What is e-Invoicing?
In its Directive 2014/55/EU, the European Commission defined e-invoicing as the exchange of electronic invoices that are issued, transmitted and received in a structured data format. They are processed automatically or digitally, i.e. without manual input. The EU authority also defined binding “core elements” for electronic invoices. These include: The identifier of the invoice, period of the invoice, designation of seller, buyer, payee and seller’s tax representative, order reference, delivery details, method of payment execution, details of surcharges or discounts, breakdown of the individual line items of the invoice, total amount of the invoice and the separate display of VAT.
In addition, the European Committee for Standardisation (CEN) has defined a framework for structured invoices via the e-invoicing standard EN16931, which, however, allows each EU member state to approve its own specifications – the Core Invoice Usage Specification (CIUS):
- ZUGFeRD and XRechnung in Germany
- Factur-X in France
- XML format according to competent authority (NAV) in Hungary
- FatturaPA in Italy
- Facturae in Spain
Implementation of e-Invoicing.
In order to ensure that invoice-relevant data can be exchanged regardless of the technology used in the company, interoperability and therefore the compatibility of content (semantics), format (syntax) and transmission method of the electronic invoice must be given.
Semantic interoperability means that the document contains the above-mentioned core elements and their content-related meaning remains unambiguous – regardless of how they are physically represented or transmitted. Syntactic interoperability means that the invoice data is presented in a format that can be exchanged between the invoicing party and the recipient and can be digitally processed by both without any media disruption. A smooth process at the syntactic level is ensured either through the use of a common syntax or – increasingly – through the technical assignment (mapping) of the different syntax types. As a rule, hybrid formats are used, i.e. an invoice is sent both as a printable and readable document and as a structured, machine-readable file only.
B2G transmission channels for Germany are:
- Web capture with manual invoice data generation at the federal government’s invoice receipt platforms (ZRE and OZG-RE)
- Logging on to government platforms and uploading e-invoices from external systems
- Use of the non-profit Pan-European Public Procurement Online network, PEPPOL, for the export and import of electronic invoices from different systems. PEPPOL is particularly suitable for the mass transmission of invoices, but also for smaller companies
- E-mail dispatch for the transmission of externally generated invoices to the federal government’s platforms
Challenges of e-Invoicing?
On the government side, the electronic exchange of invoices is becoming more and more popular and formalized through legislation – not only in public procurement (B2G), but also in B2B and B2C. Therefore, the introduction and concrete implementation of e-invoicing should take into account:
In electronic data interchange (EDI), certain industries often prefer certain formats. For example, invoices can be sent and received via EDI standards such as EDIFACT, VDA, UBL 2.1, UN/CEFACT CII (Cross Industry Invoice) or ANSI.X12 and their subsets. To make matters worse, even when identical formats are used, different versions are used. It is therefore advisable to agree on a common format with business partners in advance or to use appropriate EDI software.
Restrictions due to existing ERP systems
Not all ERP systems offer the option of importing and exporting electronic invoices or the necessary preliminary products (e.g. PDF/A-3). In the context of e-invoicing, ERP systems should be able, among other things, to check the electronic document of the outgoing invoice for the required core elements and automatically add the missing data if necessary. A document should also be generated for the incoming invoice that no longer requires manual input.
Compliance with procedural requirements
More and more countries are enacting mandatory requirements for electronic invoicing. This means that invoice providers and recipients are obliged to design digital invoices in compliance with the law, among other things with regard to required core elements (see above), formats, encryption and signing as well as other process specifications: Which invoice receipt platforms must be used, which private platform providers are certified, which certificates must be attached, which transmission paths must be followed? In order to ensure compliance with existing regulations, it is advisable to use specialised tools and appropriate advice.
Increasing prioritisation of digital invoicing in the EU
The pioneer in e-invoicing in the EU is Italy (FatturaPA), but Hungary, Poland and France are also similarly active. For all internationally oriented companies, it is therefore necessary to deal with the respective national requirements. This is all the more true as a prioritisation of clearing centres over post-audit is emerging in the EU. A trend that makes the use of EDI-based solutions imperative.
Benefits of e-Invoicing?
E-invoicing aims to automatically check and process all outgoing and incoming invoices. The optimisation of all billing processes brings the following benefits for companies:
Significant savings potential
Digital invoice management from receipt to approval and central archiving of invoices significantly reduce expenses compared to the paper-based process – costs for materials, printing, postage and processing are eliminated entirely, and cash discounts can be generated thanks to fast invoice payment. The time and effort required is also reduced because electronically generated invoices do not contain any input errors and therefore have to undergo fewer correction steps, process times are generally shortened, and fewer personnel resources are tied up.
Higher data quality
The exchange of electronic invoices promotes transparency in payment transactions. Automatic data processing and consistent validation of the invoice data entered increase the data quality and therefore the trustworthiness of the company’s information both with regard to (tax) authorities and business partners. Invoices and liabilities can be calculated reliably and financial analyses are more meaningful. If companies use the PEPPOL service, the correct delivery of the invoice is documented with a confirmation of receipt – in contrast to sending the invoice by e-mail, for example.
Improved cash flow
The ability to track the status of invoices in real time via e-invoicing processes leads to better control of financial flows and ultimately to more company liquidity. This means that accounts payable can be held back until the last moment of the payment deadline, immediate payments can be released if discount terms are favourable, and outstanding balances can be collected more quickly through automated collection processes. In addition, the investment in specialised software, the implementation of optimised processes and the training of employees usually pays for itself in less than a year.
What solution does Lobster offer?
As part of its data integration software Lobster_data, Lobster offers ready-made solutions for generating and processing electronic invoices in the formats ZUGFeRD for Germany, FatturaPA for Italy, XML for the competent tax and customs authority NAV in Hungary and Facturae in Spain.
The PEPPOL (Pan-European Public Procurement Online) standard, which is used in public procurement procedures within the European Union, is also supported. In this context, Lobster_data recommends for users to cooperate with the PEPPOL Access Point certified partner Storecove and offers a profile package for its API accordingly.
The handling of certificates and the configuration of communication channels are also no challenge for Lobster_data users. This is because communication via REST and the protocols HTTPS or AS2 or AS4, which are frequently used in connection with e-invoicing, are natively supported in Lobster_data. Each individual communication channel is centrally maintained in the partner administration and is therefore available for both receiving and sending data.
Lobster also offers modules for pre- and post-processing for ERP systems that are not able to meet the PDF/A-3 archiving standard required for creation.