The e-invoicing obligation in the B2B sector - introduction and significance for SMEs

In a rapidly digitalizing world, SMEs are faced with the challenge of continuously adapting and modernizing. A central element of this transformation is e-invoicing.

According to the Federal Ministry of Finance's draft bill, mandatory e-invoicing for B2B transactions is set to come into force on January 1, 2025. This step is aimed at simplifying business processes in invoice processing and reducing bureaucracy. An e-invoice is defined as an invoice that is issued, transmitted and received in a structured electronic format. 

The importance of the e-invoice
The e-invoice is more than just a digital version of a paper invoice. It is a structured, standardized format that enables automated processing. This can range from ordering to delivery to payment, making the entire process more efficient and transparent. Two standards and specifications exist in Germany.

Deeper insights into XRechnung and ZUGFeRD
XRechnung is a purely XML-based semantic data model. It was developed by the Coordination Council for IT Standards (KoSIT) on behalf of the IT Planning Council. XRechnung defines a fixed set of data that must be contained in an electronic invoice and specifies how this data should be structured and formatted. It is a pure data format without visual representation that complies with the requirements of the European standard EN 16931. The standard was developed to enable uniform implementation of the requirements of public clients for electronic invoicing. It is used for the transmission of invoices to federal public clients and, in some cases, to federal states and local authorities.

ZUGFeRD, on the other hand, is a hybrid format that contains both machine-readable XML data and a human-readable PDF.  It was developed by the Forum elektronische Rechnung Deutschland (FeRD) and is also based on the European standard EN 16931 and Directive 2014/55/EU. In addition, the Cross-Industry-Invoice (CII) from UN/CEFACT and the ISO standard 19005-3:2012 [PDF A-3] are taken into account from ZUGFeRD 2.0 onwards. The special thing about ZUGFeRD is that it can be processed by machines as well as read by humans, which makes it particularly flexible and versatile. The integrated PDF ensures that even companies that are not yet fully digitized can process the invoice without any problems. Thanks to OCR recognition, many companies can also process PDF invoices digitally. In the current version, an invoice in accordance with the ZUGFeRD standard also meets the requirements of public clients for an e-invoice.

Transmission and archiving
E-invoices can be transmitted via various channels, including email, web portals or electronic data interchange (EDI). Regardless of the transmission channel, e-invoices must be archived for a period of 10 years in accordance with legal requirements. It must be ensured that the invoices remain unchanged and available at all times during this period.

Signature and authenticity
In order to guarantee the authenticity of the origin and the integrity of the content of an e-bill, it can be provided with an electronic signature. However, this is not mandatory in Germany. Instead, companies can also use other procedures to ensure authenticity and integrity, for example through internal control procedures that create a reliable control process between invoice and service.

Opportunities, challenges and the future of e-invoicing for SMEs
The introduction of mandatory e-invoicing can lead to a considerable increase in efficiency. By digitizing accounting, processes can be automated, optimized and therefore accelerated. OCR recognition is often used to read the information on a PDF invoice. OCR recognition can lead to errors when recognizing and post-processing data. In contrast, the structured XML file can be processed directly without additional OCR recognition. This direct processing leads to time and cost savings. In addition, manual input errors that can occur when transferring paper invoices can be minimized. The elimination of paper invoices also saves resources and reduces the company's CO2 footprint. Another advantage is faster payment processing thanks to digital invoicing, which can lead to improved cash flow.

Challenges and how to overcome them
The implementation of e-billing is not without its challenges. These include adapting existing systems, training employees and complying with data protection regulations. It is important to tackle these challenges proactively. The internal processes should be known and documented in advance.

0. process mapping and documentation: Existing processes should be regularly reviewed and documented. In the course of the introduction of e-billing, it may be useful to carry out a process mapping. The BPMN 2.0 (Business Process Model and Notation) standard helps to present the processes in a structured and visual way. The documentation of the processes can be used for optimization, training and control.

1. planning and strategy development: Companies should develop a clear strategy for the implementation of e-billing. This includes selecting the right format, determining the timing of the changeover and identifying the necessary resources.

2. employee training: The introduction of e-invoicing requires an adjustment of work processes. Training can help prepare employees for the changes and ensure that they can take full advantage of the benefits of e-billing.

3. data protection: When implementing e-invoicing, companies must ensure that they comply with data protection regulations. This could be achieved through the use of encryption technologies and secure transmission methods.

Conclusion
The introduction of mandatory e-invoicing in the B2B sector offers SMEs enormous opportunities. The technical foundations of e-invoicing in Germany are characterized by standardized formats, clear transmission and archiving guidelines as well as mechanisms to guarantee authenticity and integrity. By digitizing invoice processes, companies can increase their efficiency, reduce costs and strengthen their competitive position. However, it is important to approach the changeover strategically and to provide the necessary resources to fully exploit the benefits of e-invoicing.