With the digital transformation of tax administration, e-invoicing is becoming increasingly important in Germany. Companies must adapt to the digitization of their invoicing processes to comply with the legal requirements of the Federal Ministry of Finance (BMF). But what exactly is an e-invoice and what advantages does it offer? What legal requirements exist in Germany and how can these requirements be implemented in SAP? You will find the answers to these questions in the following sections of this blog article.
What is an e-invoice?
An e-invoice (electronic invoice) is a digitally transmitted invoice document sent in a machine-readable, structured data format. It allows for electronic processing that runs automatically in conjunction with your ERP system. Unlike traditional invoices, which are sent as PDFs or paper documents, e-invoices must be sent in an XML file containing all relevant invoice information and being machine-readable. The available formats for sending electronic invoices are divided into structured data formats (e.g., EDI, XRechnung) and hybrid formats (e.g., ZUGFeRD).
- Structured data consists exclusively of machine-readable data and is specifically designed for the electronic transmission and automated processing of information. A well-known example in Germany is the XRechnung format. This was developed specifically for use in the public sector and is intended for future use in the B2B sector.
- Hybrid data formats combine the advantages of machine-readable structured formats with a representation that is also human-readable. A well-known example is the ZUGFeRD format, in which an XML dataset containing structured invoice data is embedded in a PDF file. This allows the recipient to process the invoice automatically as well as manually review it in a human-readable format.
What are the advantages of e-invoicing?
The introduction of e-invoicing offers companies a multitude of advantages that not only improve efficiency and cost structure. E-invoices also reduce the error rate regarding the factual and arithmetical accuracy of the invoice and its accounting. Companies that modernize and optimize their invoicing process by implementing e-invoicing not only position themselves as pioneers in their industry but also lay the foundation for future growth and success. Therefore, we will take a closer look at the advantages of e-invoicing and how it can optimize business processes.
Increased efficiency and cost savings
One of the biggest advantages of e-invoicing is the significant increase in efficiency in the invoicing process. By automating invoicing and processing, companies can save time and resources, as well as minimize manual data entry and transmission errors. Employees can invest the time saved through automation in value-adding tasks instead of performing time-consuming administrative work. Furthermore, the costs associated with printing and mailing invoice documents are eliminated.
Compliance with legal requirements
Many countries are increasingly introducing legal requirements for the use of e-invoices. Companies that use e-invoices ensure they meet these requirements and thus avoid potential legal consequences or sanctions. Compliance with these regulations is facilitated by standardized formats such as XRechnung and ZUGFeRD, which comply with legal requirements.
Faster payments
E-invoices promote faster payments because they are generally processed more quickly than traditional invoices. Automated processes enable faster approval and processing, which reduces the company’s liabilities. Additionally, recipients have the opportunity to review invoices immediately and clarify any questions, which can shorten payment terms and increase early payment discounts.
Sustainability and environmental protection
The switch to e-invoices also contributes to sustainability and environmental protection. By eliminating paper and printing of invoices, companies significantly reduce their ecological footprint.
What legal requirements must German companies comply with?
Invoice receipt
The German Growth Opportunities Act, passed in March 2024, mandates the receipt of e-invoices in the B2B sector from January 1, 2025. This measure aims to help tax authorities better digitize tax processes and combat VAT fraud. From this date, companies in Germany must be able to receive and process e-invoices for domestic taxable B2B transactions. These e-invoices must comply with the European standard EN 16931 and use structured data formats such as XRechnung or ZUGFeRD.
Outgoing invoice
January 1, 2025 to December 31, 2026
In 2025 and 2026, invoices may still be submitted in paper form or as PDF files. Electronic invoices that do not conform to the EN 16931 standard will also remain permissible during this period – however, the recipient’s consent is required.
January 1, 2027 to December 31, 2027
In 2027, specific transitional rules for the obligation to issue e-invoices will apply in Germany, which are linked to the turnover of the invoice issuer from the previous year (2026):
- Obligation to use standard e-invoices for higher turnover: Companies whose turnover exceeds the threshold of 800,000 euros in 2026 are required from 2027 onwards to send their invoices in the prescribed electronic format according to EN 16931 without exception.
- Transitional arrangement for smaller companies: Companies whose turnover in the previous year (2026) did not exceed €800,000 may continue to issue paper invoices or other electronic formats that do not conform to the EN 16931 standard for B2B transactions in 2027. However, the invoice recipient must have expressly agreed to the use of such alternative formats (including paper invoices).
These transition periods offer smaller companies additional time to switch over, while larger companies are already required to fully utilize e-invoicing. From January 1, 2028, this obligation will apply to all companies without exception.
What challenges do companies expect when implementing e-invoicing?
Implementing e-invoicing also means that companies have to adapt their IT systems. Country- and industry-specific differences in legal requirements and formats, as well as implementation and integration with existing ERP systems, pose a significant challenge for many companies. In particular, the introduction of e-invoicing presents specific challenges for complex and highly customized systems like SAP.
- Compatibility and integration: E-invoicing formats such as XRechnung and ZUGFeRD must be compatible with existing SAP modules. Adjustments are required to ensure that the data can be processed correctly and completely.
- Compliance and legal requirements: Adhering to country-specific regulations requires dynamic system adaptation, as different countries implement different e-invoicing standards. Therefore, companies need a flexible and adaptable solution to remain compliant in every market.
- Adaptation and training: Implementing e-invoicing often requires comprehensive training for employees involved in the invoice processing process. Furthermore, full integration of e-invoicing into the SAP system necessitates adjustments to existing workflows and approval processes.
What solution does SAP offer to integrate e-invoicing into the system landscape?
SAP’s Document and Reporting Compliance (DRC) solution offers a powerful and comprehensive solution that enables the integration of e-invoicing and the management of statutory tax reports into existing system landscapes. Incoming documents can be automatically captured as electronic receipts and displayed and managed in the central eDocument Cockpit. The solution automatically converts outgoing documents into the required format and ensures direct transmission to the recipient or the responsible authority.
With the help of an integrated dashboard, companies maintain an overview of the entire process at all times, can monitor the status in real time, and make corrections as needed. Integration with the Pan-European Public Procurement Online (PEPPOL) network for the transmission of electronic documents is also easily possible.
A key advantage of the DRC is its function as a standard SAP solution within SAP’s “Keep the core clean” strategy. Since no additional external interfaces are required, implementation effort is significantly reduced and the risk of errors when connecting external programs is minimized. Companies with a global and complex structure and numerous subsidiaries particularly benefit from the centralized management of all e-invoicing processes within a single tool. The administrative burden of centralized processing via the DRC is significantly reduced.
The solution also offers a high degree of future-proofing, as the public cloud version is regularly updated by SAP to ensure compliance with current legal requirements. In comparison, the private cloud version offers greater flexibility and customization options, but requires companies to ensure their solution meets legal requirements.
With the DRC, SAP provides a central and efficient platform that simplifies the processing of e-invoices and optimizes the creation and transmission of legally required tax reports. This significantly reduces the operational burden on companies while simultaneously ensuring full compliance with legal requirements.
adesso business consulting as a partner for the successful implementation of SAP Document and Reporting Compliance (DRC)
Introducing e-invoicing in conjunction with an SAP S/4HANA transformation can quickly become overwhelming. At adesso business consulting, we understand the complexity of this challenge and support you in making the entire process efficient and structured. We not only prepare you optimally for the requirements of German legislation, but our experienced team also accompanies you in every project phase to ensure a smooth and future-proof implementation that considers both national and global aspects.
Together with you, we develop a customized project strategy precisely tailored to your needs and conduct a thorough analysis of your current situation. We assess optimization potential in your existing processes and identify opportunities for increased efficiency. We also support you in selecting the right tool to ensure seamless integration and guide you through the process.
From detailed project planning to targeted implementation, we handle every step of the project process. We then conduct comprehensive testing to ensure the system functions flawlessly. And even after launch, we don’t leave you on your own: Our experts offer targeted training and intensive support during production (hypercare) so your employees can work confidently and efficiently with the new system.
Trust in our expertise and let us work together to make your SAP DRC implementation a success. Contact us today and secure your future with an efficient and legally compliant e-invoicing process!
