How Many Types of E-Invoice Are There? (In-Depth Analysis)

In today’s digital age, businesses constantly seek ways to streamline their processes and improve efficiency. One area that has seen significant progression is invoicing.

Traditional paper-based invoices are being replaced by electronic or e-invoices, which offer numerous benefits such as cost savings, faster processing, and reduced errors.

But you may be curious to know how many types of e-invoices are there. Several types are available depending on the country where you are doing business.

The following are some e-invoice formats you may encounter and the country where the given type of invoice is most widespread.

  • FacturaE (Spain)
  • FatturaPA (Italy)
  • Finvoice (Finland)
  • ISDOC (Czech Republic)
  • NemHandel/OIOUBL (Denmark)
  • PEPPOL (EU, Australia, New Zealand, Singapore, Canada, USA)
  • Svefaktura (Sweden)
  • Tradacoms (UK)
  • UBL-OHNL (The Netherlands)

This blog post will dig into the different types of e-invoices, government regulations, and compliance requirements, how to create them, and their benefits. It will also highlight the best security and data privacy practices.

Let’s delve in!

Types of e-invoices

Electronic invoices are of different types, each with its own specifications. As a result, your customers may request that you send invoices and credit notes in a specific format that their ERP systems can accurately receive and interpret.

Think of it as communicating in a particular language. When sending e-invoices, ensuring they have been generated in a format that the recipient’s system can read is essential.

For example, an invoice in a PDF format is not typically considered an electronic one because transferring the information from a PDF to the recipient’s system is often complicated.

In addition, individual companies prefer different invoicing standards, and some standards are, as a rule, limited to specific countries or sectors.

Generally, e-invoicing formats can be separated into three types:

Structured format

These are invoices that solely consist of data without a visual representation. They do not provide a graphical layout but focus strictly on the structured data necessary for processing.

While they may not be visually appealing, structured formats like XML are designed to be easily read and processed by automated systems.

Unstructured format

Contrasting structured formats, unstructured formats encompass invoices that retain their visual appearance, such as PDFs or Word documents, but lack an embedded file connection or structured data.

Unstructured invoices are more akin to their traditional paper counterparts and are primarily used for record-keeping purposes.

However, processing such invoices may require manual data extraction and entry into the recipient's system.

Hybrid format

The hybrid format combines the advantages of both structured and unstructured formats. It includes a visual representation of the invoice alongside an embedded file, facilitating processing capabilities.

For those using software-based invoicing systems, the hybrid format is typically recommended. Unstructured invoices, like digital invoices, may still be acceptable but are often limited to record-keeping purposes rather than seamless payment processing.

It's important to note that different countries may have specific standards or format requirements for e-invoicing compliance. Some nations mandate using XML-based formats, while others accept PDF invoices.

Staying updated on the regulatory landscape in your operating jurisdiction is crucial to ensure compliance with the applicable standards.

What are the legit format types of an electronic invoice?

There are several legitimate format types for electronic invoices, and the specific formats accepted may vary depending on the country, industry, and requirements of the receiving party.

The following are examples of different legit format types of electronic invoices you may encounter.

  • E-Invoice (Estonia)
  • EDIFACT or UN/EDIFACT (United Nations/Electronic Data Interchange for Administration, Commerce, and Transport)
  • EHF (Elektronisk Handelsformat) (Norway)
  • FacturaE (Spain)
  • FatturaPA (Italy)
  • Finvoice (Finland)
  • ISDOC (Czech Republic)
  • NemHandel/OIOUBL (Denmark)
  • PEPPOL (EU, Australia, New Zealand, Singapore, Canada, USA)
  • Svefaktura (Sweden)
  • Tradacoms (UK)
  • UBL-OHNL (The Netherlands)
  • X12 (USA)
  • ZUGFeRD, XRechnung (Germany)

Among this list, the PEPPOL format has gained significant popularity within the European Union and other regions across the globe. Despite being a relatively new standard, PEPPOL is already widely adopted by businesses.

Read also: Digital VAT: Mandatory e-Reporting and e-Invoicing for EU

Government regulations and compliance requirements for e-invoicing

Government regulations and compliance requirements for e-invoicing vary across different countries and jurisdictions. These regulations are implemented to ensure electronic invoices' transparency, accuracy, and legal validity.

Understanding and adhering to these regulations is essential for businesses to avoid penalties and maintain compliance. Here are some key aspects to consider:

Familiarize yourself with the legal framework governing e-invoicing in your country. Different countries may have specific laws, regulations, or standards defining electronic invoicing requirements.

For example, in the European Union, Directive 2014/55/EU establishes a common framework for e-invoicing in public procurement.

Electronic signature and authentication

Many countries require electronic invoices to be accompanied by an electronic signature to ensure their authenticity and integrity. The electronic signature serves as proof of the origin and integrity of the invoice.

It's essential to understand the specific requirements for electronic signatures in your jurisdiction and ensure compliance with applicable standards.

Data retention and archiving

Government regulations often outline requirements for the retention and archiving of electronic invoices. This includes the storage duration, format, and accessibility of invoices.

Ensure that your e-invoicing system complies with these requirements and allows for secure and organized storage of electronic invoices for the mandated period.

Tax compliance

Tax-related regulations are a critical aspect of e-invoicing compliance.

Some countries may require specific formats or data elements to be included in the invoice for tax compliance purposes.

Ensure that your electronic invoices include all necessary tax-related information, such as VAT or GST numbers, tax rates, and other applicable tax details.

Invoice format and content

Government regulations may specify the required format and content of electronic invoices.

This includes information such as invoice numbers, dates, supplier and customer details, itemized descriptions, and monetary amounts.

Adhere to these requirements to ensure the invoices are legally valid and compliant.

Data privacy and security

Ensure that your e-invoicing practices align with data privacy regulations, such as the General Data Protection Regulation (GDPR) in the European Union.

To safeguard sensitive invoice data, implement appropriate data protection measures, including encryption, access controls, and data handling practices.

Compliance reporting

Some jurisdictions may require businesses to report or submit periodic compliance reports related to e-invoicing. Stay informed about any reporting obligations and ensure timely and accurate submission of required information.

It is crucial to consult with legal experts or specialized consultants in your country to fully understand the specific government regulations and compliance requirements for e-invoicing.

Alternatively, you can speak with one of our consultants.

How to create an e-invoice?

Creating an e-invoice can be straightforward when using the right tools or software. Using an IT solution that can “translate” the invoice you have made in your ERP system into an invoice your customer’s ERP system can receive and read would be helpful.

That said, the following are the general steps for creating an e-invoice:

Notify customers

Before initiating the process of sending e-invoices to customers, ensure they are willing and capable of receiving electronic invoices.

In certain countries, obtaining written consent from customers may be necessary. Additionally, verify that you have the correct email address if you plan to email the invoices.

Set up e-invoicing

Utilize advanced accounting software to establish automated invoicing systems and customize invoice templates for each customer's requirements.

Ensure that your e-invoice format incorporates all essential information, including transaction details, supplier and customer identification, accepted payment methods, and any applicable taxes or discounts.

Generate the invoice

Ideally, your accounting software will generate e-invoices automatically based on sales orders. This includes relevant taxes and customer-specific discounts, simplifying the process and reducing the likelihood of errors.

Deliver the invoice

Choose the most suitable method for delivering e-invoices to customers, which can either be through email or a secure portal.

Sending the e-invoice electronically ensures quick and efficient delivery, allowing customers to receive and process the invoices promptly.

Benefits of e-invoices

The adoption of e-invoices brings numerous benefits to businesses. Many of these benefits stem from e-invoicing allowing for greater automation of accounting and payment processes for suppliers and customers.

Some key advantages include:

Increased productivity

E-invoicing significantly minimizes the manual workload for suppliers. With the automation capabilities of ERP systems, employees no longer need to dedicate time to manual data entry. Instead, e-invoices are automatically generated and dispatched when sales transactions are recorded, or products are shipped to customers.

This automation liberates employees to focus their valuable time and energy on more strategic and high-level tasks, fostering productivity and efficiency within the organization.

Automated matching and validation

E-invoicing simplifies the automated matching process for customers, enabling the seamless reconciliation of invoices with purchasing and shipping documents.

This ensures that the invoiced amount accurately corresponds to the items ordered and received by the customer. As a result, significant effort is saved by eliminating the need for manual verification and cross-referencing.

Moreover, suppliers can efficiently reconcile the payments they receive with the original sales transactions.

Security of communication

The potential to manage document delivery via private networks such as a VAN (Value-Added Network) or specific point-to-point protocols such as AS2 ensures secure and confidential delivery.

Reduced cost

Eliminating paper invoices and manual invoice processing procedures translates into lower costs for trading partners as you save money on paper, envelopes, printing, postage, etc.

Improved document integrity

Electronic signature processes provide enhanced assurances to both senders and receivers concerning the integrity of content and the authenticity of its origin.

By incorporating electronic signatures, the integrity and unaltered nature of the invoice content are safeguarded, ensuring that the information remains unchanged during transmission.

This also helps curb business transaction process fraud between B2Bs and B2Gs.

Improved cash flow

E-invoicing can significantly shorten payment cycles, allowing suppliers to improve their cash flow. Automation helps suppliers send invoices on time, which means customers can pay faster because they can quickly validate the invoices they receive.

Track and traceability

E-invoicing tracks transaction history and the entire document journey automatically, so you don't have to spend time doing it manually.

Enables supplier discounts

Many suppliers offer discounts for prompt payment — and impose penalties for late payments. Customers can benefit from e-invoicing by paying more quickly and taking advantage of supplier early-payment incentives.

Fewer errors

Transaction data is automatically copied to e-invoices, removing the possibility of data-entry errors. This also lessens the likelihood of time-consuming and aggravating payment disputes.

Environmentally friendly

E-invoicing not only reduces paper consumption and CO2 emissions; this long-term effort also reduces operating costs, leads to increased profitability, and establishes a transparent, trustworthy brand reputation.

If e-invoicing is now required in the countries where you do business, and you are yet to begin the process for this new regulation, partnering with a service provider like Storecove would be helpful for businesses and suppliers looking for more interoperability and connectivity.

Storecove is a certified electronic-invoicing solution provider, meaning B2Bs and B2Gs can use our platform to send and receive electronic invoices.

Speak to Dolf to learn how we can help you securely issue or receive invoices in your country.

Best practices for security and data privacy in e-invoicing

The utilization of an electronic invoicing presentation and payment platform enhances the security of invoice delivery. Unlike sending invoices directly through unsecured emails, this method employs a different approach.

Instead, an email notification is sent, prompting users to access the platform to view the invoice data securely.

This approach helps mitigate potential risks associated with email invoicing, such as:

  • Receipt by an incorrect person or email bounce-back due to human error.
  • Risk of interception or payment redirection by unauthorized individuals.
  • Vulnerability to spear phishing attacks that exploit false payment requests.

By leveraging an electronic invoicing platform, best practices for security and data privacy in e-invoicing, such as additional security features, can be implemented, including two-factor authentication and rule-based access controls.

These measures ensure that only authorized users can view and manage invoice information, thereby fortifying the overall security posture of the invoicing process.

You may also like: 5 Advantages of Using an E-invoicing Portal in 2023.

Takeaway: The diverse types of e-invoices revealed!

E-invoicing offers businesses significant advantages over traditional paper-based invoices.

Understanding the different types of e-invoices documents (structured formats like XML, unstructured formats such as PDFs or Word, and hybrid formats), complying with government regulations, and following the best security and data privacy practices are essential for a smooth and efficient invoicing process.

No matter where you run your business, you must be prepared for this change. It is crucial to acquaint yourself with the e-invoice regulations and be updated on any changes to the rules in the country where you do business to ensure compliance.

By embracing e-invoicing, businesses can streamline operations, reduce costs, and improve productivity. To experience the benefits of e-invoicing firsthand, you can work with a service provider like Storecove.

We offer a comprehensive e-invoicing solution to ensure businesses like yours use the proper sending and receiving infrastructure.

Register to learn more about how our e-invoicing solution can help your company comply with your country’s e-invoicing regulations.

More information about the types of E-invoice?

Contact us for more information or schedule a consult with one of our e-invoicing experts.

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