Mastering e-invoicing: The complete guide for 2025

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Mastering e-invoicing: The complete guide for 2025 | Pleo Blog
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The global e-invoicing market is at an all-time high – and it’s only growing. In the E-Invoicing Global Market Report 2024, the Business Research Company lists projections indicating growth from $15.98 (£12.93) billion in 2023 to $45.44 (£36.76) billion by 2028. At a compound annual growth rate (CAGR) of 23.3%, it’s safe to say that e-invoicing is expanding rapidly, and it’s here to stay.

This expansion goes beyond mere convenience. As regulations surrounding VAT compliance and real-time invoice reporting become increasingly complex, e-invoicing has emerged as an essential tool across industries.

Key takeaways:

  • E-invoicing is more than a compliance requirement. It automates the invoicing process and ensures fewer errors, faster payments and better cash flow – all while making a difference for the environment.
  • With governments across the world pushing to improve tax compliance, meeting the e-invoicing requirements of initiatives such as VAT in the Digital Age (ViDA) and Making Tax Digital (MTD) has never been more important.
  • Pleo Invoices helps you simplify your workflow, boost transparency and keep control of the whole invoicing process, so you’re not just compliant, but you’re also ahead of the game.

What is e-invoicing? A guide for finance professionals

E-invoicing goes beyond just sending and managing invoices digitally. It specifically involves the structured exchange of invoice data in a standardized format (e.g., XML, UBL) directly between systems, eliminating the need for manual intervention. This structured approach ensures seamless processing, accurate validation, and compliance with tax authority requirements.

Paper-based invoicing involves all the tedious steps that make the invoicing process so time-consuming. The invoice has to be written or typed out, printed and posted. Once that’s done you have to wait for the approver to receive it – and hope it doesn’t get lost on the way.

E-mail invoicing, or digital invoicing, is a little more reliable, but still involves creating the invoice manually using tools like Word or Excel (that are all prone to human error). The file is then saved, attached and e-mailed. After sending, there’s typically no way to automatically track if the e-mail has been opened. In other words, you’re in the dark until you hear back from the approver.

But there is a better way. E-invoicing automates and streamlines the entire invoicing process.

It’s more than just sending an e-mail: it seamlessly integrates with ERP systems and tax portals to generate the invoice for you, pulling the necessary data from your system automatically. The invoice is then sent directly to the approver’s e-invoicing system or a secure portal, allowing you to keep track of when the invoice is received, opened, approved and paid – all in one place.

In short, the e-invoicing process gives you a level of control and transparency you simply can’t achieve with digital or manual invoicing.

The importance of e-invoicing

In essence, e-invoicing is an upgrade to all your manual invoicing processes – and there are plenty of reasons for finance teams to love this. Here are some of the most important ones:

  • Fewer errors, fewer headaches: There’s no way around it – manual invoicing means more mistakes. We’re only human, after all. Whether it’s typos, missing information or miscalculations, errors slow everything down. E-invoicing handles the details for you, ensuring invoices are accurate and consistent every time. Your team spends less time fixing errors and more time focusing on the work that really matters.

  • Faster payment processes: E-invoicing enables more efficient payment processing by automating invoice creation and approval workflows. This reduces manual intervention, speeds up approval times, and minimises the risk of delays. 

  • Better cash flow = less stress: When invoices get paid faster, cash comes in quicker. You’ll have a steadier cash flow to cover expenses and make investments. No more scrambling because payments are late or you’re uncertain of invoice statuses – e-invoicing ensures it all runs smoothly.

  • Stay on top of your taxes: Tax rules can be a headache – especially if you’re working with international clients. E-invoicing platforms, however, handle compliance with global tax laws automatically. They generate invoices that meet local standards, track everything for audits and keep you out of trouble. It’s like having a tax professional built into your system.

  • Make a difference for the planet: E-invoicing allows you to shelve traditional paper invoices and keep everything electronic. Going paperless helps reduce your company’s carbon emissions, making it an essential part of improving your sustainability efforts.

In short, e-invoicing saves you time, reduces stress and helps your team focus on growing the business instead of chasing payments or fixing mistakes. What’s not to love?

You might also be interested in: ‘Invoice management: The ultimate guide

The global push for e-invoicing compliance

With governments across the world pushing to improve tax compliance, e-invoicing requirements are evolving fast. It’s up to finance teams to stay on top of these requirements.

Here’s a quick breakdown of current and upcoming e-invoicing requirements to be on the lookout for:

EU: the VAT in the Digital Age (ViDA) initiative

In the EU, the ViDA initiative aims to modernise VAT reporting and make e-invoicing mandatory across all EU member states. It’s a big shift for the EU with the goal of reducing VAT fraud and improving cross-border transactions.

What’s changing:

  • Standardised e-invoicing will replace traditional paper or digital invoices
  • Real-time (or near-real-time) VAT reporting will be required, meaning businesses must send invoice data directly to tax authorities

The EU plans to roll out ViDA gradually, starting in 2028 for many businesses. However, some countries are already implementing local e-invoicing mandates ahead of this.

UK: Making Tax Digital (MTD)

In the UK, the MTD programme is already transforming how businesses handle tax and invoicing.

What’s changing:

  • MTD requires businesses to keep digital records and file tax returns through approved software.
  • Although e-invoicing isn’t yet mandatory, the UK is aligning its digital record-keeping rules to pave the way for more widespread adoption.

MTD for VAT is already in place for most businesses, and further expansions to Income Tax and Corporation Tax are expected in the coming years.

Germany: Mandated e-invoicing for businesses 

Starting January 2025, Germany mandates the use of e-invoicing for businesses, requiring invoices to be processed in XRechnung and ZUGFeRD formats. These formats ensure standardised data exchange and improve efficiency.

Companies must validate the structure and fields of invoices to ensure compliance with legal requirements, particularly for VAT accuracy. This shift aims to streamline invoicing processes and enhance transparency in business transactions across Germany.

What does this mean for finance teams?

For finance teams across the world, failing to meet these new e-invoicing requirements can lead to significant operational risks.

These include:

  • Financial penalties: The penalties for non-compliance are strict. Missed deadlines, incorrect invoice formats or incomplete reporting can result in hefty fines.

  • Payment delays: Your customers might reject your invoices if they don’t meet the new e-invoicing standards. This can lead to delayed payments – and that hurts your cash flow.

  • Reputational damage: Non-compliance can damage your relationships with both customers and suppliers by causing them to lose trust in your business. A reputation for being difficult to work with can also push your clients towards competitors who are fully compliant.

  • Increased operational complexity: Without the right tools, managing multiple country-specific requirements can be overwhelming – especially for businesses operating across borders.

So what should finance teams do?

Other than keeping track of evolving regulations in the EU and UK, the most important step is to invest in an e-invoicing solution or platform that automates compliance across countries. You’ll want to do this sooner rather than later, as transitioning to e-invoicing takes time: start adopting systems now to avoid last-minute scrambles. 

The future of e-invoicing

E-invoicing is evolving rapidly. It’s no longer just about efficiency: it’s about reshaping business operations and bringing them into the future. Here’s a look at what’s on the horizon for e-invoicing:

  • AI-driven automation: AI-powered systems are already detecting errors, categorising expenses and predicting cash flow based on invoice patterns. They can also automatically match invoices to purchase orders, contracts and delivery receipts, eliminating manual reconciliation.

  • Real-time tax reporting: Across the world, governments are moving towards real-time VAT reporting, where invoices are sent directly to tax authorities as they’re issued to help reduce tax fraud. E-invoicing solutions will integrate seamlessly with government systems to ensure compliance with local and international regulations alike.

As environmental concerns grow, the shift to paperless invoicing will become non-negotiable. For this reason, governments may offer incentives for companies adopting e-invoicing as part of broader sustainability initiatives.

Even if they don’t, however, it’s worth getting on board now: consumers and business partners alike increasingly expect companies to prioritise sustainable practices. In other words, e-invoicing gives you a competitive advantage in a competitive market.

Stay ahead of the curve with Pleo Invoices

The future of e-invoicing is right around the corner – and Pleo Invoices is here to make sure you’re ready for it.

Pleo Invoices lets you capture, process, approve, pay and bookkeep your invoices, all under one roof. Here are some of the key benefits you can expect from Pleo E-invoicing:

  • Streamlined workflow: Pleo Invoices automates invoice generation, approval and submission, reducing manual tasks for finance teams and improving productivity.

  • Compliance made easy: With Pleo, you don’t have to worry about breaking the rules. Pleo is built to meet evolving global and regional e-invoicing standards, ensuring hassle-free compliance for your e-invoices. 

  • Enhanced transparency and control: Pleo allows you to track invoices and payments in real time, giving you full transparency of invoice statuses. Seamless integration with accounting software and ERP systems also ensures better visibility throughout the invoicing process.

  • Cost savings: With automation come lower administrative costs. Pleo Invoices helps you eliminate expenses related to traditional paper invoicing and error correction.

And that’s not all. Pleo Invoices supports the XML invoice format – a standardised format for structuring invoice data.

The XML format is designed to make invoices machine readable, ensuring they can be easily processed, shared and understood by different systems – without human intervention.

Many countries require XML formats for e-invoicing. Pleo Invoices automatically processes country-specific XML-based formats like XRechnung, Factur-X, FatturaPA and Facturae to ensure compliance with local mandates.

Supporting XML invoices is essential for modern e-invoicing. It bridges the gap between businesses and tax authorities, ensuring smooth and compliance transactions globally – and that’s exactly what Pleo Invoices is here to do.

Compliance is just the start – and with Pleo, you can get ahead of the curve. Try Pleo Invoices today and take the first step towards the future.

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