By
Martin Fogh Skovlyst
An electronic invoice – or “e-invoice” – is the term for a document sent directly from your IT system (typically your ERP system) to a corresponding system at your customer’s.
Invoices of this kind feature a special format that allows them to be read directly into your customer’s ERP system.
If you are asked to send an electronic invoice, it is not sufficient simply to send a standard invoice in PDF format by email. You need to send the invoice in a format that your customer’s ERP system can receive.
Many different formats are in use today, and different companies and businesses may prefer different formats. If you need to send invoices to public sector customers, however, there is one particular standard (PEPPOL) that you can use for all public authorities and institutions within the EU.
The designation “electronic invoice” or “e-invoice” applies not only to invoices in the most limited sense, it also encompasses credit notes and other documents.
When you send invoices electronically, you eliminate the need for your customers to enter the information manually. There are a great many benefits to this – for you and your customer alike.
One obvious advantage is that you save your customer time, making you easier to work with. This gives you an edge over your competitors who cannot provide the same service.
Another good reason to send invoices electronically is security. Your e-invoices are encrypted and cannot be accessed by non-authorised parties – which is the case if you send standard invoices by email, fax or old-fashioned mail.
As an added bonus, it is much cheaper to send e-invoices than paper invoices, as you save money on paper, envelopes, printing, postage and so on.
Find out more about the numerous benefits of e-invoicing.
Generally speaking, you can send e-invoices in three different ways:
Use Peppol.com to send PEPPOL invoices directly from your ERP system, or let us help you as a service provider. You can use the PEPPOL format for invoicing all public authorities throughout the EU, as well as a great many other businesses and organisations worldwide.
If so, get in touch to hear about your options.
Many businesses of a certain size can already receive electronic invoices. There can be major differences from one company to another with regard to whether or not they accept electronic invoices, and if so, which format they use, so in many cases the best option is to ask your customer’s accounts department.
Some businesses, however, are legally required to be able to receive e-invoices. These include, for example, all public authorities in the EU, which are obliged to be able to receive what are known as PEPPOL invoices. This is precisely the type of invoice you can send using Peppol.com.
There are also many private companies and businesses that can receive invoices in this format as well – both within and outside the EU.
Find out more about how to send invoices to the public sector.
If you need to send an electronic invoice, the process involves converting (“translating”) the information from your invoice to a format your customer’s ERP system can understand. There are some differences regarding the formats that the different systems prefer. If you are in doubt about which format to use, ask your customer.
When your customer receives an invoice in electronic format from you, the information from the invoice is automatically entered into your customer’s ERP system. This significantly reduces the risk of error, which is a common problem when people have to enter data manually into a system. As a result, you can be more certain of receiving the correct payment – and on time.
E-invoices contain the same information as “ordinary” invoices. This includes information about the recipient, the sender, the invoice number, invoice date, your company’s VAT number and, of course, details of the item or service you have sold.
If you are to create electronic invoices, you need an IT solution with the capacity to “translate” the invoice you have created in your ERP system into an invoice your customer’s ERP system can receive and read. Your ERP system may even have a built-in function for creating some types of e-invoice. If it does not, you can use some of the special online services that enable you to create the type of invoice you need to send.
Here at Peppol.com you can send what are known as PEPPOL invoices. You can do so by integrating our platform into your ERP system.
There are several types of electronic invoice. For this reason, your customers will ask you to send invoices (and credit notes) in a specific format that their ERP systems can receive and read correctly.
This is rather like sending the information in a given language. When sending e-invoices, you must therefore be sure that they have been created in a language (format) that your recipient’s system can understand. A PDF file is not typically considered an electronic invoice because it is often complicated to transfer the information from a PDF to the recipient’s system.
Different companies prefer different invoicing standards, and some standards are generally limited to specific countries and/or sectors. The list below contains examples of different e-invoice formats you may encounter. The list is by no means exhaustive, and the country names simply refer to the countries in which the given type of invoice is most widespread.
You may have been asked to send invoices in PEPPOL format, as this relatively new standard is already in widespread use within the EU and in other parts of the world. Click here to find out more about what PEPPOL is.
You may sometimes have to change an electronic invoice you have already submitted. You may have entered an incorrect price, for example, or you may need to cancel the invoice completely.
In principle, you cannot “delete” or recall an electronic invoice once it has been sent. You will have to create a credit note instead. A credit note is a kind of “reverse invoice” that serves to cancel the invoice you have send. When you create a credit note, you need to enter the number of the invoice you wish to change or cancel.
The credit note contains the same information as the original invoice, but the document clearly states that it is a credit note. When you send a credit note, it is understood that all the sums it features are negative. Therefore, you do not need to enter a minus sign in front of the figures.
The credit note and invoice cancel each other out. Once you have sent your credit note, you can issue a new invoice – with a new invoice number.
The cost of sending e-invoices varies depending on which service you use to send them. In some cases the service may be free of charge, in others you may have to pay a small fee per invoice. Many e-invoicing solutions allow you to choose to pay a fixed fee per month or year, which entitles you to send all the invoices you wish within a given framework.
Go back to item 3: “How do you send an electronic invoice?” to find out more about your options for sending electronic invoices.
The rules with regard to storing invoices vary from one country to the next. You should therefore check to see which regulations apply for the market(s) on which you operate. For example, general directive 2010/45 EU applies within the European Union and states that all companies in EU Member States must store invoices in order to be able to present them for tax purposes. However, this general directive allows the individual Member States to apply their own national legislation.
For this reason, it is not possible to give a universal answer to the question of how long you need to save your invoices. To find out more, visit the European Commission website.