How do you implement electronic invoice processing between companies in Europe?

January 9th, 2024
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Electronic invoicing in Europe is progressively becoming the norm, regardless of company size. This is notably due to the regulatory obligations that are multiplying in this field. Beyond compliance with standards, e-invoicing promise efficiency gains, cost reductions, and improved environmental performance. To guarantee the success of such an approach, here are five key steps to follow.

What is an electronic invoice?
The European Commission shares the following definition: "E-invoicing is the electronic exchange of an invoice document between a supplier and a buyer. An e-invoice is an invoice that has been issued, transmitted and received in a structured data format which allows for its automatic and electronic processing."

Electronic invoicing is accelerating across Europe

In the past few years, electronic invoice in Europe has become widespread. Directive 2014/55/EU of 16 April 2014 requires the use of e-invoicing in public procurement contracts in the Member States of the European Union since 2020. In other words, European public administrations are required to receive and process electronic invoices that comply with the European standard. In addition to harmonising EU invoicing procedures, this directive mostly aims to promote the widespread adoption of electronic invoicing in Europe.

With regard to B2B (Business-to-Business) transactions, an e-invoicing solution is recommended and framed by VAT Directive 2010/45/EU of 13 July 2010. Electronic invoicing can then only apply subject to acceptance by the recipient.

On this point, maturity differs between EU member states. As an example, Italy was the first country to implement mandatory e-invoicing for public sector bodies in 2014, then extended this obligation to companies in 2019. Some governments want to follow this momentum. France, Belgium, and Poland in particular are preparing to gradually make B2B e-invoicing mandatory from 2024 onwards.

In other countries, such as Spain and Sweden for instance, B2B electronic invoicing is voluntary. However, some states are more or less receptive to it. This is the case in Finland and Norway where, although it is not mandatory, this practice is widespread.

The benefits of electronic invoicing in Europe

Whilst the tax authorities seek to steer government action and improve fraud detection through electronic invoicing, they also aim to strengthen business competitiveness. And for good reason as they also derive multiple benefits from it.

Efficiency gains

Implementing electronic invoicing in Europe improves overall process efficiency. Processing is carried out more quickly, with less risk of data entry errors. In addition, automating certain tasks (such as entry, verification and purchase order/invoice matching) enables teams to focus on higher value-added missions.

Cost reduction

By dematerialising invoice flows, businesses can reduce direct and indirect costs. This eliminates paper and all the steps involved (printing, postage, shipping, archiving, etc.) while also automating other administrative tasks.

Faster processing

With e-invoicing, invoice receipt times (and thus supplier payment times) are shortened. This is explained by the immediacy of electronic tools, but also by the processing efficiency and the reduced number of errors.

Securing processes

Electronic invoicing involves sending invoices via private networks or specific protocols, using an electronic signature and implementing a compliant archiving system. These are all steps that help strengthen the security of e-invoices.

Reduced carbon footprint

By reducing paper and energy consumption related to producing invoices, companies reduce their carbon footprint. According to a study conducted by Basware, switching from sending paper invoices to e-invoicing reduces CO2 emissions by around 36%!

How to implement electronic invoicing in Europe?

Implementing e-invoicing in a company is a complex project that should not be underestimated. It involves regulatory, technical and human transformations. Here are the five main steps.

1. Taking stock of the current situation

The project must start with a comprehensive assessment of the stakeholders, processes and systems involved in invoice management. Such mapping is essential to get a clear picture of existing practices, the application landscape and flows in order to make appropriate decisions.

2. Formulating needs

The second step involves specifying what the needs and expectations for such a project are. To draft the appropriate specification, it is necessary to consider the following:

· The preferred invoice format;

· Exchange methods;

· The information that should appear on these documents (both from a customer and supplier perspective);

· The technologies needed to automatically provide certain information to suppliers;

· The type of partner (dematerialisation platform or dematerialisation operator);

· Etc.

3. Setting objectives

As mentioned earlier, digitising invoices addresses many issues. This is why it is important to set a course for this project, with objectives and key performance indicators. This could be reducing delays, lowering costs, improving DSO (Days Sales Outstanding), etc.

4. Managing change

Implementing such a large-scale project requires change management. It is imperative to gain sufficient support from stakeholders, be it from employees, customers, suppliers and third parties (partners and/or service providers). Internally, it is important to explain the strategic challenges from the outset of the project, then communicate regularly and support users step-by-step. Externally, it is equally crucial to involve and inform contacts about this project.

5. Choosing the right solution

The final step involves making technical choices. Companies can either opt for a new solution or develop the solution they already have. On top of meeting the expectations specified beforehand, this solution must have an adequate functional coverage.

Electronic invoicing is a central step in dematerialising processes in companies and, more broadly, in their digital transformation. It is a tremendous milestone to reach in order to improve a company’s productivity and its relationships with suppliers. Today, implementing electronic invoicing in Europe and elsewhere paves the way for digitising other processes, starting with the Procure-to-Pay process.

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