By Petra Beck, Senior Analyst, Software Practice at Infosource
May 2024
A business-to-business (B2B) invoicing mandate in Germany was established as part of the Growth Opportunities Act, which received final government approval on March 22, 2024. This will have a material impact on the European Capture market since Germany is the largest country in the Europe, Middle East and Africa scanner and Capture & IDP software markets.
Germany joins a long list of EU countries and other large nations that are starting to mandate e-invoicing in the B2B sector in an attempt to accelerate digitalization and optimize and secure the VAT tax system. The German e-invoicing mandate relates to a B2B sale between two businesses that are resident in Germany.
The implementation of the mandate starts in January 2025 with the required readiness of businesses to accept e-invoices in the defined structured formats while the issuance of invoices remains voluntary to three years depending on company size. Starting in January 2027, it is mandatory for large companies, and in January 2028 for all businesses, to issue invoices that comply with the new standards.
MARKET IMPACT
Capture hardware vendors
Invoices are a key document type in business inputs with a significant portion arriving on paper where B2B e-invoicing mandates have not yet been implemented. As these mandates are rolled out, they will have a material impact on scanning volumes. This will translate into reduced demand for scanners and multifunction printers (MFPs) as fleets are refreshed.
Scanner and MFP vendors should reflect the expected changes in demand in their business plans. They should align sales plans and portfolio investment plans with the expected roll-out of e-invoicing mandates per geography considering the importance of invoices in their respective scanning volumes.
Historical sales in countries that have already implemented business-togovernment (B2G) and B2B e-invoicing mandates will serve as a valuable benchmark. Of course, it is important to balance this trend with other market dynamics including drivers for digitization for business process automation.
Capture & IDP software and solution vendors
Invoice processing is the single most popular use case for software sales in the Capture & IDP market and is covered by the vast majority of vendors, including the more recent entrants with AI native solutions. Vendors with a strong focus on invoice processing will see changing requirements in countries where e-invoicing has become mandatory.
At the same time there will be a growing demand for solutions to provide and accept structured invoice data and bridging the formats and processes required by ERP systems and DMS. Where similarities exist in standards and exchange platforms—such as Peppol—this may allow vendors to leverage solutions between geographies with small or minimal localization efforts.
Vendors with tight integration with ERP systems such as SAP should leverage their established expertise and technical capabilities including connectors to enhance their positioning and their consulting efforts. There is an increasing interest in the end-to-end automation of the entire Accounts Payable process.
As the process element of invoice ingestion moves from processing of an unstructured document to the receipt of structured invoice data, it shifts the interest and opportunities to the automation of other elements of the process. This includes the purchasing process step and the end-to-end automation of the process or HITL review or escalation requirements.
Outsourcing providers and consultants
The service providers involved in the outsourcing of accounting processes will experience a significant change of requirements as their target geographies roll out B2B invoicing mandates. In addition to the digitization of paper-based invoices covered under the hardware section, the mandates also impact the exchange of pdf files.
Outsourcers who get involved in the receipt or issuance of e-invoices need to meet the new requirements. At the same time, there is an opportunity for outsourcers and consultants to support businesses in establishing their readiness to receive or issue structured invoices following the respective standards including their scaling throughout the implementation period.
Furthermore, there is an opportunity for certified service providers in select national e-invoicing ecosystems that use a delivery infrastruture like Peppol. They may offer certified access points and take over the reporting and potentially even the validation of tax data.
The business user
Businesses with a direct presence in Germany need to comply with the new B2B e-invoicing mandate, with very few exceptions based on the type of transactions. They must prepare for the first milestone of the implementation, the required readiness to receive structured invoices in the defined formats, by January 1, 2025.
In addition, businesses need to prepare to scale their ability to process and archive e-invoices. In preparation for the milestones of mandatory issuance of structured e-invoices at start 2027 (or start 2028 for businesses with an annual revenue below € 800,000), businesses need to get ready to issue structured invoices.
To optimize the timing of the implementation of e-invoice issuance during the voluntary phase, businesses should consider the investment required and the associated cost savings, in particular for organizations with large invoice volumes. Businesses who conduct business with the German government can leverage efforts put in place using the XRechnung format, the preferred B2G e-invoicing standard in Germany.
Where EDI processes are used, they need to be assessed regarding their compliance with the new standard. Businesses with B2B activities in other countries want to ensure awareness in preparation for national e-invoicing regulations including delays and changes to standards and roll-out plans.
The experience gathered in entities in geographies where B2B e-invoicing mandates have already been implemented, can serve as a benchmark. Learning from planning and implementation of issuing and processing
structured invoices will be valuable for sister companies.
The ability to leverage specific standards and infrastructure requirements will depend on country specifics, with some geographies having more similarities than others. In geographies where e-invoicing is voluntary, the business case should assess the cost aspects and carbon footprint. Similar guidance applies in geographies where business-to-consumer e-invoicing is voluntary.
Conclusion
The shift to B2B e-invoicing mandates is one of the major drivers of changes in the Capture and IDP market. With major economies including Germany scheduled to roll out e-invoicing mandates in the next five years, this dynamic needs to be part of the strategic planning for all participants in the ecosystem.
