Many respondents stated that they expect to save 60 percent or more per invoice when sending them online. (Photo: © yozayo/123RF.com)
Read aloud:
Digital Crafts - Theme specials
January 2019
Industry 4.0: To switch to digital invoices, small businesses need nothing more than an email address and an office program that can generate PDFs. Larger businesses usually rely on software packages.
Approximately half of companies in Germany prefer electronic invoices. This is the result of the recent study "ibi research 2017: Electronic Invoice Processing and Archiving: Facts from German Business Practice 2017," published in September 2017 by the ibi research institute at the University of Regensburg on behalf of the German Federal Ministry for Economic Affairs and Energy (BMWi). According to the study, both small and large companies value the cost and efficiency advantages of digital delivery: Many respondents stated that they estimate savings of 60 percent or more per invoice if they send them electronically and also digitize their invoice receipt processes.
With paperless invoicing, companies save in several ways: There are no paper or postage costs, and the invoice is sent to the recipient via email attachment within seconds. Archiving these files is also significantly easier and saves space. An example calculation: With 500 invoices per year, the annual postage savings alone amount to €350. Furthermore, the costs for paper, envelopes, and printer toner or ink cartridges are eliminated. Office supplies and folders for archiving invoices will also be unnecessary in the future. Furthermore, companies save time on filling envelopes, stamping, and the regular trips to the mailbox.
Since 2011, electronic and paper invoices have been treated equally under the Tax Simplification Act. In practice, this means that neither an electronic signature nor the EDI procedure ("Electronic Data Interchange," electronic data connection between companies) is required for digital invoices. While both are still possible, input tax deductions are recognized by all tax offices regardless of these procedures – but only if all provisions of the VAT Act are complied with. This makes the switch worthwhile for large and small businesses alike, as implementation is possible without great effort. Only a few legal regulations must be observed.
A recommended and free format for paperless invoices that is becoming increasingly popular in everyday business is "ZUGFeRD." More and more software packages for the use of electronic invoices now support this standard, which, starting with version 2.0, also complies with EU directives. ZUGFeRD is based on the "PDF/A-3" format and embeds an XML invoice in a PDF file. This allows both structured invoice data (XML) and the actual invoice (as a PDF) to be sent simultaneously by email. The advantage: The PDF format used meets the requirements for audit-proof archiving, while at the same time allowing the XML data to be directly read and further processed automatically.
Operations management
Operations management
Operations management
The abbreviation ZUGFeRD stands for "Central User Guide of the Forum for Electronic Invoicing Germany" and was founded by the "Forum for Electronic Invoicing Germany" of the "Working Group for Economic Administration" under the umbrella of the Federal Ministry for Economic Affairs and Energy (BMWi).
ferd-net.de
Legal regulations
Paperless invoices can be submitted in many ways: for example, by email, e-mail, or DE-Mail, but also as downloads. However, to avoid jeopardizing the tax recognition of electronic invoices, businesses must comply with certain legal regulations. These include:
The readability of the digital data: The invoice file must be easily displayed using current hardware and software.
The authenticity and integrity of the invoice: This includes the clear identity of the invoice issuer and the immutability of all content – including legally required information. The PDF format is legally correct and recommended for electronic invoices. If the accompanying email text contains invoice-relevant information, such as discount agreements or tax information, the corresponding email must also be archived. Permissible invoice formats also include image files such as TIF or JPG, as well as computer fax or fax server transmissions. A Word document, on the other hand, does not generally meet the requirement for immutability of content. Invoices in Excel or Word documents are only permitted if a document management system (DMS) is used, which documents every processing step and prevents subsequent changes. Companies must use an internal control procedure to check every incoming and outgoing digital invoice to ensure legibility, authenticity, and integrity. This review can be performed both electronically and manually – for example, by comparing all data against existing orders, purchase orders, or contracts. In addition, companies should ensure the following:
The invoice recipient's consent to electronic transmission: Consent is deemed to be tacitly granted when the customer pays the invoice. Of course, it is also possible to obtain written consent in advance.
Electronic archiving: Digital invoices must be electronically archived in their original format for at least ten years from the date the annual financial statements are valid. Businesses must ensure electronic readability and machine analysis at all times. Input tax deduction is not granted without the original document, as tax auditors and tax authorities do not recognize printouts of electronic invoices. All details are regulated by Section 14b of the German VAT Act (UStG).
Once the strategy and structure for processing electronic invoices have been established, companies benefit from many advantages in their daily work.
Before compiling your first paperless invoice, there are some organizational preparations to be made: For example, using your own email address for receiving and sending digital invoices can be helpful, for example: rechnungen@meinbetrieb.de. The advantage: All messages containing or referring to invoices can be identified directly. If you create separate folders for incoming and outgoing invoices in your email inbox, these can also be quickly searched at any time. If necessary, the respective folders can also be further subdivided, for example, by year, customer, or business partner. To ensure that incoming invoices don't disappear unnoticed into the spam filter, you should check your spam filter regularly.
Links
- VAT: Simplification of electronic invoicing through the Tax Simplification Act 2011: bit.ly/2Q0Vyjb
- FeRD: The electronic invoice – a practical guide for companies: bit.ly/2Rm6I2o
If companies want to send paperless invoices themselves, the initial procedure is identical to that for paper invoices. The first step is to create the invoice, for example manually using a word processor or invoicing software – naturally with all formally and legally required information. Instead of printing it out, however, it is saved in a format that cannot be subsequently edited. The PDF format has proven particularly useful because it is easy to save and read. Finally, the PDF file is sent by email to the business partner or customer. To ensure quick processing, it is important to agree in advance on the email address to which the invoice should be sent. For final archiving, it is recommended to create separate directories for sent and paid invoices – ideally divided by year and/or customer.
If a company has decided that incoming invoices will also be accepted electronically in the future, the following procedure is recommended: Immediately upon receipt, an invoice should be checked to ensure it meets all formal criteria – especially those required by tax law. If everything is correct, it can be moved to a different folder for further processing, for example, "Checked." This ensures that unchecked and checked invoices are always clearly separated. The content review (authenticity of origin, services rendered, sender, and invoice issuer) can be performed simultaneously or in a subsequent step. If an invoice contains errors, the sender should be informed immediately – with a request for correction. Incorrect invoices may only be processed by the invoice clerk. Changes made by other persons are considered forgery under criminal law. For better traceability, disputed invoices should be saved in a separate folder, for example, "Newly Requested."
There are no differences in the posting of digital and paper invoices, as long as the "Principles for the Proper Management and Storage of Books, Records, and Documents in Electronic Form, as well as for Data Access" (GoBD) formulated by the Federal Ministry of Finance are adhered to. However, it can be helpful to create separate accounts for both types of invoices to enable faster evaluations. It is recommended to promptly forward all positively reviewed invoices to your own accounting department or tax advisor. To maintain internal overview, paid invoices should be moved to a separate folder, for example, named "Paid."
Final archiving should always follow a clearly structured scheme, for example, by date and invoice number. In any case, care must be taken to ensure that invoices cannot be subsequently changed. To prevent data loss, a backup system should be used that creates and securely stores daily copies of all invoices.
Newsletter
Write a comment