What is e-invoicing and what does it mean for accountants and bookkeepers?

Published on Wednesday 10 September 2025

Table of contents

• E-Invoicing Explained: How Digital Invoicing Works and Why It Matters
• What is e-invoicing?
• The e-invoicing process
• E-invoicing requirements
• 3 E-invoicing benefits for accountants and bookkeepers
• E-invoicing software: Register for e-invoicing with Xero
• How to get started with e-invoicing using Xero

E-invoicing explained: how digital invoicing works and why It matters

E-invoicing allows businesses and public sector services to send and receive invoices digitally – without the need for paper or emailed documents. This means less repetitive admin and increased efficiency for you and your clients.

E-invoices are sent on digital networks, and land directly in the recipient’s accounting software, meaning less time spent on entering transaction data and more reliable numbers.

For small businesses, e-invoicing can open up opportunities with international trading partners. This is particularly relevant for those who join the Peppol e-invoicing network, which is used throughout Europe. Accountants and bookkeepers should be ready to transition clients to e-invoicing software and processes, should they wish to explore this opportunity.

But before we get into the details, let’s take a closer look at how e-invoicing works.

What is e-invoicing?

E-invoicing is a method of exchanging invoices between accounting systems.

Instead of sending a PDF file or online invoice to a client, you can automatically send the invoice to their accounting system via a secure e-invoicing network.

It’s an automated data transfer between accounting systems, instead of the standard invoicing process which is an exchange of files. When your client receives a supplier’s e-invoice, there’s no need to manually type the details into software or upload a copy to their accounting system. The information will automatically be captured in the right place.

Businesses don’t need to use the same accounting system as suppliers or customers, either. As long as they’re using the same e-invoicing network (which we’ll expand on later in this guide), they can receive e-invoices from all of their partners.

Some benefits of e-invoicing include:

1. Less invoicing admin
2. Fewer errors (because there’s less manual admin)
3. Trade opportunities with Europe
4. Increased security and legitimacy (it’s harder to imitate an e-invoice on a secure network)
5. Better cash flow visibility – with supplier invoices automatically added as bills

The e-invoicing process

The e-invoicing process should be virtually the same, regardless of which e-invoicing software you and your clients choose:

1. Invoice creation: E-invoices are drafted as ‘structured digital data’ – this means they’re able to be submitted digitally and received by the customer or client. With specialist e-invoicing software, creating an e-invoice is as simple as creating a traditional one.
2. Network transmission: When you or your client sends the e-invoice, it travels via a digital network. An example is Peppol, an open and secure network used to send and receive invoices. It’s trusted by businesses and governments – throughout Europe, Australia, New Zealand and Singapore.
3. Automated data capture: E-invoices are exchanged using digital signatures and encryption as security mechanisms, to keep data safe. Recipients get the e-invoice in their accounting system automatically, with all the information filled out and no need to manually upload the invoice. In accounting software like Xero, the e-invoice appears as a draft bill to be paid.
4. Better records and audit trail: E-invoicing provides a clear data trail, making it easier to trace back documents and payments, and validate them.

E-invoicing is still in its early days in the UK. While only a small number of UK businesses are using the Peppol network right now, registering today means businesses are ready to receive e-invoices from suppliers. Xero is digital invoice-ready, and UK-based businesses can receive invoices on the Peppol network via Xero today.

E-invoicing requirements

There are no legal requirements in the UK to submit e-invoices yet – though a consultation was in progress to hear from businesses on electronic invoicing proposals. The UK public sector has already seen success with e-invoicing adoption, specifically in the NHS.

With increasing digitisation, it’s likely we could see more businesses adopting e-invoicing processes. Especially if it’s encouraged and supported by the UK government.

The following e-invoicing requirements exist for VAT in the UK, but they’re generally good guidance points:

• The same information you include in a traditional invoice should be covered in the e-invoice
• The e-invoice can be formatted using traditional EDI standards (UN/EDIFACT, EANCOM, and ODETTE), PDF, XML, and CSV
• You must ensure data authenticity and integrity, typically through digital signatures, electronic data interchange (EDI) systems, and internal controls that create a reliable audit trail

E-invoicing software enables businesses to send digital invoices that meet the standards above. This can come in the form of compatible accounting or ERP software, which acts as an access point to the e-invoicing network. Once sent, the invoice lands in the recipients accounting software, ready to pay and file away.

E-invoicing software enables businesses to send digital invoices that meet the standards above. This can come in the form of compatible accounting or ERP software, which acts as an access point to the e-invoicing network. Once sent, the invoice lands in the recipients accounting software, ready to pay and file away.

E-invoicing and tax regulations

E-invoicing also helps businesses with tax compliance. The creation and transmission of e-invoices is completely digital, and doesn’t require information to be entered manually into accounting software.

This can help with Making Tax Digital for VAT’s digital linking requirements. Plus, documents are easier to trace on an e-invoicing network, and the structured data is far easier

3 e-invoicing benefits for accountants and bookkeepers

When your clients start accepting e-invoices from suppliers, you can spend less time on manual data entry and more time helping them make sense of the numbers.

E-invoicing is compliant with UK VAT Invoice requirements, and provides a secure system for submitting and receiving invoices. But that’s not all. Let’s explore more benefits of e-invoicing below.

1. Shorten your cash flow cycle

Late payments impact cash flow for small businesses on a global scale. Many Singaporean businesses are suffering cash flow issues, which are intensified by late payments. Businesses in the US are paid an average of 9.1 days late, according to Xero data. And UK small businesses are suffering the longest payment times since the pandemic.

E-invoices can be delivered to the recipient’s accounting software in a matter of seconds. This makes it easier for clients to see exactly what’s due to be paid, and could help them manage their cash flow cycles better.

E-invoicing processes are designed to deliver all of the necessary information to users – so there’s less chance of a convoluted back-and-forth between clients and suppliers to confirm invoice details, meaning faster payments.

2. Reduce admin time

There are many ways to create and send invoices to customers. You can send a PDF via email or post a paper copy in the mail. In both of these scenarios, the recipient still needs to open the invoice when it’s received and enter the data into their own accounting system. This manual process takes time for you, your clients and their customers. If the invoice needs to be adjusted, this can lead to further payment delays.

When you use Xero’s e-invoicing software, e-invoices automatically appear as a draft bill in Xero for you or your clients to approve. This eliminates the need for manual data entry, reducing the risk of errors for both your clients and their customers. It also means you and your team spend less time on admin tasks and more time advising your clients on the strategic aspects of their businesses.

3. Facilitate cross border business

The global accessibility of e-invoicing means more countries around the world have started accepting it as a best practice (and sometimes mandatory) standard.

The UK has signed multiple digital trade agreements with Singapore, Australia, and New Zealand – all of which mention e-invoicing. One agreement of note is the UK-Singapore Digital Economy Agreement (DEA), signed in February 2022. The agreement aims to facilitate growth and collaboration in the digital economy, through systems such as paperless trading, e-payments, and secure cross-border data flows.

While sending e-invoices is mandatory for suppliers to the UK’s National Health Service, e-invoicing for UK businesses is completely optional. But given the drive towards digitalisation – through Making Tax Digital and upcoming changes like Companies House reform – it’s a great time to encourage clients to explore electronic invoicing choices.

E-invoicing software: Register for e-invoicing with Xero

Xero is the first major small business accounting software provider to offer e-invoicing functionality. If your clients are just getting started with the technology, they can opt to receive their Xero invoices via e-invoicing to see how it works. Accountants and bookkeepers can opt to receive Xero e-invoices too, using your practice organisation.

You’ll need to get clients registered on the Peppol network before they can start receiving e-invoices.

You can do this on their behalf if you have the ‘subscriber’, ‘advisor’ or ‘standard’ role in their organisation. Just follow these steps:

1. In the ‘Business’ menu, head to ‘Bills to pay’
2. Select ‘Automate bill entry’, then click ‘Register to receive e-invoices’
3. Enter your business’s VAT number, then click ‘Search for business information’
4. Verify your information, then click ‘Yes, these details are correct’
5. Enter details for the business contact. Select the checkbox to agree to the terms and conditions
6. Click ‘Complete registration’

Check our support page for in-depth guidance on registering for e-invoicing with Xero.

How to get started with e-invoicing using Xero

The e-invoicing process is similar to traditional invoicing – you just need to make sure clients are registered to the Peppol network, and have compatible software in place. Xero allows your clients to exchange e-invoices with other businesses and government bodies quickly and safely.

Why is Xero the best e-invoicing software for accountants and bookkeepers?

E-invoicing does away with tiresome data entry. Instead of updating an accounting system manually, you can focus on advising and supporting your clients with their long-term financial goals.

Xero is digital invoice-ready

This means you and your clients can start receiving e-invoices today. You don’t need to download additional software or learn a new programme – you can manage e-invoices directly from Xero.

Xero is easy to use and affordable

Along with Peppol e-invoicing compatibility, Xero has the tools to help you and your clients run healthier businesses.

Spend less time on daily admin by automating invoices and payment reminders. See your own and your clients’ financial positions more clearly with customiseable reports and forecasts. And integrate with all your favourite tools and apps – for seamless, simple workflows that save you hours every week.

Streamline your invoicing process

E-invoicing is fast, secure and the standard for countries around the world. Adopting e-invoicing processes in your practice and on behalf of your clients could open up new opportunities to trade internationally.

When you receive an e-invoice in Xero, it’s automatically drafted as a bill. Save time on manual data entry and invoice preparation that could be devoted to strategic work or client advisory instead. Prioritise getting paid by streamlining your invoicing processes today.