What is e-invoicing?

Electronic invoicing, or “e-invoicing” , is the exchange of invoice documents between a supplier and a customer in a structured digital format. Unlike traditional paper invoices or PDF documents sent by email, e-invoices are generated, transmitted and received in a standardised electronic format that allows for automated processing.

How does e-invoicing work?

The e-invoicing process typically begins with the supplier creating an invoice using specialised software. The e-invoice is then transmitted electronically to the customer's system, which automatically receives and processes it. The invoice data is integrated into the customer's accounting system without intervention, eliminating the need for manual data entry and paper handling.

Benefits of e-invoicing

The main benefit of e-invoicing is that it significantly increases efficiency and reduces processing times. The automated nature of e-invoicing reduces errors in invoice processing, potentially leading to faster payments and improved cash flow.

Challenges of e-invoicing

Businesses may face some challenges in its implementation. The initial costs of setting up e-invoicing systems can be significant, and employees may require training on new processes. Ensuring compliance with relevant standards and regulations is crucial, as is the successful integration of e-invoicing with existing accounting systems.

International approach

E-invoicing is gaining global traction, with more than 90 countries already using or in the process of implementing e-invoicing mandates. Latin American countries such as Brazil and Mexico have been at the forefront of this trend, often using e-invoicing as a tool to modernise their tax systems.

The EU's VAT in the Digital Age (ViDA) package of measures includes an EU-wide mandate for real-time digital reporting for cross-border trade based on the standardisation of e-invoicing. The e-invoicing and digital reporting rules are currently due to be effective from 1 July 2030.

Current UK position

Currently, the use of e-invoicing in the UK is voluntary for most businesses. However, some businesses have already adopted e-invoicing systems, particularly where they trade internationally or interact with organisations that require e-invoicing.

It's important to note that e-invoicing is already mandatory in parts of UK public procurement. Public authorities covered by the procurement regulations must be able to receive and process compliant e-invoices, and suppliers to NHS England already use the Pan-European Public Procurement Online (PEPPOL) network to exchange e-invoices.

Looking ahead

At the Budget 2025, the government announced that it will “require all VAT invoices to be issued in a specified electronic format from April 2029”. This followed a period of consultation between February and May 2025 to gather views on standardising e-invoicing and “how to increase adoption of e-invoicing across UK businesses and the public sector”.

In its response to the consultation, ICAEW expressed strong support for the adoption of e-invoicing and recommended that the government prioritises voluntary adoption of e-invoicing, with mandation delayed until at least 1 January 2030.

In June 2026, the government announced that “the electronic procurement system PEPPOL will be the core interoperability network for e-invoicing in the UK”.

The government is expected to publish an implementation roadmap for e-invoicing at the Autumn budget on 28 October 2026.

Further information

• E-invoicing: digital revolution or compliance hurdle?
• VAT gets its day in court – again