Regnskab

Accounting

Finansiering af din virksomhed

Financing your business

Vækst din virksomhed

Growing your business

Fakturering

Invoicing

Opstart af virksomhed

Starting your business

The world is getting smaller and better technology means that looking outside the UK for business can be both good for your company and sometimes necessary. Expanding into other markets does not have to be a frightening proposition, but it is crucial you know what you are doing if your company is based in the UK.

There are certain things that need to be done and at Ageras we hear the same questions on a regular basis, such as:

*   Do I need to invoice in a different language?
*   How do I calculate the exchange rate?
*   Which country’s VAT rate should I use?
*   Can I be paid in euros with a UK bank account?
*   How do I invoice in a certain currency?
*   What about Brexit?

These are all excellent questions and show you are thinking along the right lines. We can give you the tools to succeed and the advice to keep you on the right track.

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## Should I invoice in another language?

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When dealing with a customer from another country that does not have English as an official language, there is always the issue of which language to send your invoice in. In the UK, we are not known for our language skills, so it is probably expected that we will send invoices in our mother tongue.

However, invoicing in your customer’s language shows:

*   a commitment to them
*   makes them feel wanted
*   helps to speed up payment
*   Gives you a chance to learn and work in a new language

Note: if you are going to invoice in a different language, it is always better to have it done by a certified translator. This will save you from any unnecessary errors and possible confusion. It also keeps you right if you have to deal with the authorities in either country or in case of an audit.

As for writing the perfect email to attach your invoice to – we’ve written a short guide. [How to send the perfect invoice email](https://www.zervant.com/en/blog/how-to-write-an-invoice-email/).

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## Should I invoice in another currency?

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First of all, you do not have to invoice in foreign currencies. However, much like the language question, your partner will surely prefer to pay in their local currency.

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### Charging in Sterling

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If you decide to invoice the amount in Sterling, obviously there is no need to worry about exchange rates (see below).

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### Invoicing in a foreign currency

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This will come with costs. Each individual bank charges its own fees for foreign currency transactions into Sterling, so make sure you know the rate beforehand.

If you want to avoid or minimize these charges, there are options available such as [PayPal](https://www.paypal.com/uk/home) and [Wise](https://www.wise.com/) (formerly Transferwise). As more business is conducted between different countries across borders, more solutions are being found that bypass traditional banks. But, make sure you investigate these companies fully before committing to them.

All of Zervant’s accounts – both free and premium – offer support in 5 languages, so we are on hand to help you. To see the benefits, visit our [Features page](https://www.zervant.com/en/features/).

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## Receiving payment into a UK account from abroad

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Firstly, you need to be aware of the exchange rate (see below) and any fees that you may have to pay before the money arrives in your bank. This is the ideal point to contact your bank and ask about this. Different banks have different fees and rates, so do look around to find the one best for you. They are always looking to attract clients, so you may well have the upper hand.

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### How long does it take?

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Again, it depends on the bank, but the average amount of time to receive money from abroad is three to seven working days.

If you want to receive the money faster, look into specialists that deal with international transfers such as the ones mentioned earlier. They are often far quicker and more efficient.

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### What do I need to include?

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If you do go with a bank, this is what you will need to include in your client invoice:

*   IBAN (international bank account number)
*   Your bank’s BIC (business identifier code) – this is a code exclusive to your UK bank
*   Foreign currency amount
*   Your full name and business address
*   The company’s account number and sort code

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## Exchange rates

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Exchange rates go up and down constantly – sometimes many times a day. For this reason, it can be difficult to know the right amount to charge in a different currency. Fortunately, the UK Government sets monthly exchange rates for businesses, all of which have a stipulated start and end date.

[The UK’s official and accepted period rate of exchange](https://www.gov.uk/government/publications/hmrc-exchange-rates-for-2020-monthly).

The other options available to you are the [European Central Bank’s live exchange rate](https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/index.en.html). This is usually updated at 15.00 GMT daily.

As a courtesy to your customer, you can always inform them beforehand that this is what you will be using.

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## Exchange gain and exchange loss

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Gain and loss is when the amount marked on the invoice is different to what you receive from your client, due to a change in the rate of exchange.

<span style="box-sizing: inherit; font-style: inherit; font-weight: inherit; text-decoration-line: underline;">For example:</span>

If you decide to work with a French company, you have the Pound Sterling as your currency and the French company deals in Euros. Obviously, the two currencies do not stay the same against each other constantly and will fluctuate.

Therefore, if you send an invoice amount of GBP 500 on 31.05, the exchange rate of the Euro to the Pound could be EUR 1.12\. But, when the company goes to pay the invoice 10 days later, the exchange rate may have shifted to EUR 1.25\. This means that instead of receiving EUR 560 in payment, you will actually get EUR 650 – a big shift.

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### What can I do about it?

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If you are a small company who only deals in smaller amounts, it shouldn’t make too much difference to you or your customer. Although, you will have to pay more tax if you receive a larger amount of money than anticipated.

Talk to your customers as the relationship begins and mention this could be an issue, so that you are aware of their thoughts on the matter. Over time it may balance out, but no one wants to feel they are being cheated.

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## What about VAT?

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Firstly, you need to work out whether your company is eligible for VAT. You can find out more from the [UK Government’s website](https://www.gov.uk/vat-registration).

If your company is registered in the UK and your place of supply is the UK, then you must pay the British rate of VAT as normal. Here, the ‘place of supply’ is where you supply your good or services to. Always make sure you are aware of the amount of VAT you will have to pay for each invoice issued.

Before Brexit, the country’s rules on VAT automatically extended to the European Union. However, at the start of 2021, the rules changed. The British government has brought in a system known as ‘postponed accounting’, which includes all good imported from both EU and non-EU countries into the UK. This means that all VAT-registered UK firms can allocate VAT to their VAT return, rather than paying import tax on their VAT return as goods arrive into the country.

If your place of supply is outside the EU, then you do not pay EU VAT but the sale should be included in your VAT Return.

Note: If VAT is due in the UK, then everything must be converted into Pound Sterling for the benefit of HMRC.

For more info regarding VAT, have a look at the [UK government’s breakdown](https://www.gov.uk/guidance/vat-how-to-work-out-your-place-of-supply-of-services).

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## Invoicing in a post-Brexit world

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Please note that customs and duties rules on goods have now come into force and both must now be paid. For more info on the post-Brexit rules that have come in, have a look at [this article from ICAEW](https://www.icaew.com/brexit/uk-vat-after-the-transition-period).

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An invoice is not only a request for payment, they often account for the majority of direct communication you have with your customers. That’s why it is worth making a good impression with them!

In this article we’ll cover some of the basics that you need to know when writing your first invoice.

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## 1. Use your logo – and be recognised

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You should always add a logo to your invoices, because a logo will guarantee direct recognition of your company. It also adds to making a good impression and helps you to be taken seriously as an entrepreneur. And it’s not only about the image: if you’re taken seriously as an entrepreneur, it’s also much more likely that your bills will get paid faster.

If you don’t have a logo yet, no need to worry. You do not have to be a graphic designer to get one. With simple online tools such as Canva, you can easily create a neat logo for free!

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## 2. Include your contact details – so customers can get in touch

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Of course, your invoices should always contain all legally required information. Beyond that, you should provide as complete and detailed information about your company as possible.

In addition to your bank details, this also applies to contact information such as:

*   Your company’s phone number,
*   email address,
*   and website.

The easier it is to get in touch with you, the more serious and professional your billing and thus your business will be considered.

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## 3. Clearly list your products – they are the heart of your invoice

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When creating an invoice, pay special attention to the products or services you’re invoicing. They are the very heart of your invoice, so it’s crucial to have them listed clearly with simple, but descriptive names. Here’s a few examples:

*   Instead of “Shoe” something like “Red Hi-Top Trainer, size 7.5” would be clearer.
*   Also “Work Hour – Wall Painting” is more descriptive than just “Work Hour”.

This way, your customer can immediately see what the invoice is about.

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## 4. Have your customers’ information in order – it’s good customer service

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When writing your invoice, it is crucial to have your customers’ contact information correctly on the invoice without any mistakes. Also mind any special characters, especially if you have international customers!

Some important customer information have written on your invoice is:

*   Name
*   Address
*   Customer number – ideally multi-digit customer IDs, they give the impression of a larger customer base and adds credibility.

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## 5. Payment terms – the really important part!

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When writing any invoice, you should always include your payment terms. This way your customer knows exactly when they have to pay.

Payment terms should include:

*   Date of the invoice
*   How many days after sending the invoice, the payment is due (typically 14, 30 or 60 days)
*   Due date of the invoice

Also, if applicable you can include:

*   Special conditions, such as discounts
*   Your terms and conditions, these can be included as an attachment

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## What if you want to make changes to the invoice?

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It’s never a good idea to just delete your invoices, since you need to keep a detailed record of all your approved invoices. In case you made a mistake on the invoice or your customer demands a refund for example, you should use a [credit note](https://www.zervant.com/en/blog/free-credit-note-template/). However the best way for staying legally compliant, as well as for creating credit notes for your invoices, is to use [invoice software.](https://www.zervant.com/en/free-invoicing-software/)

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## Checklist: How to write an invoice

1.  Use your company’s logo
2.  Include your contact information
3.  List your products or services clearly
4.  Have your customers’ details in order
5.  State your payment term

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Are you still writing your invoices in Word or Excel? You should change this ASAP! You might be happy with the look of your templates (and have been using them for years), spreadsheets are far from professional invoicing.

The crucial point here is the technology behind it. In order to be legally compliant, you should store all your invoices complete, comprehensible and inalterable. This can only be guaranteed with a [professional software](https://www.zervant.com/en/free-invoicing-software/). In addition to [making your billing easier to manage](https://www.zervant.com/en/blog/how-to-write-an-invoice/), invoicing software also offers a neat layout, reinforcing your overall professional image.

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E-invoicing is in our blood here at Zervant. Its speed, cost and accuracy are just three of the reasons why e-invoicing will become the new standard for invoicing and why you should get on board now.

As a provider of free invoicing software, it can only be a good thing for our users that the future of e-invoicing is now being championed by dozens of countries and organisations.

<span style="box-sizing: inherit; font-style: inherit;">EU members and the European Commission have been leading the way for the past decade, stating that its adoption is crucial for the highly competitive European social market economy in the 21st century, and will “help to reap the full economic and social benefits of a digital society.” </span>

<span style="box-sizing: inherit; font-style: inherit;">According to the 2019 Billentis Market Report for E-invoicing, 70% of all invoice processing globally is still paper based, so there is still a long way to go. However, in the business-to-business (B2B) field, e-invoicing in the EU has nearly doubled, from 4.8 billion electronic invoices sent in 2015 to 8 billion last year.</span>

<span style="box-sizing: inherit; font-style: inherit;">Further, the potential annual financial benefits of e-invoicing are predicted to be around EUR 40 billion across Europe in the B2B field alone, according to a report by French consultancy firm Capgemini.</span>

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## What is e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">E-invoicing is a type of invoicing where all the same information of a regular invoice is provided in a digital format, and paper is completely removed from the process, making it easier, cheaper and more efficient.</span>

<span style="box-sizing: inherit; font-style: inherit;">[Read more on GXS’s e-invoicing basics blog](https://www.einvoicingbasics.co.uk/what-is-e-invoicing/) </span>

<span style="box-sizing: inherit; font-style: inherit;">Your e-invoices are created, sent, received, processed and archived electronically, eliminating the traditional method of printing or scanning, posting or emailing, and then waiting for the recipient to handle them manually.</span>

<span style="box-sizing: inherit; font-style: inherit;">E-invoicing allows you to forget about:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">Printing</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Sending</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Mailing</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Archiving</span>
*   <span style="box-sizing: inherit; font-style: inherit;">Sending payment reminders</span>

<span style="box-sizing: inherit; font-style: inherit;">Note: Do not confuse an email invoice with an e-invoice. While both are sent online, the difference is their destination:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">Email invoices are sent to your customer’s inbox with the invoice attached.</span>
*   <span style="box-sizing: inherit; font-style: inherit;">E-invoices are sent to your customer’s invoice processing software.</span>



## Should I use e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">While 42% of large enterprises say they already receive or send e-invoices, the adoption rate among SMEs is at a much lower rate, with the total just over one in five (22%). To put that into perspective, 99% of all businesses in Europe are small businesses and exchanging e-invoices is described by the EU as “still being too complex and costly for SMEs.”</span>

<span style="box-sizing: inherit; font-style: inherit;">At present, statistics show that:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">over 75% of companies still send paper invoices</span>
*   <span style="box-sizing: inherit; font-style: inherit;">8% send invoices via email</span>
*   <span style="box-sizing: inherit; font-style: inherit;">9% still send invoices by fax</span>
*   <span style="box-sizing: inherit; font-style: inherit;">only [4.5% of small businesses in the UK have used e-invoicing](https://www.zervant.com/en/blog/all-about-e-invoicing/)</span>

<span style="box-sizing: inherit; font-style: inherit;">Despite the struggle these figures suggest, there is growth in the number of European e-invoices being processed. As we mentioned earlier, the total number of e-invoices sent nearly doubled from 2015 to 2019 and will only continue to grow due to increasing national legislation and changing invoicing standards.</span>

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## What are the benefits of e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">According to the EU website (https://ec.europa.eu/growth/single-market/public-procurement/digital/einvoicing_en), the main benefits include:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">faster retrieval of money from customers by reducing the time an invoice or payment is in the post</span>
*   <span style="box-sizing: inherit; font-style: inherit;">reduced printing and postage costs</span>
*   <span style="box-sizing: inherit; font-style: inherit;">quicker and cheaper processing as the information in electronic invoices can be fed directly into a company’s payment and accounting software, strengthening the supply chain</span>
*   <span style="box-sizing: inherit; font-style: inherit;">lower storage costs</span>
*   <span style="box-sizing: inherit; font-style: inherit;">reduced training and system development costs</span>

<span style="box-sizing: inherit; font-style: inherit;">Because the processing is fully automated, the pre-defined format of an e-invoice means it cannot be altered, thereby guaranteeing safety and authenticity, as well as reducing fraud and tax evasion.</span>

<span style="box-sizing: inherit; font-weight: 700; color: rgb(49, 53, 52);">[How e-invoicing can lower your risk of fraud](https://www.opuscapita.com/blog/2019/how-e-invoicing-can-lower-your-risk-of-fraud)</span>

<span style="box-sizing: inherit; font-style: inherit;">Note: Do not confuse pre-defined format with PDFs, despite the similar names. PDFs, scanned invoices and email attachments are not considered to be e-invoicing.</span>

<span style="box-sizing: inherit; font-style: inherit;">E-invoicing not only reduces the risk of errors but will save you both time and money. [A Billentis market report](https://www.billentis.com/e-invoicing-businesscase.pdf) estimates that e-invoicing can save you, as the issuer, almost 60% per invoice in costs and the recipient about 65%.</span>

<span style="box-sizing: inherit; font-style: inherit;">In fact, the EU believes that most of the economic benefits will not come from savings in printing and postage costs, but from “full process automation and integration from order to payment” between trading partners.</span>

<span style="box-sizing: inherit; font-style: inherit;">As you can see, the Billentis case study considered costs ranging from printing and payment reminders to cash flow management and archiving. However, we wonder if they also factored in the direct expense of buying paper and the wider energy costs for transportation.</span>

<span style="box-sizing: inherit; font-style: inherit;">The reduction of both could generate reductions in CO2 emissions of a million tonnes per annum for the EU and annually [save about 12 million trees](https://www.zervant.com/en/blog/invoice-online-in-2022/), which are cut down to create paper invoices.</span>

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## How does e-invoicing work?

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<span style="box-sizing: inherit; font-style: inherit;">While e-invoicing can seem confusing with its many different technical standards and acronyms, like EDIFACT, iDoc, UBL, TEAPPS and PEPPOL, you don’t need a background in finance, accounting or IT to use the service.</span>

<span style="box-sizing: inherit; font-style: inherit;">For entrepreneurs and small businesses, there are many invoicing software providers and ERP systems that allow users to create e-invoices easily and quickly. Of course, we would recommend checking out a firm called Zervant.</span>

<span style="box-sizing: inherit; font-style: inherit;">Using our service as an example, we employ a few simple steps when creating an e-invoice:</span>

1.  <span style="box-sizing: inherit; font-style: inherit;">After creating your invoice, add the e-invoicing address, which is a unique number sequence to identify a business—for example, a VAT number, Orgnr, GLN, DUNS, IBAN or SAP iDoc. You can [obtain this address from your customer](https://support.zervant.com/hc/en-gb/articles/360036369831-Understanding-e-invoicing-addresses).
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2.  <span style="box-sizing: inherit; font-style: inherit;">After clicking send, your e-invoice arrives to our e-invoicing partner Basware, which transforms it into a machine-readable format.
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3.  <span style="box-sizing: inherit; font-style: inherit;">From there, Basware forwards it to your customer’s e-invoicing operator. The operator does a final e-invoice format check, after which it transfers it to your customer’s invoice processing software.</span>
4.  <span style="box-sizing: inherit; font-style: inherit;">After it arrives to your customer’s invoice processing system, they can pay it with the click of a button, allowing you to receive payment faster.</span>

[Learn more about sending e-invoices.](https://support.zervant.com/hc/en-gb/articles/360036369891-Sending-e-invoices)

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## What different e-invoicing models are there?

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<span style="box-sizing: inherit; font-style: inherit;">When reading about e-invoicing, it is likely that you will hear about 2-, 3- and 4-Corner models. While you don’t need to know the technical intricacies of each, it is useful to understand what they are.</span>

<span style="box-sizing: inherit; font-style: inherit;">E-invoicing began with the 2-Corner Model, a P2P (peer to peer) process in which e-documents were directly shared between the systems of the supplier and buyer using Electronic Data Interchange</span>

<span style="box-sizing: inherit; font-style: inherit;">(EDI) or XML formats. </span>

<span style="box-sizing: inherit; font-style: inherit;">However, that was supplanted by the 3-Corner Model that saw the supplier/buyer share the same third-party service provider to process e-documents, which works well as long as you don’t have more than two recipients for your e-invoices.</span>

<span style="box-sizing: inherit; font-style: inherit;">Today, the development of PEPPOL and other global networks has seen the arrival of the 4-Corner Model, which involves the supplier/buyer using different service providers for their e-documents. Since most entrepreneurs need to send invoices to several different companies, it is easier to use service providers that are connected to another, like a mobile network.</span>

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## What is PEPPOL e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">In 2014, the European Union issued a Directive mandating business-to-government (B2G) e-invoicing that also included wording that encouraged its members to write laws requiring electronic invoicing for areas.</span>

<span style="box-sizing: inherit; font-style: inherit;">Since then, 23 EU members have deployed B2G e-invoicing solutions, as well as the UK. Despite deciding to leave the EU, Britain did implement the Directive on e-invoicing in public sector procurement as of May 2019 and it became compulsory for local government and utilities from April 2020, the EU’s deadline.</span>

<span style="box-sizing: inherit; font-style: inherit;">The National Health Service (NHS) became the first area of the UK’s public procurement to trial electronic formats and comply with the EU’s technical e-invoicing standard via the PEPPOL network.</span>

<span style="box-sizing: inherit; font-style: inherit;">With the existing rules governing e-invoicing differing across Europe, PEPPOL, a 4-Corner Model, was launched. It enables cross-border eProcurement, allowing international companies to handle their communication in the procurement process electronically.</span>

<span style="box-sizing: inherit; font-style: inherit;">While it is not an e-Procurement platform, PEPPOL does provide technical specifications that can be implemented in existing eProcurement solutions and eBusiness exchange services, explains the [project’s official website](https://peppol.eu/what-is-peppol/).</span>

<span style="box-sizing: inherit; font-style: inherit;">PEPPOL is in use across 28 countries in Europe plus Australia, Canada, New Zealand, Singapore and the USA, with more expected to follow. This year, India approved the introduction of voluntary e-invoicing for B2B reporting, while China is preparing to roll-out business to consumer (B2C) and B2B e-invoicing.</span>

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## What is the status of B2B e-invoicing in the EU?

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<span style="box-sizing: inherit; font-style: inherit;">While the world’s two most populous countries are rolling out B2B e-invoicing mandates, it is still not mandatory across the EU. Italy became the first European country to require B2B electronic invoicing at the beginning of 2019, but elsewhere it has remained a voluntary practice. </span>

<span style="box-sizing: inherit; font-style: inherit;">B2B e-invoicing mandates are planned in Serbia starting in 2022 and France after 2023, with Spain also signalling it is ready to follow. However, interest from countries across the EU is increasing due to the growing VAT Gap – the difference between Value-Added Tax owed and that which is collected.</span>

<span style="box-sizing: inherit; font-style: inherit;">Mandatory electronic tax invoicing has been credited with lowering tax compliance costs and raising the transparency of business transactions. In fact, the Mexican government implemented a new model that [dramatically increased tax collection, as well as reducing the shadow economy](https://www.coupa.com/blog/how-e-invoicing-will-close-the-vat-gap-and-change-the-world), according to Coupa.</span>

<span style="box-sizing: inherit; font-style: inherit;">In 2017, EU countries lost approximately EUR 137 billion in VAT revenues, according to a study released by the European Commission last year. While smaller than previous years, the amount remains remarkably high and highlights the ineffectiveness of the various members’ VAT enforcement and compliance measures, which could be solved with the application of e-invoicing.</span>

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## What are the obstacles for e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">Since e-invoicing is an emerging technology, it still faces technical obstacles, user difficulties and reluctance to change.</span>

<span style="box-sizing: inherit; font-style: inherit;">Here are some of the main issues:</span>

*   <span style="box-sizing: inherit; font-style: inherit;">routing issues can occur between e-invoicing providers because there are a wide range of formats and different standards</span>
*   <span style="box-sizing: inherit; font-style: inherit;">variation in national rules governing the validity and acceptability of e-invoices in legal, financial and administrative terms, making their use in cross-border transactions within the EU difficult</span>
*   <span style="box-sizing: inherit; font-style: inherit;">many potential users still have concerns about the security of e-invoicing systems and the potential for misrepresentation in fraud</span>
*   <span style="box-sizing: inherit; font-style: inherit;">mistakes can occur when entering the e-invoicing address, such as typos, or the invoice can have incorrect information</span>

<span style="box-sizing: inherit; font-style: inherit;">While some of these may seem serious, they all have solutions. For example, some vendors will disappear over time and others will consolidate; the EU is working to improve cross-border transactions; and digital signatures and encrypted transmission procedures are constantly being improved.</span>

<span style="box-sizing: inherit; font-style: inherit;">Despite these hurdles, over half the companies in a survey on e-invoicing said that to be successful, it is essential to require e-invoicing in contracts.</span>

[The Institute of Finance and Management (IOFM) emphasized that](https://www.iofm.com/ap/process-improvement/automation/overcome-the-barriers-to-e-invoicing):

> “…it is important not to get discouraged about the low volume of electronic invoices received, or lose patience because of the long road to success.”

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## What is the future of e-invoicing?

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<span style="box-sizing: inherit; font-style: inherit;">The long road to success is gradually being filled with forward-thinking companies driving toward the benefits that await them.</span>

<span style="box-sizing: inherit; font-style: inherit;">Christiaan van der Valk, VP of Strategy for the [tax software provider Sovos](https://news.bloombergtax.com/daily-tax-report-international/insight-vat-compliance-software-as-an-essential-tool-for-business), writes:</span>

> “<span style="box-sizing: inherit; font-style: inherit;">It is interesting to look in the rear mirror and observe what has created a huge distance between the leaders and the laggards in the European e-invoicing market to date.</span>“

<span style="box-sizing: inherit; font-style: inherit;">Firms who have chosen to make e-invoicing compliance an integral part of their mission have a “competitive advantage that cannot be underestimated going forward,” he notes, adding that “VAT compliance remains an ever stronger driver behind e-invoicing growth”.</span>

<span style="box-sizing: inherit; font-style: inherit;">In the UK, across the EU and globally, the market is moving towards making e-invoicing the new standard. It is the future, which is why you should get on board now. If you have any questions about e-invoicing or our invoicing service, please get in touch and we can help you!</span>

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