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E-invoice mandate in Germany – why is this one so intriguing and significant? 

Germany, being the economic powerhouse of Europe, has a significant say in shaping e-invoicing practices across the European Union. Therefore, the recent decision to enforce an e-invoice mandate in Germany has sparked considerable interest. However, beneath the surface of this seemingly straightforward transition lie various challenges that require careful consideration. 

In contrast to some neighboring countries like Poland and France, Germany has taken a relatively open approach to e-invoicing. While insisting on e-invoices, the regulations allow businesses the flexibility to integrate them according to their operational needs. The primary requirement is to phase out paper and ensure that all e-invoices comply with EN standards, providing room for adaptation. 

The e-invoice mandate in Germany is brilliant—it aligns with business interests and enables companies to capitalize on pre-existing infrastructure and formats. While forcing the change at the same time.

Kamil Cichocki, Product Manager, E-invoice Compliance 

What distinguishes this approach is its emphasis on prioritizing business benefits and continuity, rather than solely narrowing the VAT gap, as seen in other countries. While tax reporting reforms are on the horizon, they are not directly tied to the e-invoice mandate in Germany but are expected to be integrated later through ViDA around 2030. Nonetheless, this reform lays a robust foundation for the future implementation of ViDA. 

Not a walk in the park

However, transitioning to this new system poses practical challenges. Reviewing and potentially revamping current B2B invoicing setups may entail changes to ERP systems. Industries accustomed to EDI practices will also need to adjust, as the Germany e-invoicing mandate covers all invoices, including EDI/point-to-point setups. 

Moreover, the relationship dynamics between suppliers and buyers may shift, especially in traditional industries where buyers traditionally dictated invoice specifics. With suppliers now empowered to send e-invoices without buyer consent, questions arise about accepting technically compliant invoices versus buyer-specific data requirements. 

Flexibility is crucial during this transition, requiring adaptability from AP processes and ERP systems to accommodate various formats, including compliant ones like ZUGFeRG. Additionally, cross-border invoicing adds complexity, necessitating the continuation of diverse multi-format processes, unfortunately including the support for traditional PDFs and paper. 

Crucially, collaboration between suppliers and buyers during this transition is vital, potentially involving discussions or mini-projects with each business partner to align on the timing and content of changes. 

The change is significant, perhaps even greater than many companies have realized. However, so is the opportunity it brings.

The upside and motivation to move immediately? 

For years, German businesses have wrestled with paper-based and PDF invoices sent via email. Some tried to push suppliers into portals for data input, and attempts to move away from paper were also done by providing software solutions to convert print streams into “e-invoices.” The e-invoice mandate in Germany compels modernization, harmonization, and simplification of processes, fostering scalability and ease of maintenance, which is a significant positive. Importantly, it takes out a legacy.  

This transition offers an opportunity to simplify and unify processes, moving from a point-to-point model to a many-to-many approach. Standardized formats and data content facilitate seamless interoperability among service providers, easing cross-border transactions and driving efficiency in supply chain operations. 

Standardization serves as a catalyst for automation and efficiency, ultimately leading to significant process improvements and reduced manual work. While change may entail initial challenges and costs, the long-term benefits are substantial, as evidenced by studies like billentis’ “Watch the Tornado”, showing potential savings of 60-80% in invoicing costs.  

Additionally, since you have to act anyway, this mandate presents an opportunity to reconsider the conventional “ERP-box.” Is the current system optimal for managing e-invoices (both sending and receiving) and facilitating efficient modern invoice processing and automation? Or would it be time to move to industry best practices here as well? 

One key piece of advice: Establish a comprehensive program to manage the change. This isn’t just an internal IT project – it impacts all your suppliers and customers too. And it’s crucial to start early.

Next steps? 

In conclusion, the need for German companies to transition to e-invoicing cannot be overstated. While challenges exist, the benefits of e-invoicing in terms of efficiency, cost savings, and compliance are undeniable.  

As the compliance deadline approaches, businesses must act swiftly to modernize their invoicing processes, leveraging technology to drive innovation and competitiveness in the digital era. Delaying the transition only prolongs inefficiencies and inhibits growth. The time for change is now – welcome e-invoicing into your business strategy and unlock its maximum potential in the modern business landscape. 

Transitioning to e-invoicing certainly presents its share of challenges, especially when considering the complexities of tax control methods and the absence of a centralized platform. It’s understandable that German companies are grappling with which compliant formats to prioritize amid this uncertainty. However, it’s reassuring that the government is taking proactive steps by planning to issue best practices and engage in public consultations. Such measures can help alleviate concerns and streamline the transition process for organizations. 

Get ready for mandatory B2B e-invoicing in Germany 2025 onwards

Learn about mandatory e-invoicing in Germany, what changes are coming, and how you should proceed with those.

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