Germany Is Shifting e-Invoicing into a New Gear in Europe
e-Invoicing, Digitalization, Business Network, E-invoicing
Germany has drawn up a solid roadmap to a digital future. How will the actions of the public sector affect the progress of e-invoicing in the country - and in the whole of Europe?
One of the recent news in the rapidly transforming e-invoicing market comes from Germany. In April, the German National IT Planning Council mandated the use of PEPPOL eDelivery Network for transporting electronic invoices to public authorities in Germany. The decision is a part of the preparations for the new European e-invoicing standard (Directive 2014/55/EU), which aims at the implementation of e-invoicing in public procurement in EU.
Germany has not been among the leaders of digitalization of invoicing, but in the last couple of years, it has drawn up a solid roadmap to the electronic future:
In November 2018, all federal authorities need to be able to receive and handle e-invoices.
In November 2019, all subordinate institutions on the federal level need to be able to receive and handle e-invoices.
In April 2020, the supplementary legislations by the federal state level have to implement e-invoice receiving.
In November 2020, electronic invoicing becomes mandatory, and all suppliers to the public sector need to send their invoices to the authorities and agencies electronically if the amount exceeds 1.000 €.
One of the latest steps forward in the digitalization of German business-to-government (B2G) trade is the pilot which started in July. The Ministries of the Interior and the Economic Affairs (das Bundesministerium der Innern, für Bau und Heimat und das Bundesministerium der Finanzen) began a pilot to test and develop the governmental e-invoicing portal with several e-invoicing service providers (OpusCapita among others) for ensuring a secure and easy way for the suppliers to submit XRechnung invoices to the authorities.
The carrot will be more effective than the stick
Making e-invoicing mandatory in the B2G trade is self-evidently a guaranteed way to increase the number of exchanged e-invoices in the market. And as pioneers of e-invoicing in the Nordic countries, such as Sweden, Finland, and Denmark, have shown, implementing electronic invoicing in the B2G trade will quickly have impact on the business-to-business (B2B) invoicing as well – even if e-invoicing is not made mandatory for the private sector like in many Latin American countries.
Thus, I expect the actions now taken in Germany to have a clear impact on the overall e-invoice ratio in the country, considering that roughly about 70% of German companies are doing business with some governmental organization.
Currently, in Germany, similarly as in many other countries, the majority of electronic invoices are still PDF invoices (see for example the latest Billentis Report on e-invoicing). Without the structured data of a true e-invoice, the huge strides that are possible in process efficiency will remain out of reach for both the buyers and the suppliers. According to some estimates, switching from paper-based processes to electronic and automated invoicing can cut the costs from up to 30–50 euro to one euro. Sending electronic invoices can save a lot of time and money alike.
I believe the indisputable benefits of e-invoicing – streamlined and faster business processes, optimized financial supply chains and buyer-supplier relationships, considerable costs savings, and greater transparency and compliance – are a juicy enough of a carrot to drive the wider adoption of e-invoicing forward, now that the public sector is providing the initial push toward digitalization.
Digitalization is not just about the technology
With the different e-invoicing initiatives going on in Europe and the new regulations coming into effect, it is also important to remember that a successful transition from paper invoices to e-invoices is not just about technology. To make most out of it, a thorough rethinking of business processes is needed, together with change management that involves stakeholders both inside and outside your organization.
We at OpusCapita have decades of experience in moving businesses away from inefficient and costly manual processes by beginning sending and receiving e-invoices, as well as other related documents (like orders, receipts, etc.). We are keeping a close eye on the market changes in Europe and beyond, to continue to support businesses in their digital transformation and help them operate efficiently in the global trade. By developing a digital roadmap together with our customers, we include all their business partners regardless of size and sector (suppliers, customers, banks, customs, tax authorities, etc) to ensure a true electronic data exchange that benefits all.
Here are some of the basic questions you could ask yourself:
- How many invoices are you receiving from your suppliers?
- How many people are handling those invoices?
- How many invoices are you sending out to customers? How much does it cost to archive those invoices?
- How common are mistakes and delays in the process?
A good time to ask them – and especially start answering them – is now, as the whole of Europe is moving toward electronic processes.
Hanno Detlefsen has joined OpusCapita in the beginning of 2018 and is working with digitalizing various business processes, especially with the help of electronic invoicing. He has a long background from small and medium sized companies and has experienced first hand the struggles when it comes to digitalization and e-invoicing.
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