Towards a European electronic invoicing framework: Why businesses, service providers and consumers should switch to e-invoicing

Abstract

This paper explores the market potential of electronic invoicing, which is expected to transform the way business and consumers exchange their bills in the coming years. When defining electronic invoicing, the paper explains why it is important to look beyond the pure exchange of electronic invoicing (e-invoicing in a strict sense), as most of the benefits for enterprises are expected from the full integration and automation of the purchase-to-pay cycle (e-invoicing in a broad sense). These benefits, which include cost savings for enterprises, time savings and additional convenience for consumers, could in a scenario of mass adoption bring considerable benefits to the EU economy as a whole. After describing the current highly fragmented e-invoicing servicing landscape, with many providers competing on a wide variety of business models, the paper analyses why uptake of electronic invoicing has been modest up to now. In what follows, it develops what is ongoing at EU level to promote the uptake of electronic invoicing with particular attention to the proposed recommendations of the European Expert Group, which could create a European Electronic Invoicing Framework, where electronic invoices are legally accepted by all VAT authorities and can be exchanged in a cheap and easy way between trading parties throughout the EU. The paper explains why we are at the doorstep of this vision. First of all, a new regulatory framework is on its way, which will ensure equal treatment between paper and electronic invoices; second, the development of an international standard is proceeding; and third, initiatives to further promote interoperability between systems are emerging, ensuring that all trading parties will be enabled to reach each other. The paper closes by addressing the opportunities for service providers and banks for making e-invoicing the dominant way of exchanging bills, especially by focusing on the segment of small and medium enterprises.