eInvoicing – all you need to know

What exactly is an eInvoice?

The abbreviation “eInvoice” stands for electronic invoice. According to Section 2 of the German eInvoicing Ordinance (ERechV), an invoice has to have a structured, machine-readable XML data record, in order for it to be considered an electronic invoice, or eInvoice.

The XML format guarantees that the invoice processes are carried out electronically – from issuing the invoice by the invoicing party to payment by the invoice recipient.

Is a PDF file an eInvoice?

A PDF invoice is the digital copy of a paper invoice. Physically, it is available electronically. However, a PDF does not meet the requirements for eInvoicing, and it is not an eInvoice. The reason is the format: the data are unstructured and not machine-readable.

What are eInvoice formats?

File formats are approved for eInvoicing, if they meet the following requirements:

• The European standard EN 16931 for electronic invoicing
• The German eInvoicing Ordinance (ERechV)
• The eInvoice formats recommended by the federal government are XRechnung as standard and ZUGFeRD.

XRechnung

XRechnung establishes a national, reliable solution for invoicing in Germany based on local business rules. Section 4, para. 1 ERechV defines the XRechnung as an open, free-of-charge, and future-proof data standard for public customers.

Specifications of XRechnung comply with the directive 2024/45/EU. In concrete terms, this means that with XRechnung, businesses can comply with European data exchange standards by sending, receiving, and further processing invoice data exclusively in XML format.

The benefits of XRechnung at a glance:

• Open source ensures widespread use of the standard.
• Standardized invoice format guarantees legally compliant eInvoice processes.
• Supports a wide range of integration options for components in proprietary and commercial software.

ZUGFeRD

ZUGFeRD is a data format that, similar to XRechnung, meets the legal requirements for electronic invoices in Germany. In contrast to XRechnung, ZUGFeRD translates invoice records so that they can be processed electronically. ZUGFeRD itself is not an application software. It is a hybrid model between electronic and digital invoicing. In other words, ZUGFeRD enables electronic and non-electronic invoice processing in parallel.

• The PDF file is what you see digitally when issuing invoices.
• For electronic processing, ZUGFeRD creates a copy with the identical content based on the XML format.

The advantage is that you can manage invoice data using ZUGFeRD in your preferred accounting software with zero manual effort. Common ERP systems and accounting software support the data format.

Archiving eInvoices

Like paper invoices, eInvoices contain tax-relevant data and are subject to retention periods of ten years. These begin at the end of the calendar year in which the invoice is issued. Businesses therefore have to archive eInvoices during these retention periods.

Legal requirements

The archiving of eInvoices follows the German regulations on electronic recordkeeping (GoBD). In addition to eInvoices, these regulations also apply to digital invoices, i.e. invoices in the form of PDFs. Documents such as invoices are archived in accordance with GoBD, if they meet the principles of traceability, verifiability, immutability, and completeness of data and documents.

According to the law, eInvoices are only archived properly, if they are audit-proof, i.e. unchangeable and tamper-proof.

Methods and technologies for archiving

In principle, electronic invoice processing is technology-neutral. So you can choose the software you want to use to manage invoice documents We recommend the following:

• A document management system, DMS for short, combines all of the document management processes in one tool, from creation to deletion.
• Enterprise content management systems (ECM) can do even more. They automate end-to-end business processes efficiently in one central location.

Security features in long-term archiving

eInvoices are among the documents that companies store for the long term. In this sense, long-term archiving refers to developing, maintaining, and permanently retaining information, as well as making this information available. Regulations in GoBD, AO, HGB and BDSG are binding for companies in the context of long-term archiving.

ECM systems with digital archives, such as Doxis, meet legal and company-internal security standards. You can store information in Doxis in compliance with regulations. This supports secure data storage.

Mandatory eInvoice requirement

Since November 27, 2020, eInvoicing has been mandatory in Germany for all parties issuing invoices to public authorities. A mandatory eInvoicing system for the B2B sector is now planned to start in 2025.

The draft law for Section 14 of the German Value-Added Tax Act (UStG) is already available. It redefines the concept of electronic invoice.

Transition periods

It has not yet been clarified definitively when the eInvoicing requirement for B2B sales will actually come into effect. The law provides for transitional regulations from 2025 to 2027.

Paper invoices and electronic invoices in unstructured format are still permitted as follows:

• Until December 31, 2025: for all B2B companies.
• Until December 31, 2026: for invoice issuers who have permission from the invoice recipient and whose total sales during the previous year did not exceed 800,000 euros.
• Sales between January 1, 2026 and December 31, 2027, which are grandfathered for the use of the EDI process.
• For an indefinite period: Companies are still allowed to issue all small-value invoices under 250 euros as other invoices in accordance with Section 33 of the German Sales Tax Implementation Ordinance (UStDV-E).

The benefits of eInvoices

Switching to eInvoices is recommended for companies regardless of their legal situation. eInvoicing provides opportunities for both invoice issuers and invoice recipients in the areas of efficiency, cost savings, compliance, reducing employee workloads, and growth.

Electronic processing increases process efficiency

Particularly noteworthy are the simplified process structures in invoicing, invoice verification, and invoice processing. The eInvoice accelerates throughput times, facilitates simplified invoice creation, and enables automated reading of invoice data on the recipient side.

Increased process and data quality thanks to automated processes

The eInvoice processes also differ qualitatively from other invoices. Thanks to automated and electronic processes, there is no need to manually create, validate, or manage invoices in the system. High-quality data is already available in the system.

Managing incoming eInvoices in a business

Only specialized software meets the standards of electronic invoice processing. In addition to electronic inbound invoices, mandatory technical components include electronic processes for invoice processing and an audit-proof archive.

Hey Doxi, how does digital invoice processing work in Doxis?

AP automation

The great opportunity of eInvoicing is the possibility of AP automation, i.e. fully automated invoice processing.

Previously, software such as a DMS still had to convert invoice data from PDFs using OCR technology (optical character recognition), and make it machine-readable, extract it, and convert it to a structured format.

With the shift to eInvoicing, this step is no longer relevant – nor is there a need to manually validate the data. This speeds up invoice workflows, ensures timely payments, and reduces the possibility of errors when transferring the data.

Conclusion: eInvoicing requires new invoicing solutions for businesses

With eInvoicing, a new invoicing standard is establishing itself on the market. This requires new invoicing solutions for companies and timely updates to current invoice workflows. In the long run, the introduction of eInvoicing is an opportunity: If invoice data is always available in a structured manner in the future, AP automation will become the standard, and this means fully automated processes and complete efficiency. With Doxis you’ll be ready to process invoices electronically!

FAQs asked questions about eInvoices