Simplifying finance: the shift from paper to e-Invoicing

Digitalisation olé! Tedious scanned paper invoices or manually typed Excel invoices are soon becoming a thing of the past – since January 2025, the Growth Opportunities Act (Wachstumschancengesetz, WCG) has introduced a comprehensive e-invoicing mandate for businesses in Germany. For some, the new machine-readable format has quickly become the norm, while other teams are still working on transitioning to the new standard. One thing is clear: this is the next logical step in the digitalisation of business processes.

We have summarised what these new regulations mean for accounting, how companies can significantly cut costs thanks to online invoicing, and which software makes the shift from paper to e-invoices easier.

Summary:

1. Key points
2. What is an e-Invoice?
3. Formats of e-Invoices
4. Benefits of electronic invoicing
5. Who is affected by the e-Invoicing mandate and when?
6. Programs for creating e-Invoices
7. Frequently asked questions about digital invoicing

Key points

• PDFs are not considered e-Invoices
• E-Invoices contain structured data that can be processed automatically
• The common formats for electronic invoices in Germany are XRechnung and ZUGFeRD
• Creating an e-Invoice requires specialised software
• There are individual software solutions as well as business accounts with integrated e-Invoicing software
• E-Invoicing has been mandatory for German companies since 2025, though transitional periods still apply

What is an e-Invoice?

Electronic invoicing (e-Invoicing) refers to the digital exchange of invoice data between business partners. This means scanned paper invoices are not included. Even though a PDF can be sent digitally, it still does not meet the e-Invoicing principle because it is designed to be read by people and processed manually.

For an invoice to qualify as an e-Invoice, it must be in a structured data format that allows automated processing. The legal requirements include information such as addresses, tax numbers, goods or services, and the total invoice amount including tax.

These detailed requirements are set out in Section 14 VAT Act. Modern e-Invoicing software organises all necessary data hierarchically, using formats like Extensible Markup Language (XML) or Universal Business Language (UBL). This hierarchical structure makes the data machine-readable.

Formats of e-Invoices

The Growth Opportunities Act follows the European directive and currently recognises two formats as e-invoices: XRechnung and ZUGFeRD.

XRechnung is a pure XML file without visual layout and requires specialised software to view comfortably as it can be hard to read for the untrained eye.

In contrast, ZUGFeRD combines structured XML data with a visible PDF component, which is why it is called a hybrid format. This allows both humans and machines to easily read the invoice.

Benefits of electronic invoicing

Maybe your team still creates invoices in Microsoft Excel or Word, saves them as PDFs, and sends them that way. E-Invoicing reduces manual steps and optimises digital processing – from issuing to archiving invoices:

• Elimination of time-consuming manual errors
• Automatic processing and direct import into accounting software
• Complete traceability thanks to electronic storage

Besides the potential for increased efficiency and fewer errors, e-Invoicing also offers other benefits for your business account and the environment:

• Savings on materials and postage (no more paper, printing, postage)
• Savings on tax advisor fees (faster digital access)

To sum up: e-Invoicing makes the invoicing process faster, safer, and more sustainable – valuable advantages for companies of all sizes.

Discover more about e-invoicing with a business account here.

Who is affected by the e-invoicing mandate and when?

Since January 2025, it has been mandatory for all companies trading within the EU to issue e-Invoices. The new standard applies to invoices addressed to businesses and public authorities alike, covering the entire business-to-business (B2B) sector.

In fact, the Growth Opportunities Act also provides transitional periods. Depending on the previous year’s turnover, companies have until 1 January 2028 to implement e-invoicing and train their teams.

Programs for creating e-Invoices

Microsoft Excel and Word are primarily designed for calculations and word processing. Fortunately, there are now many other software solutions to help meet the new legal requirements and facilitate the transition from paper invoices to the digital standard.

Most of these tools not only support creating e-invoices but also offer practical functions for sending, storing, and tracking invoices. Alongside accounting tools like DATEV or Lexware Office, many neobanks now offer invoicing and accounting functions integrated into their business accounts, so everything can be viewed on a single platform.

Vivid Money has developed an easy-to-use solution for companies and freelancers wanting to speed up their financial management without getting bogged down in complicated software. Its digital business accounts already include a powerful AI tool for e-invoices. On top of that, features for monitoring outstanding payments and sending reminders are included. This kind of innovation is rare in business account offerings: free access to these tools saves costs, which is especially important for small to medium-sized businesses and freelancers.