The UK's eInvoicing Mandate Has Arrived - What Business Needs to do Now

The starting pistol has been fired!

The UK government announced at Budget that from April 2029 eInvoicing will be mandated for all VAT registered businesses. That’s right, the UK economy is going digital! And while the date might still seem a little way in the future, the time to start preparing for our new digital economy is now.

The UK’s eInvoicing Roadmap to 2029

The roadmap to carry business through to 2029 will be set out next year. But soon, paper and PDFs will be replaced by structured, reportable invoices. At PPN we’ve talked about the benefits of eInvoicing to business for almost two decades. At times it’s seemed that the benefits would remain unrealised for a large proportion of British businesses. But with what seems to be a sensible timeframe bearing in mind the steps which will need to be taken between now and then, it seems we’re ready to stand shoulder to shoulder with other nations across the world.

The UK eInvoicing Advocacy Lab (UKeLab)

With the creation of the UKeLab almost 2 years ago, we formed a diverse group of experts to ensure that all voices could be heard and help give the UK economy the best chance to realise the opportunity ahead. We gathered large enterprise practitioners, technology providers and eInvoicing experts and small business representatives and as a group, alongside others, we helped inform the public consultation on eInvoicing which closed on 7th May. The UKeLab will be actively engaging with HMRC and other industry stakeholders next year to help shape the direction of eInvoicing in the UK.

It's Not Just About Compliance

And it’s not just about compliance. It’s about digitising process that sheds light into corners that might otherwise have remained in the dark. Areas such as automatic routing to a correct approver at the right level, automatic matching to a PO, reporting visibility and errors. All of which not only helps speed up processes and deliver cost savings, but it can also help protect an organisation from fraud and oil the wheels of cash management. A manually processed and complex invoice can easily cost as much as £16 per invoice to process. A correctly routed and processed eInvoice can be as little as £1.

Data Means Power

Essentially an eInvoice means data. Data that can be analysed and used to make strategic decisions, strengthen a company’s cash management and place it on a path to growth and competitiveness. At the same time, the enhanced visibility that the technology creates, leads to better fraud protection and can address elements of the ESG agenda, such as:

· Paper reduction

· carbon footprint monitoring

· On time payments.

And of course, if a company has a good relationship with their suppliers because of that, it means that they’ll also be more likely to hear of any new innovations that the supplier may be making. And ultimately an organisation that can demonstrate a tight ship is likely to attract the right talent to their company too. Who wants to work for a company that’s in the news for paying suppliers late? What might that mean for their company culture for employees too? And if that’s how bad processes make prospective employees feel – imagine what it does to investors looking for companies to add to their portfolio.

Governments Look at eInvoicing to Close the VAT Gap

Back in the early 2000s we started to see pioneering countries like Chile and Peru begin the path towards eInvoicing. And in 2008 it was a trend that started to make inroads in Europe, firstly with Portugal and then in 2014 with Italy mandating eInvoicing for B2G transactions. Today there are over 99 countries at various levels of mandated or soon to be mandated einvoicing. The focus for many has been to close the extensive VAT gap, in other words, money missing from the economy from fraud. Governments discovered that eInvoicing wasn’t simply a tool to pay and be paid more efficiently, but opened possibilities for real-time scrutiny and enforced compliance. In the UK both HMRC and DBT worked together to develop the eInvoicing consultation in recognition of both the reporting and business efficiency benefits to the economy.

Why is an eInvoice the Tool to Deliver Such Wide-Ranging Benefits?

An eInvoice differs from a paper invoice or a PDF in that the information that it contains is shared in a structured and standardised format such as XML or UBL (Universal Business Language) that is machine readable and can be plugged directly into a company’s ERP or accounting software. An eInvoice will then be transmitted via a secure network, such as EDI, removing the need to print anything out or physically store it somewhere. This offers the potential for real-time reporting.

UK’s eInvoicing Model

As mentioned, the detail of the UK’s mandate has yet to be finalised, but government focus sits around a decentralised model and as yet, no real-time reporting measures are planned. To begin with the main attention will be on the ramping up of eInvoicing through the economy, data quality, format and interoperability. The NHS already uses a Peppol four corner model, so it would not be surprising if this or a similar model was to be rolled out more generally.

Time to Plan for the Change Ahead

It's human nature to leave things to the last minute. But as a country we’ve already had a lot of minutes to think about this. If eInvoicing has been on a backburner for a while, now is the time to bring it forward and the place to start is with your current process. Is it fit for purpose? What about your data? Does it need to be more robust? And what about your people? Are they ready for the change and opportunities that lie ahead? Making sure that any change matches the outcomes you had planned for it is mostly about communication. A thorough change management process take time to investigate and time to communicate. There is time. Use it well.

The Consultation Response Document is here >> Promoting electronic invoicing across UK businesses and the public sector — consultation response - GOV.UK.

UKeLab White Paper: Why eInvoicing Should be a Public Policy Priority in the UK

UKeLab: Position Paper 1 - Key Challenges for the Successful Implementation of a National eInvoicing Initiative

UKeLab: Position Paper 2 - Leveraging the Making Tax Digital Infrastructure for UK eInvoicing