How to automate the e-invoicing process: key technologies to consider
With European governments rolling out e-invoicing mandates, businesses must modernise their invoicing processes as soon as possible. These mandates are part of a wider push for greater transparency, tax compliance and digital efficiency across the EU. While compliance is quickly becoming non-negotiable, the transition to e-invoicing offers many advantages beyond regulatory alignment.
Automated e-invoicing can significantly improve cash flow, operational efficiency and data security, while also delivering substantial cost savings. However, despite these clear benefits, EU data from 2023 shows that adoption remains relatively slow, with only 37% of small businesses and 44% of medium-sized businesses having adopted e-invoicing.
But why are companies holding back? For many, the complexity of data formats, integration requirements and ever-changing regulatory landscapes is a cause for concern. However, with compliance deadlines approaching and clear long-term value on offer, now is the time to take action.
What does e-invoicing mean — and where does automation fit in?
First, let’s define terms and clear up a common misconception. According to the EU, e-invoicing means the issuing, transmission and receipt of invoices in a standardised, electronic format such as UBL, XML or Peppol BIS, featuring structured, machine-readable data.
This last point is crucial: it means that the systems of both supplier and buyer can automatically process and validate e-invoices, without manual input from accounts payable (AP) and accounts receivable (AR) teams. The systems send and receive the electronic information seamlessly.
Where does this leave digital invoices, such as PDFs or Word files sent via email? While these formats are technically digital, they contain unstructured data and, in their original form, do not meet the standards required by new mandates. This puts businesses at risk of non-compliance unless these documents are converted into a structured, machine-readable format that can be processed automatically by financial systems.
Only 44% of medium-sized businesses have adopted e-invoicing despite clear benefits. *
*According to 2023 EU research
What are the key technologies behind automated e-invoicing?
An end-to-end e-invoicing workflow consists of multiple steps, principally: invoice creation, validation, dispatch, processing, and archiving. The key technologies to automate these steps include:
E-invoice format conversion tools:
- The initial step for outbound e-invoices ensures that issued documents comply with the mandated requirements. For this, a conversion engine automatically takes data from your ERP, finance or dedicated e-invoicing system, and transforms it into the correct structured format.
- The latest conversion tools support multiple e-invoicing formats—not only XML and Peppol BIS, but also specific national standards, such as XRechnung in Germany and FacturaE in Spain – helping to ensure that you can exchange data with international trading partners.
Invoice validation engines:
- An outbound validation engine performs vital quality checks to ensure that e-invoices issued by your company meet the correct standards for transmission and processing. Without this step, there is a risk that your trading partner will reject the invoice, leading to costly remedial work and longer payment cycles.
- The validation engine automatically assesses the quality and completeness of the e-invoice, ensuring that it follows the correct format and contains all relevant tax information, and detects errors and duplication. The system will then either alert users to errors or complete the validation and trigger dispatch of the e-invoice.
Data extraction engines:
- When you receive an e-invoice from a supplier, the process runs in reverse. The first step is for an extraction engine to automatically read and understand the structured data fields, such as supplier name, date, tax codes, purchase order (PO) number, unique identifier, payment terms, amounts and more.
- The extraction engine then pulls this information from the e-invoice, ready for processing and validation, completing within seconds what would take a member of the AP team several minutes or more to handle manually.
Workflow automation and ERP integration:
- With incoming e-invoices parsed, workflow automation tools enable automatic matching and validation of the invoice details against POs and delivery notes. If the information is correct, the tools will approve the e-invoice for payment and automatically enter the details into ERP and finance systems, eliminating manual working and saving additional time for AP teams.
Archiving and reporting tools:
- Archiving is often overlooked in e-invoicing, as businesses typically focus on understanding data formats and integrations. However, government mandates state that you must retain e-invoices for a set period depending on region, ready to present during auditing.
- That’s why intelligent archiving tools are essential, enabling automatic classification and indexing of incoming and outbound e-invoices. You can define specific retention periods to ensure compliance with mandates, and use search tools to quickly retrieve specific information, simplifying auditing and reporting.
What are the benefits of automated e-invoicing?
Adopting these tools will help to streamline your invoice processes, unlocking significant benefits for AP and AR teams and the wider business, including:
- Faster processing and approval times: e-invoicing accelerates the entire invoicing process, reducing payment times by between five and seven days, according to research.
- Reduced manual work and error rates: automation frees AP and AR teams from repetitive manual working and reduces the risk of human errors.
- Enhanced compliance and simpler auditing: e-invoicing helps you to meet government mandates, and makes it easier to surface data and create reports for tax authorities.
- Improved supplier relationships: faster invoicing helps to build trust with suppliers, eliminating the friction caused by late payments, and can even unlock early payment discounts.
- Real-time visibility on spending and liabilities: data available from e-invoicing offers a clearer picture of your current financial position and spending to support smarter decision-making.
How to get started?
To implement automated e-invoicing successfully, it’s smart to take a step-by-step approach, starting with auditing your current processes and systems to determine whether they support integration with e-invoicing networks, before establishing success criteria and targets. With a fully planned approach and with the right partner, you can accelerate the implementation process and maximise the impact of the project.
For more information, read our guide
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