What is an electronic invoice? E-invoice

Do you know what an electronic invoice is? The electronic invoice or e-Invoice is a document with the same validity as a paper invoice, but it is issued and received in electronic format. Despite this, there are different types of digital invoices depending on the regulations of each country, and in many cases the PDF is not considered an electronic invoice. In this article, we solve the most common doubts and tell you how you can create electronic invoices for free.

What is an electronic invoice? Technical requirements, formats, benefits, etc.

Let’s start at the beginning. This is a type of invoicing that started to be used relatively recently, as it has been closely linked to the use of new technologies. Different regulations are appearing all over the world, limiting paper invoices. In many countries its use is mandatory for suppliers to the public administration, and it is increasingly being implemented for all transactions, among all companies.

The electronic invoice is an invoice in digital format, and different types of electronic invoices can be considered:

What is the electronic invoice meaning?

An electronic invoice must meet certain legal standards (we will talk about them later), since, as we have seen, it has a specific regulation. Usually, the format most used by companies is PDF. This format is easily accessible to everyone, but it is gradually losing prominence due to its limitations when interpreted by computer systems.

With the appearance of the new electronic invoicing regulations at a global level, the most common electronic invoice format is XML. This format is a UN standard for worldwide electronic data interchange. It guarantees the security, privacy, and veracity of data. It is encoded and understandable by any computer with the appropriate software.

Defining electronic invoicing: Technical requirements

In view of the above, there are generally two types of electronic invoices:

Structured electronic invoices format

These are invoices created in computer language. They are easily understood by computer systems, i.e. they are encoded to automate the management of information by the computer. For this reason, they are typically created in XML. There are many examples worldwide such as UBL (international), Facture-X (France), XRechnung (Germany), Facturae (Spain), among many others.

Unstructured electronic invoices format

These are invoices that must be processed manually by the receiver (for example, a PDF document).

Although we are talking about PDF as an electronic invoice, it is a format that is not considered as an electronic invoice due to the new regulations that are appearing globally.

Why use electronic invoicing in a structured format?

Electronic invoices in structured format are very easy for a computer system to encode, record and archive. On the other hand, with electronic invoices in unstructured format, it must be a person who, once received, encodes, records and archives them. For this reason, their use is being restricted, as it is very difficult to process the data in a PDF correctly, quickly and without errors. If you are looking to speed up procedures and times, the first type is undoubtedly more useful.

Electronic Invoice Formats: Examples

These are some of the most popular and widely used electronic invoice formats:

UBL: This is the electronic invoice format of choice in many countries in the European Union and other regions of the world. It is the format used in the Peppol electronic document exchange network.
EDIFACT: It is widely used in certain sectors such as the automotive or food distribution, although it is falling into disuse, as regulations are not taking it into account.
CII: The Cross Industry Invoice format is a format created by United Nations working groups and only used in Europe.

What is the UBL format?

However, these are generic formats and, as mentioned above, there are a multitude of electronic invoice formats specific to each country or region.

What data must an e-Invoice contain?

Like any paper invoice, the electronic invoice must necessarily include a series of data. For example:

It must be numbered. It must contain the date of issuance.
It must contain the fiscal data of the person issuing and receiving the invoice.
The type of operations that are being invoiced and their date.
Tax information (VAT, IRPF, etc.)
The amount to be paid.

In many cases, e-invoices in structured format must contain other specific data such as routing codes (e.g. Peppol Id, etc.). This varies depending on the receiver or the network through which the e-invoice is processed.

How does electronic invoice work?

This is a very generic question, as it depends on many aspects. These are the steps to follow:

First, you must generate the electronic invoice in the correct format for the recipient or the regulations of your country.
Then you must process the invoice through the channel, shipping method or platform where your customer receives the invoices. This may also depend on the recipient or local regulations.
Finally, invoice status changes are exchanged for control purposes.

How to create an electronic invoice?

There are different ways to create an electronic invoice depending on the format you need to work with. As a general rule, you should use a tool that allows you to easily create the electronic invoice in the desired format. Some examples may be an open form mode generator or may be specialized electronic invoicing software.

What is electronic invoice form?

These are free tools that allow you to generate the invoice file. As they are open tools, in many cases created by the public services of a country, they are not usually very user-friendly. In addition, they are very limited and only allow you to generate electronic invoices in very specific formats.

What is e-invoice system?

Electronic invoicing software are much more agile tools for companies. They allow the generation of electronic invoices in different formats and in a much simpler way, they often offer user support and also have many other complementary functionalities to e-invoicing.

B2Brouter is an example of electronic invoicing software. It allows you to generate the electronic invoice in a simple way.

How to create an e-invoice

Can I turn my paper invoices into electronic format?

Theoretically you can, but it is not the safest way. There are systems that allow you to process data from a photograph or PDF (OCR). These systems are not 100% reliable, since it is very complicated to obtain all the information from a “photograph”, when in addition each invoice has a different structure and design.

For this reason, it is essential to use specialized systems. If you have a large volume of invoices, you can integrate your ERP system to automate the whole process.

Integration of e-invoicing with your ERP

What are the benefits and advantages of e-invoicing?

We have already pointed out some advantages: agility, security… But it also minimizes paper consumption and, of course, facilitates the management and mechanization of information. It can be easily integrated with a fully computerized management system. This helps accounting and error reduction. In addition, costs are eliminated and thanks to the ease of archiving, the use of physical space is also reduced. Here are the main advantages:

Reduced costs.
Faster payments.
Time savings.
Removal of paper and manual processing.
Increased accuracy.
Improved cash management.
Improved supplier relationships.
Improved dispute handling.
Improved visibility
Optimized cash management.
Increased productivity.
Improved compliance.

In addition to all these, one of the best advantages of electronic billing and invoicing, is the level of integration you will have with partners, vendors, suppliers and other partnerships within your business.

When is an e-invoice required?

It actually depends on the regulations of each country, as there is no legislation that regulates within global scale. Generally speaking, it is a requirement for all public administrations in the European Union to be ready to receive electronic invoices. In countries such as Spain, Italy, Switzerland, Holland, Germany, Belgium, Denmark and Sweden, electronic invoicing is mandatory for all suppliers of public administration. In the case of Italy, it is also the same for transactions between private companies.

If you need to comply with electronic invoicing regulations in any country, B2Brouter can help you easily, quickly and globally.