What is eInvoicing and what does it mean for accountants and bookkeepers?

We highlight the benefits of eInvoicing, how it works, and the software that can support your clients’ eInvoicing needs.

Laptop showing invoicing software

eInvoicing allows businesses and public sector services to send and receive invoices digitally – without the need for paper invoices or emailed documents. eInvoices 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, eInvoicing can open up opportunities with international trading partners. This is particularly relevant for those who join the Peppol eInvoicing network, which is used throughout Europe. Accountants and bookkeepers should be ready to transition clients to eInvoicing, should they wish to explore this opportunity.

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

What is eInvoicing?

eInvoicing 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 eInvoicing network.

When your client receives a supplier’s eInvoice, 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 the ones they work with, either. As long as they’re using the same eInvoicing network (which we’ll expand on later in this guide), they can receive eInvoices from all of their partners.

Some benefits of eInvoicing include:

  1. Less invoicing admin
  2. Trade opportunities with Europe
  3. Increased security and legitimacy (it’s harder to imitate an eInvoice on a secure network)
  4. Better cash flow visibility – with supplier invoices automatically added as bills

How does eInvoicing work?

eInvoices are sent via digital ‘networks’. Instead of sending an invoice via email or post, businesses can send them directly to the recipient’s accounting software.

For the purpose of this guide, we’ll focus on the Peppol network. Peppol is an open and secure network used to send and receive invoices. It’s the standard – trusted by businesses and governments – throughout Europe, Australia, New Zealand and Singapore.

Using a combination of digital signatures and encryption, invoicing data is transmitted safely and securely on the Peppol network. Other examples of eInvoicing networks include Basware and Crossinx.

eInvoices can be sent and received on the Peppol network, using a Peppol access point or compatible software. Xero is digital invoice-ready, and UK-based businesses can receive invoices on the Peppol network via Xero today.

eInvoicing 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 eInvoices from suppliers.

eInvoices contain much of the same data as a conventional invoice – the difference is how they’re delivered to the recipient's accounting system. When your client receives an eInvoice, it will appear as a bill to be paid in their accounting system.

eInvoicing and tax regulations

eInvoicing also helps businesses comply with tax regulations. The creation and transmission of eInvoices 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 eInvoicing network, and the structured data is far easier for auditors to assess.

Register for eInvoicing with Xero

Xero is the first major small business accounting software provider to offer eInvoicing functionality. If your clients are just getting started with the technology, they can opt to receive their Xero invoices via eInvoicing to see how it works. Accountants and bookkeepers can opt to receive Xero eInvoices 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. You’ll be taken through to Invoici, Xero’s tool for Peppol eInvoicing. Just follow these steps:

  1. In the ‘Business’ menu, head to ‘Bills to pay’
  2. Select ‘Automate bill entry’, then click ‘Register to receive eInvoices’

You’ll then be taken to Invoici from Xero and should follow these steps:

  1. Select the organisation name, then click ‘Allow access’
  2. Select the checkbox to agree to the terms and conditions
  3. Select whether they want to receive Xero subscription invoices as eInvoices
  4. Click ‘Complete registration’

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

Benefits of eInvoicing for accountants and bookkeepers

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

eInvoicing 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 eInvoicing below.

Shorten your cash flow cycle

Late payments impact cash flow for small businesses on a global scale. Back in 2019, internal Xero data showed that small businesses in Singapore see more than half of their invoices (55%) paid late. Businesses in the US are paid an average of 5.9 days late, according to recent Xero data. And late payments hit a three-year-high in the summer of 2023 for UK-based small businesses.

eInvoices 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.

eInvoicing systems 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.

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 eInvoicing software, eInvoices 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.

Facilitate cross border business

The global accessibility of eInvoicing 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 eInvoicing. The most recent was 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 eInvoices is mandatory for suppliers to the UK’s National Health Service, eInvoicing 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.

How to get started with eInvoicing using Xero

The eInvoicing 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 eInvoices with other businesses and government bodies quickly and safely.

Why is Xero the best eInvoicing software for accountants and bookkeepers?

eInvoicing 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 eInvoices today. You don’t need to download additional software or learn a new programme – you can manage eInvoices directly from Xero.

Xero is easy to use and affordable

Along with Peppol eInvoicing 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

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

When you receive an eInvoice 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.

Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

Become a Xero partner

Join the Xero community of accountants and bookkeepers. Collaborate with your peers, support your clients and boost your practice.