Which formats are permitted for electronic invoices?

How avvaneo know so much about invoice formats

We have been a focused specialist in automating invoice receipt processes for over 25 years. We therefore know the requirements in the accounting departments of a wide range of industries from years of project experience. We can help you to clearly understand what the changeover will mean for your company and how you can adapt to it with as little effort as possible.

Our most important recommendation at this point is to adopt all permitted e-invoice formats through a standardized entry point to continue using the data seamlessly from then on. But which different e-invoice formats from domestic or foreign suppliers will you have to deal with in the future?

What is an electronic invoice?

An invoice is described as electronic if the data is embedded in it in a structured form and therefore also reaches the recipient in a structured form. This means that all data is linked to information about its meaning so that it can be processed fully automatically.

Simple PDF invoices do not contain such information. They will therefore no longer be sufficient in the future, as the letters and numbers they contain require an intermediate interpretation step before they can be transferred to the accounting software or ERP systems.

Electronic invoices are based on XML

Your suppliers can choose between several different formats for the electronic invoice and exchange further information with you in addition to the mandatory data, for example on locations, delivery routes, or departments. The choice of format depends on factors such as the mandatory legal information of the country in which the company is based, its industry, individual specifications, or the software solutions used.

However, all formats defined in the regulations or the software solutions have the XML format (Extensible Markup Language) on a uniform basis. This is a markup language that can be used to define any type of data. It is used to significantly simplify the exchange of data between computer systems (websites, databases, software). And because XML is now the most widely used format for this, it is now the predominant structuring method for e-billing worldwide.

ZUGFeRD: the German standard for hybrid invoices

ZUGFeRD is the abbreviation for Zentraler User Guide des Forums elektronische Rechnung Deutschland. This is a hybrid invoice format with the extension “pdf” because it combines a PDF invoice with an XML data record. What looks like a standard PDF document at first glance contains all the necessary data in machine-readable form behind the image layer.

This method was originally developed specifically for public contracts in Germany to combine the advantages of electronic and traditional invoices. All versions from ZUGFeRD 2.0 onwards now comply with the EU directive for e-invoices (2014/55/EU).

Advantages of ZUGFeRD:

• Hybrid solution: The invoice can be read by employees as a PDF and also by the software thanks to the embedded XML file.
• Compatibility: Some accounting and ERP systems can already process ZUGFeRD invoices. avvaneo eInvoicing offers a comprehensive solution for this.
• Legal conformity: ZUGFeRD complies with German and EU government requirements for electronic invoices.

The current version ZUGFeRD 2.1 is suitable for all sectors and international use. Good to know: If the PDF of the ZUGFeRD invoice contains different information than the XML file, the information contained in the XML will be authoritative in the future.

XRechnung: the format of the public sector

The XRechnung is a pure XML format. The transmitted data is initially only machine-readable. Recipients only see the data on their screen once it has been transferred to their software. In Germany, XRechnung has been mandatory for invoicing to federal ministries since the end of 2020. By EU Directive 2014/55/EU, this also applies to all contracting authorities within the European Union.

Advantages of the XRechnung:

• High compliance: Meets the requirements of public institutions in Europe.
• High standardization: XRechnung invoices follow a strict format that facilitates machine processing.
• High data security: An XRechnung ensures all relevant invoice data is transmitted securely and completely.

XRechnung is just as valid a format as ZUGFeRD. It enables structured, machine-readable transmission of invoice data to your accounting department and will therefore certainly gain importance in the future if countries, sectors, and companies only send e-invoices.

What's next with EDIFACT?

EDIFACT is the abbreviation for Electronic Data Interchange for Administration, Commerce, and Transport and is a global standard for the exchange of electronic data from various business documents. It was introduced by the UN and can be used for orders, delivery bills payment instructions, and also for invoices.

EDIFACT plays a major role in global business transactions today but does not correspond exactly to the EU standard for e-invoicing. The Federal Ministry of Finance is currently working on a solution to ensure that the EDI procedure is also compatible with the requirements for electronic invoices. This will probably require some technical adjustments.

Advantages of EDIFACT:

• Internationality: EDIFACT is used worldwide.
• Possible applications: EDIFACT is open for a wide variety of business documents.
• Automation: EDIFACT data enables direct communication from computer to computer and can therefore accelerate numerous processes down to real-time.

EDIFACT is particularly widespread in the automotive industry, logistics, and international trade, where large volumes of invoices and other business documents are constantly flowing back and forth across all borders. Politicians are therefore endeavoring to enable this proven standard for global electronic data communication for e-invoices as well.

The advantages of electronic invoices speak in favor of rapid preparation

The switch to electronic invoicing brings so many advantages for both clients and suppliers that companies should prepare for it sooner rather than later. The changeover is primarily motivated by these advantages:

1. Cost savings: electronic invoices eliminate the need to fiddle with paper and postage and reduce overall manual effort in many places.
2. Process acceleration: E-invoices are automated to check, approve, post, and pay.
3. Legal certainty: between 2025 and 2028, e-invoicing will become increasingly mandatory, including in terms of archiving.

For your incoming invoice processing, this means that you will be able to accept all invoice formats via a standardized input channel as soon as possible. This will also affect the rest of the invoices that come in by letter, PDF, or even just as a receipt, such as travel tickets, other small-value invoices, or transactions that are tax-free by § 4 no. 8 to 29 UStG.

Which solution suits your company?

The ideal is clear: your accounting department can easily process any invoice format automatically and forward the data to the correct next process steps. Whether XRechnung, ZUGFeRD, EDIFACT, or even unstructured formats - you have an input channel that accepts all formats correctly for your systems.

With avvaneo you get everything you can out of it

avvaneo already offers you an easy-to-implement platform for AI-supported processing of all types of invoices. With our tools already available today, you can make the transition to e-invoicing easier and get everything out of the electronic formats that will be possible in the future. You can achieve this because avvaneo Expedite and avvaneo eInvoicing allow you to combine and strengthen the potential of e-invoices with AI. This opens up several new avenues for your accounting:

1. You can seamlessly automate even more process functions (reconcile and check documents, allocate, assign to accounts, release, pay on time, etc.).
2. You have enormous possibilities for lightning-fast and high-resolution data analyses.
3. Forecasts on balances, costs, cash flows, or profits are based on a seamless, up-to-date data set.
4. You have the option of continuous automatic monitoring of accounting quality so that any kind of discrepancy is displayed in real-time.

Or much simpler: get in touch with us!

We will be happy to explain to you in a non-binding call how you can use our help to prepare for the introduction of e-billing for greater efficiency, more accuracy, and an increasing degree of automation. And this even involves relatively little financial outlay. We look forward to hearing from you.