What is e-invoicing and why is it important?

Time and again, new examples of digitalization have appeared in the world of corporate payments. These developments, powered by structured data, have enabled new levels of automation and convenience that can lead to substantial savings for businesses.

And now there is a new hot topic: e-invoicing.

As we’ve already developed an eBilling process at scale for our customers, we are in an ideal position to use help them take the next step into e-invoicing.

But for today, we’ll be taking a look at why this is important and how we are taking notice.

What is electronic invoicing?

An electronic invoice (e-invoice) is an invoice issued, transmitted, and received in a structured digital format (like XML or EDI) that allows for automatic computer processing.

As with regular invoices, their digital 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: Invoices are 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.

And between the EU Directive on electronic invoicing in public procurement (Directive 2014/55/EU) ^[1] , the ViDA (VAT in the Digital Age) reforms and other EU-wide cross-border digital reporting requirements, this topic is incredibly important to stay on top of. 

With all said, more than 60 countries worldwide have introduced e-invoicing regulations so far – many of these mandatory. And it’s safe to assume that more governments will start adopting this standard as the regulations continue to roll out.

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 that meet the definition of ‘structured data sets’ are EDI and XML. These are not readable by humans as they are designed to be processed by computers. More specifically, 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/ text-based representation of the invoice (e.g. scanned JPG or PDF formats) does not meet the European Commission's requirements for an electronic invoice. However, some companies choose to include image-based or physical invoices alongside the electronic version for either ease of use or for archiving purposes.

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), 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.

How e-invoices work

E-invoices work in the same way as their regular counterparts. We know that they need to be sent electronically and in a specified format, but ultimately serve the same purpose.

Here’s a general overview of the process:

The seller collects all the necessary details and data relating to the transaction and feeds it into a platform. The platform then takes this information and translates into a format that meets the e-invoicing standards. The invoice then follows the standard process of the business.

On the other end, the e-invoice will be fed into the financial platform which will read and present the details in a readable format.

So, 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 for all parties: the buyer, the supplier, and the government.

Benefits of e-invoices

Standardization

Uniform invoice layouts eliminate cross-border friction.

• Unified structures: Replaces manual formatting across different suppliers.
  
  
• Consistent data: Streamlines incoming order processing uniformly.
  
  

Efficiency

Digital processing replaces physical paperwork workflows.

• Resource reduction: Eradicates paper use and physical supply dependencies.
  
  
• Sustainability gains: Lowers environmental impact across business operations.
  
  

Cost Savings

Operational expense reductions improve bottom-line margins.

• Zero overhead: Eliminates printing, mailing, and physical archiving fees.
  
  
• Reduced labor: Minimizes time spent on manual administrative tasks.
  
  

Automation

Structured data pathways sync instantly with financial systems.

• System integration: Connects with modern ERP, Coupa, and T&E software.
  
  
• Instant processing: Speeds up verification loops without human intervention.
  
  

Enhanced Security

Private network protocols shield sensitive transactional data.

• Encrypted transit: Protects information better than standard PDF files.
  
  
• Access control: Restricts visibility to validated trading partners only.
  
  

Traceability

End-to-end digital tracking logs every transaction milestone.

• Audit readiness: Generates a clear, legal chain of evidence.
  
  
• Real-time visibility: Monitors invoice status throughout the processing journey.

Where we come 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.

As mentioned, there is very little consensus on what form a standardized approach can take, and so localized solutions will need to be developed for each market.

We’ll be continuing to monitor the situation until then, in order to provide an optimal solution that enables businesses to meet the requirements set out by the regulations once that becomes clear.

Currently, AirPlus offers XRechnung exclusively to our public sector customers who use the AirPlus Company Account via the PEPPOL network. 

From January 1, 2027, AirPlus will offer XRechnung (e-invoicing) for all products and services where we act as the "legal invoice issuer" in Germany. 

Electronic invoicing are an interesting topic, but so too is electronic mailing. Subscribe now for our newsletter to get the latest blog posts and more to your inbox.

[1] https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0055