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Are e-invoices the future of expense management?

19th Dec 2022
Brought to you by
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Aurelia are the automation and software experts for accountants and finance leads. We want to to...
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E-invoicing is a digital form of invoicing that has been gaining traction in recent years. What makes it a multi-faceted problem but also an exciting place for accountants to add value if they support it, is the rapid growth  in and out of the European Union. This blogpost will explore the benefits, drawbacks, and implications of e-invoicing for expense management and accounting/bookkeeping in Europe and for anyone who does business with European companies or institutions.

E-invoicing revolution | Aurelia on AccountingWeb.co.uk
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What is E-Invoicing?

In its most basic form, e-invoicing is the use of electronic data interchange (EDI) to exchange invoices between businesses. Its main mission is to eliminate paperwork, streamline billing and payment processes, and provide a better overview of money movements for institutions and businesses

There are over 70 countries that have mentioned e-invoicing policy changes in their new directives or at least plans. While in most European countries, it has only been mandatory as a way to send/receive invoices between governmental organisations,the next couple of years will bring some changes in the B2B landscape as well. 

What makes e-invoicing incredibly complex for all parties involved, is that the regulations and standards differ between European countries. For example, Germany is working on their ZUGFeRD format that contains the image of the invoice and an XML file in the e-invoice, while Spain works with the FakturaE e-invoice in a different XML format with no image. Both of them meet the EU standard. As you go through countries the landscape for formats and solutions gets wider every year. We’re here to lift this messy invoicing fog.

The benefits of replacing paper or pdf invoices with e-Invoices

We all know that it’s the small copy+paste errors or missclicks that we spend 2 days searching for. With e-invoice time savings per invoice can easily come down from 15 minutes to 30 seconds. This cannot be achieved with digital images of the invoice such as PDFs. This is one of the things that institutions are trying to sort out. Replacing the physical paper form with a structured digital form allows for more efficient processing and handling, because the steps from there on out to accounting software to a bank payment are still very often laborious. Even more significant savings come from moving away from paper invoices and receipts as it reduces the cost of printing, postage and archiving. 

As a result, e-invoicing completely removes the need for viewing and reading a visual form of the invoice. It also removes the manual work of entering the invoice information into an Access Point system (read: expense management software or an accounting tool). As a result, we are likely to see massive increases in efficiency and reduced errors in data entry.

As a third and final point, it is also becoming a matter of credibility and reputation — being in the forefront of digitisation and e-invoicing as an accountant very much puts you in a favourable position as you can provide a service that not many practices can. Being on the cutting edge of accounting technology is one of the main ways to increase your revenue opportunities and stay competitive in this turbulent market.

The main three things to know:

Just like MTD, e-invoicing is coming, the questions that every accountant is asking are “How soon?” and “What do I need to do about it?”

  1. What are the rules and the plan for the country you sell to or operate in? Have a quick look at the table from the European Commission.
  2. Do you work with any European governmental entities? If yes, you most likely need a tool that can send and receive e-invoices. Feel free to contact us for a direct quote.
  3. The bigger you are as a company or the more you work with big organisations, the more likely you are to come in contact with it. Most companies still have a couple of years before they need to implement this at full scale but it’s still extremely important to jump on board now, as it’ll require you to make a decision on the service provider that supports e-invoicing, and the accounting software. [Look out for a comparison article from us in the next coming months]

We’ve seen mentioned between accountants that e-invoices will follow the same trend of being slowed down and withered, the treatment just like MTD has received until now. There are a couple of reasons why we think that’s not the case. Firstly, it is not organised by a single institution or jurisdiction. There are more than 70 countries in the world with their own policies already in place in one shape or form, next to the European Commission having multiple mandates and directives for the next steps. Secondly, there is a new VAT directive ViDA - essentially, the European Commission mandates that all intra-EU transactions need to become e-invoices by the beginning of 2025. We would say that these two points provide quite a motivating stick for all businesses and accountants involved and assure that e-invoicing is coming and quickly. 

Tools of yesterday won’t help you tomorrow

Depending on your current expense and invoice management software, with e-invoicing, you might need to look at alternatives. Unfortunately most companies, even the market leaders don’t mention e-invoicing in their roadmap unless we are talking about the market leaders in a country that is at the forefront of the e-invoicing wave (like Estonia).   Whatever solution you use - the top-of-the-market AP software or a custom-built control, e-invoicing will be one of those make-or-break features very soon, especially if your clients already work or plan to work with governmental institutions. All of the tools need to be built according to a format, be it PEPPOL, the most popular e-invoice standard in Europe, or something else.

PEPPOL started as a way to send invoices to customers in the public sector. However, it has grown to be much more than that. In addition, operators in countries all over the world have already adopted the standard as well – including companies in Canada, New Zealand, Singapore and the United States, to name but a few.

Here’s where Aurelia’s Invoice Inbox comes in. Our end-to-end invoice and expense management solution does everything related to accounts payable in 3 steps:

  1. Collect: Be it an e-invoice from Belgium from a supplier or a receipt from Tesco, just forward it to your custom email or upload it straight from your phone.
  2. Process: We don’t just do vendor name and registry code recognition, we provide you line item level categorisation using firms' own categories straight from your accounting software. Invoices get automatically sent to accounting. No need to waste time on mapping expenses to specific accounts!
  3. Pay: Hate reminding your clients about unpaid bills? We will provide you and your client with a dashboard to clearly view unpaid invoices and  make sure everything gets paid in a timely manner.

Sounds like something you need? Drop us a note here or sign up on our website for a free 30-day trial!

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