How E-invoicing Standards in Europe Are Changing

The Current and Future State of EU E-invoicing Requirements

E-invoicing standards in Europe are highly fragmented, with reporting requirements varying from border to border in some cases. As a result, businesses face mounting barriers to check and recheck that their invoices and tax records are accurate.

With the recent consultation on e-invoicing having closed earlier this year, change is on the way. If this isn’t enough, individual member states are set to make sweeping changes to B2B invoice requirements, meaning electronic invoicing is no longer a B2G-only concern.

That’s why, in this article, we’re looking at the current and future state of e-invoicing standards in Europe and how they could impact your business. Read on to learn more and discover the essentials of e-invoicing software to help future-proof your business.

The context behind e-invoicing standards in Europe:

Passed in 2014, the EU’s e-invoicing directive took full effect in April 2020. Denmark was one of the technology’s earliest adopters. However, the directive was the first to mandate electronic invoicing across all EU public sector operations.

It’s easy to see why. For example, e-invoicing systems can help firms save up to 80% on sorting and processing paper invoices. Interestingly, depending on the specific e-invoicing software, this translates into between 48p and £5.40 of savings per transaction!

As a result, e-invoicing has been on the rise in the private sector, too. Thanks to cloud computing, businesses can eliminate manual processing inefficiencies, create more reliable tax reports, and save money from printing, posting and archiving physical files. Not to mention the time savings from e-invoices being sent to customers in an instant.

Yet, three years on, EU e-invoicing requirements remain highly fragmented. This is because member states often implemented diverse standards from one another, meaning businesses have to juggle a complex web of competing file formats and reporting requirements when generating and processing electronic invoices.

How e-invoicing standards in Europe compare:

To see how, let’s compare e-invoicing standards in Europe to one another. Note: The below is accurate as of September 2023 but is subject to change.

For instance, while France, Germany, Italy, Spain and the UK all follow the European Standard for e-invoices (EN), each has a different method for doing so, including its own platforms and competing file formats. What’s more, Germany, Spain, the Netherlands and the UK have more than one e-invoicing platform depending on which public authority is being invoiced.

Similarly, some member states are further ahead in mandating certain e-invoicing standards than others. This is because, in the long term, many national governments are looking to use e-invoices to improve tax collection and VAT payment records.

For example, in Italy, B2B e-invoicing for VAT-liable organisations has been mandatory since 2019. Meanwhile, France and Germany have yet to launch similar schemes (currently planned for 2024 and 2025, respectively). By contrast, just north of the border, mandatory B2B e-invoicing in Switzerland (along with many others) doesn’t exist, so e-invoicing standards in Europe can be extremely complicated, depending on where you’re operating.

EU e-invoicing requirements across 2024 and beyond

EU e-invoicing requirements will likely change soon as both public and private sectors undergo further digital transformations.. Earlier this year, the EU Commission called for evidence on e-invoicing trends to help determine whether the current e-invoicing directive still works effectively. The consultation is now closed, with results expected later this year.

Given the differences in the scale and depth of e-invoicing across member states, it’s possible that future EU e-invoicing requirements could include B2B invoicing, similar to Italy. Moreover, the EU Commission has plans to increase the adoption of instant payments, while the European Central Bank is considering a digital euro.

Combined, this could mean subsequent e-invoicing standards in Europe could include these new technologies. Here, customers would receive an e-invoice from a supplier and automatically settle the balance, with funds (minus VAT) arriving in seconds via an instant payment. Of course, nothing has been confirmed so far and reaching this point will take some time.

At the very least, EU e-invoicing requirements will likely become more standardised. Namely, by encouraging a single platform/provider for all public procurement, file type or other technical element across borders. This should help businesses working across multiple EU countries simplify their financial admin and save money at the same time.

Compliance ready: What to look for in e-invoicing software

With so many competing file formats and e-invoicing standards in Europe, choosing the right e-invoicing software is critical.

For example, accounting functions are the most important element for 89% of ERP software users, according to a recent survey. Yet, some platforms lack critical features, meaning firms need additional integrations just to complete core AR/AP functions.

Implementing ERP solutions can already take up to 12 months, and nearly 30% launch later than expected, so they’re a significant business investment. If you’re looking for e-invoicing software that can scale with your business needs, here’s a quick overview of the core features that any reliable platform should have:

1. Interoperability

Until e-invoicing standards in Europe become more uniform, business leaders will need an e-invoicing solution that can generate a variety of file types and formats. For example, XML is one of the more popular formats, but some countries like the UK still use comma-delimited ASCII spreadsheets or even PDF documents. So, having e-invoicing software that can generate and process each file type is vital. Otherwise, you’ll need to build an increasingly complex tech stack of different platforms, adding time and stress to your back-end admin processes where there should be none.

Look for solutions that comply with the European standard on e-invoicing. Namely, the UBL 2.1 and CII XML messaging standards that mean invoice data can be easily converted from one format into another.

2. Deep integration

As extensions of AR and AP functions, e-invoices span the entirety of every organisation. While it can be tempting to lead with a platform that works best for your finance team, other departments like sales and logistics will also need to send, receive and process them. As a result, any e-invoicing software should offer deep integrations with your existing tech stack.

Doing so means you’ll be able to generate, send, receive and process fully compliant e-invoices seamlessly in your daily operations, limiting your compliance liability and maintaining productivity at the same time.

3. Security

Finally, e-invoices hold highly sensitive data on your company, including employee or customer data, payment information, and more. Given this, reliable security features should be a core part of any e-invoicing software.

In fact, according to Deloitte data, cybercriminals and other threat actors are increasingly looking for weak points in supply chain IT systems. With the average cost of data breaches across the globe rising 15% in recent years to $4.45 million, the stakes have never been higher.

All-in-one e-invoicing solutions sometimes offer payment capabilities, so look for modern payment standards, like ISO technical specifications, that follow best practices for data handling.

How Formpipe can help you navigate the e-invoicing standards in Europe

Formpipe’s Lasernet Connector for Microsoft’s Dynamics 365 Business Central is a streamlined report and document creation tool that can help organisations create, manage and distribute branded and compliant electronic invoices in any required format across Europe.

With native integration with the Microsoft Cloud ecosystem and an ISO 27001-compliant architecture, you can quickly and securely send and receive e-invoices. Moreover, the software offers granular user controls, meaning you can tailor your electronic invoices to customer preferences or adapt to EU e-invoicing requirements as they evolve. As national governments slowly mandate B2B e-invoices, Lasernet can help you update your AP and AR functions effortlessly and continue trading without disruption.

Our Microsoft Business Central Connector also integrates with the rest of Formpipe’s product suite, enabling you to access Formpipe’s digital archive solution to preserve your financial data and maintain a clean audit trail at all times. 

Access scalable e-invoicing software from Formpipe today

Formpipe is an experienced document management software and digital archiving vendor founded in 2004. Lasernet, our flagship solution, provides companies with a scalable and secure end-to-end communication platform to help them build trust with customers and partnering brands.

Built with real-world experience and market-leading innovation, we can help you realise new efficiencies and easily navigate EU e-invoicing requirements.

Michael Buch Wibe and our ERP Sales representatives will be at Directions EMEA 2023 in Lyon, France, from November 1-3. Visit booth B33 to learn more about how we can help you improve your ERP system.

To learn more, get in touch today.