By now, the vast majority of businesses have at least some digital elements in play when it comes to billing. This includes the use of accounting or customer relationship management (CRM) platforms for invoice generation and managing reminders. Or it could be as simple as pulling up ready-made templates from Google Drive as and when required.

However, true digital invoicing – aka e-invoicing – goes several stages further than this. This refers to a system whereby invoices are issued, transmitted, received, processed and stored automatically in a structured format.

Despite its business advantages, e-invoicing is one of those areas that often remains underexplored by finance leaders. For some, it’s a case of wait and see on the compliance front; a reluctance to take action until HMRC makes further inroads on mandated digital invoicing. For others, there’s a realisation that e-invoicing could well result in significant benefits to the business, but an overhaul of invoicing processes is considered too much of a hassle to contemplate.

So, are you missing an opportunity by not taking action in this area? What are the stumbling blocks to digital invoicing adoption – and how can they be overcome? Here’s how the land lies in 2024…

Mandatory e-invoicing: the current state of play

As our introductory guide explains, with e-invoicing, invoices are issued and transmitted in a standardised, machine-readable format – very often XML (Extensible Markup Language). This structured format characteristic means that invoice data can be read, captured, extracted, and acted upon automatically by buyers’ and sellers’ accounts solutions without the need for human input and without interoperability issues.

The same technology also allows key information to be automatically captured and logged with third parties – hence why tax authorities are big fans of it. If you make digital invoicing compulsory and combine it with an e-reporting requirement, you can capture details of all transactions at the point when an invoice is generated, thereby significantly reducing leeway for VAT fraud and error.

So far, more than 50 countries – including France, Spain, Italy, and Germany – have started implementing compulsory e-invoicing. Various countries – including those within the EU – are at different stages, but the rollout process is similar in each case: a mandate for B2G transactions in the first instance, followed by B2B (the timetable for implementation is usually dependent on the size of the company). Some countries (Italy, for instance) have extended the requirement as far as B2C transactions.

The UK is barely out of the starting blocks on this. If you supply to the NHS, e-invoicing is mandatory. Furthermore, there’s a general requirement for public authorities to receive and process digital invoices if their suppliers want to use them. Other than that, e-invoicing is not mandatory at either B2G or B2B level.

However, the direction of travel is pretty clear. HMRC’s overarching ‘Making Tax Digital’ strategy is focused squarely on reducing the tax gap, with a clear emphasis on “bringing the tax system closer to real-time”. In this context, it is generally accepted that it is only a matter of time until HMRC turns its attention to e-invoicing.

Why act now?

For businesses involved in cross-border transactions, there’s an obvious need to keep a close eye on the new requirements that are coming thick and fast throughout Europe and globally. This includes the need to comply with whatever invoice formatting requirements and required fields are stipulated by various tax regulators.

But even if this cross-border element is not relevant to your operating model, as Millennium Consulting’s digital invoicing guide recently highlighted, the wider business benefits of e-invoicing are compelling. This includes the possibility of being paid quicker, with less admin, a lower carbon footprint, lower costs, and fewer errors – not to mention stronger client relationships.

One of Millennium Consulting’s customers reports using their digital invoicing solution to post hundreds of invoices per minute while also automating in the region of 95% of the invoices they receive from their suppliers. More widely, digital invoicing has been reported to result in a reduction of cycle time by 65%, processing cost by 30-90%, and an improvement of on-time payment by 15-59%.

You could wait until a mandate arrives before considering e-invoicing adoption. Or you could start realising these benefits much sooner.

Barriers to adoption

Some of the concerns about e-invoicing that we encounter most often include the following:

  • Local compliance and customer preferences. The various countries we do business in have various and often very different e-reporting requirements in play. Alongside this, different clients have their own standards and preferences for formatting and required fields. Will we need a bunch of different solutions and processes for different contracts?
  • Internal interoperability. Will any new e-invoicing solution be able to work with our existing accounting and/or ERP software?
  • Cost. Will e-invoicing mean significant extra outlay?
  • Operational disruption. Should we expect cash flow issues if we switch from our existing process to a new one?
  • Buy-in. Will any new system be easy-to-use for both internal staff and customers?

The solution…

Millennium Consulting’s very own framework, Millennium Digital Invoicing (MDI) is designed to deliver precisely the framework you need for the successful implementation of digital invoicing.

Flexibility is key. The solution offers a robust, standardised way to manage incoming and outgoing invoices but does so without making built-in assumptions about the format of digital files. This means a single solution to meet all local e-invoicing and e-reporting requirements, as well as the various preferences of your customers and partners.

Offering seamless integration into your existing financial processes and rapid, hassle-free implementation with comprehensive onboarding from Millennium Consulting, MDI ensures you are all set to meet your digital invoicing needs, now and in the future.

To see what’s possible, get in touch for an MDI demo. 

Find out more about MDI