form of digitalization, you can immediately reduce your use of paper and other physical supplies. This can add up over time and is a great step towards taking a more sustainable approach with your business.
- Automation
By automating your processes you can save money, time and resources spent on manual methods. You’ll produce higher quality data, hugely reduce admin, speed up processes, and improve efficiencies business-wide.
- Safe and secure data
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 so when compared to physical documents.
- Trackable and traceable
Not only is e-invoicing more secure, it is also more easy to track. The transaction history can be traced across its entire journey, offering peace of mind and a means of evidence.
Where is e-invoicing being used?
This year has proven one thing: e-invoicing mandates have no borders or countries.
E-invoicing is being used all over the world.
A total of 31 countries in the EU have implemented an e-invoicing solution and more than 83 countries worldwide have introduced e-invoicing regulations so far – many of these mandatory.
Where AirPlus comes in.
E-invoices are just one part of the wider trend of digitalization in corporate finance. Through this digitalization, new efficiencies can be achieved across your company, enabling savings in both cost and effort.
Here at AirPlus, we already offer a structured data solution – namely our eBilling service.
Our automatic processing of billing data comes with a whole host of benefits for your business.
Banner photo by Christin Hume on Unsplash
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[2] https://www.bloomberg.com/graphics/2021-europe-travel-night-trains-flights/
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