Posted on 27th January 2025
What is the history of e-invoicing?
The traditional definition of e-invoicing is the process of replacing paper invoices with electronic invoices. The use of the term e-invoicing evolved further, over time, to describe the exchange of invoices electronically (EDI – Electronic Data Interchange). Today, the more modern definition refers to the global movement of e-invoicing government mandates (one of the pillars of ViDA - VAT in the Digital Age). Governments mandate e-invoicing to improve sales tax compliance, reduce fraud and increase transparency. Modern e-invoicing systems are cloud-based, accessible, and interoperable across countries and platforms. Some amongst us also refer to the use of AI and Machine Learning for processing invoices as a form of e-invoicing, but the more accurate phrase coined for this technology is Intelligent Document Processing. All are part of the evolution of e-invoicing story.
Where e-invoicing started
Electronic Data Interchange
The process of issuing, transmitting, and receiving invoices electronically in a structured format is documented to have begun in 1965 with the first Electronic Data Interchange (EDI) when Holland-America Line sent a shipping manifest via a telex system. A decade later in 1975 the advent of File Transfer Protocol (FTP) accelerated the possibilities of e-invoicing as it was an enabler that simplified the sharing of invoices over the internet.
In 1967 we saw a subsidiary of General Electric (GXS) launch one of the first EDI services for invoices and other important documents. GXS later became OpenText (2014) providing a secure and standardised platform. GXS and OpenText were key to establishing a foundation for the modern e-invoicing ecosystem we see today.
Word Processing & Early Finance Systems
But back in 1975, most invoices were produced on paper, and although the ‘autotypist’ was invented way back in 1936 (a pre-cursor to the word processor as one of the earliest machines to store and reproduce basic documents using punched paper tape), the popularisation of word processing didn’t happen until the 1980s, with Wordstar and WordPerfect for DOS in 1982, when the production and storage of electronic invoices starting to replace paper invoices. Microsoft Word was initially released in 1983.
The first finance computer system known to produce an electronic invoice was IBM's Financial Accounting System, implemented in the early 1970s. The system initially focused on automating accounting and invoicing tasks for large corporations, enabling EDI with their trading partners, using standard data formats to exchange documents directly between companies’ systems.
The 1980s was a key decade for establishing foundations for e-invoicing due to software popularisation in business. The accounting world saw enterprise software emerge with financials SAP and Oracle (Integra came soon after in 1993). The decade also saw an explosion of PC-based, off-the shelf, desktop packages become available for SMEs. E.g. Sage, Quickbooks and Lotus123. Microsoft brought Excel to market in 1985 and suddenly people were generating invoices electronically. Furthermore, the Fax Machine was busy revolutionising the office world at this time, for the exchange of documents as images between organisations, countries and continents. Email adoption for mainstream business happened in the 1980s too, and invoices began to fly across the ether.
EDI, word processing and finance system innovations laid the groundwork for the modern the e-invoicing landscape we have today. Surprisingly however, a recent report from Basware suggests that 53% of businesses still rely on paper-based systems! The same report found that PDFs account for 58% of electronic invoices and whilst this is a progression from paper invoices, it shows a large percentage of organisations are still a long way from full automation.
Intelligent Document Processing
A key advancement in the digital transformation story so far has been Intelligent Document Processing (IDP). This is when invoices are automatically processed via the use of Optical Character Recognition, Artificial Intelligence and Machine Learning. Kurzweil Computer Products Inc founded in 1974 created one of the early omni-font OCR products. This was originally created as a machine learning device for the blind. Fast forward to the 2000s and OCR had grown in popularity. Since then the use of OCR has been expanded upon with a combination of sophisticated AI technologies such as: Machine Learning (ML), Robotic Process Automation (RPA), Optical Character Recognition (OCR) / Intelligent Character Recognition (ICR), Natural Language Processing (NLP) and Flexible Workflow, which has led to vast advancement in the kind of powerful Intelligent Document Processing platforms we have on the market today, such as inSTREAM.
Government-mandated e-invoicing
Today, government-mandated e-invoicing is a worldwide trend that is gathering pace rapidly. Invoices are exchanged via public e-invoicing networks.
Public Networks – Peppol & DBNAlliance
The leading public network is Peppol run by the organisation OpenPeppol, which began life named after the acronym for Pan-European Public Procurement On-Line. The network is now simply named ‘Peppol’ as it now has international reach. Peppol was initiated in 2008 and is now the global leader in terms e-invoicing standards.
DBNAlliance (Digital Business Networks Alliance) provides another public e-invoicing network. It is a non-profit, business-led organisation that manages a secure, open exchange network for business-to-business (B2B) documents in North America. The DBNAlliance's goal is to make it easier for businesses to exchange electronic documents by using open standards and policies.
DBNAlliance is expanding but is not expected to catch up with Peppol in the near term. Peppol’s early adoption, government partnerships, and established infrastructure give it a significant lead. Peppol’s established network spans over 40 countries (at time of writing), Peppol exchanges c100,000 documents per day. All message types in Peppol are based on UBL (Universal Business Language) launched in 2004, an open standard for electronic business documents, e.g. e-invoices. Although DBNAlliance does have an interesting adoption advantage in that it accepts company identifier registrations for almost every country in the world. Peppol uses identifiers common in Europe and GS1 standards. Whereas DBNAlliance covers a far broader list of international identifiers, including specific IDs for the US, China, Japan, South Korea, and India.It is highly likely other public networks will evolve around the world.
The public networks offer API integration and provides real-time compliance checks and support broader business automation, making them a key part of digital transformation.
As mentioned, originally developed to streamline cross-border public procurement in Europe, Peppol has now expanded to global use, including in countries like Australia, New Zealand, and Singapore. Peppol ensures that businesses using different systems can exchange electronic documents without compatibility issues, reducing errors and delays. Peppol is notable for its interoperability, security, and the widespread government adoption, making it a significant player in the global e-invoicing landscape.
Before Peppol, e-invoicing was fragmented and inefficient because each country had its own standards. For example, Sweden used Svefaktura, Norway used EHF, and Denmark used NemHandel.
Value Added Network Partners (VAN Partners)
Before the interoperable Peppol standard there were (and still are) VAN (Value Added Network) service partners. Or VAN partners. VAN partners operate in a closed, private network establishing connections for electronic data interchange.
Peppol shifts the logic from the VAN approach. Any provider acting as an access point in the Peppol network can distribute documents or messages to any other entity, as long as each have a unique Peppol ID. It requires no previous connection or set up, unlike for Value Added Network Services.
Access Point Providers
Storecove headquartered in the Netherlands is an example of an Access Point Provider for the PEPPOL and DBNAlliance networks. The company helps organisations connect to primarily public networks, but also private networks when needed, to streamline e-invoicing processes. Storecove offers a partner program that allows businesses to resell its e-invoicing solutions to customers. Storecove has both the PEPPOL and DBNAlliance certificates, so their Reseller partners don't need to go through the certification processes. Their single API can also assist with the connection to most, if not all, e-invoicing networks and Europeon, Indian and Asian tax authorities. Storecove provides the products, and the partners handle the integrations.
Three Corner & Four Corner Models
In the four-corner model, there are four parties involved: the sender, their service provider, the receiver, and the receiver’s service provider. Each party uses its service provider (corner) to send or receive invoices, with the providers ensuring interoperability and security. This model is common in Peppol networks and allows broad connectivity across different providers.
In the three-corner model, only three parties are involved: the sender, the receiver, and a single, shared service provider. The sender and receiver both connect to the same provider, which facilitates the transaction. This model is simpler but limits interoperability, as both parties need the same provider.
Continuous Transaction Controls Reporting (CTC)
Also in 2008, CTC was established as reporting to tax authorities. CTCs enable governments to collect business transaction data directly from a company's systems, which can give them tax-relevant data faster than the company's own tax department.
CTC is a framework used by tax authorities to monitor and collect tax-related information directly from companies' transactions in near real-time and was first launched in Brazil. It was the first CTC-based e-invoicing system globally, named Nota Fiscal Eletrônica (NF-e). It set the foundation for real-time transaction monitoring and compliance and served as a model for many other countries implementing CTC frameworks for VAT compliance.
CTC means tax authorities can monitor transactions (invoices) as they happen, ensuring compliance with tax laws, particularly in the areas of VAT (Value-Added Tax) or GST (Goods and Services Tax). Under CTC, businesses submit their invoices or transaction data electronically to the tax authorities, often before or immediately after the transaction takes place. The authorities then validate the data and approve the invoices, ensuring accuracy and preventing fraud or tax evasion.
Several countries, particularly in the European Union, are in the process of rolling out CTC systems as part of the EU’s wider VAT reform efforts. The EU's VAT in the Digital Age (ViDA) initiative is expected to push more member states toward CTC based e-invoicing frameworks between 2024–2030. With an extra 5 years granted for Italy, which has to comply by 2035.
Countries with CTC-based E-invoicing:
• Latin America: Mexico, Brazil, Argentina, Chile
• Europe: Italy, Hungary, Spain, Poland, Portugal and France (coming in 2026)
• Asia: India, Turkey, Vietnam, South Korea, Malaysia and Singapore
• Middle East: United Arabic Emirates, Saudi Arabia
• Africa: Egypt, Kenya
The difference between CTC and Peppol
CTC connections focus on real-time tax reporting and compliance, whereas Peppol is a network for exchanging e-invoices across borders. Both systems can work together (via service providers that are connected to both) by allowing businesses to transmit compliant invoices through Peppol while meeting CTC reporting obligations to tax authorities. Countries like France, Singapore and Malaysia are examples where Peppol and CTC systems coexist, sometimes with integration to streamline the reporting and invoicing process.
SAF-T Reporting
SAF-T reporting (a standardised XML format for tax reporting) goes a step further than Continuous Transaction Controls, by providing a raft of detailed accounting data, including accounts payable and accounts receivable data to invoice-level details. This allows tax authorities to perform deeper audits and reconcile data between reported invoices (from e-invoicing systems) and a business’s broader financial records. While e-invoicing is primarily concerned with real-time or near-real-time transaction reporting (such as VAT on invoices), SAF-T is used in a post-transaction audit context. SAF-T reporting typically happens at a later date, often monthly, quarterly, or upon request by tax authorities. It is likely CTC will replace SAF-T reporting.
Private Networks & Formats
Over and above the public networks – Peppol and DBNAlliance, here are some of the other established private e-invoicing networks / standards:
PRIVATE NETWORKS:
• NemHandel: Denmark (part of Peppol)
• Finvoice: Finland
• Face B2B (Business to Business)/B2G (Business to Government): Spain
FORMATS:
• Svefaktura: Sweden
• Elektronisk Handelsformat (EHF): Norway (part of Peppol)
• TEAPPSXML: Finland (part of Peppol)
• UBL-OHNL: Netherlands (part of Peppol)
• OIOUBL: Denmark (part of Peppol)
• FacturaE: Spain
• FatturaPA: Italy
• xRechnung: Germany (part of Peppol)
Where e-invoicing is today?
Global e-invoicing adoption varies widely; for example, countries mandate e-invoicing for all B2B transactions, while others lack national requirements, with adoption mainly driven by private sector initiatives.
The Nordics
The Nordic countries are amongst the most advanced in the world when it comes to e-invoicing. Denmark was one of the earliest adopters of e-invoicing. Since 2005, its government has mandated e-invoicing for all transactions with the public sector. In Finland, in the Nordics, over 90% of businesses use e-invoicing. This high adoption rate has led to more accurate tax filings and less opportunity for VAT fraud. The Finnish Tax Administration highlights that digitisation of invoices and real-time reporting help close gaps that previously allowed evasion.
Italy
Italy is one of the most advanced countries in e-invoicing adoption. Since 2019, it has mandated e-invoicing for all B2B and B2G transactions, with businesses required to submit invoices via the government’s Sistema di Interscambio (SdI) platform. This system has improved tax compliance and streamlined VAT reporting, setting a strong example of national-level adoption for other European countries.
Germany
In Germany, e-invoicing has gained significant traction due to regulatory frameworks aimed at improving transparency and efficiency in public procurement.
From January 1, 2025, Germany will require structured electronic invoices (following formats like XRechnung or ZUGFeRD) for all domestic B2B transactions, aligning with EU standards (EN 16931). Paper invoices and unstructured formats such as PDFs will no longer qualify as e-invoices. Initially, businesses must be able to receive e-invoices, while their issuance will remain voluntary. By 2028, the use of e-invoices will be mandatory for all businesses in Germany. These measures are part of the broader EU ViDA initiative to enhance VAT compliance and reporting efficiency.
The latest updates include draft guidance issued by the German Ministry of Finance in mid-2024, emphasizing compliance, authenticity, and machine-readability requirements. Additionally, Germany plans phased implementation to support businesses in transitioning smoothly to e-invoicing practices, with potential simplifications for small transactions or specific cases.
Brazil & Mexico
In Brazil and Mexico are also ahead, where e-invoicing operates through government-mandated systems where businesses send invoices directly to tax authorities for validation before they reach the buyer. This approach ensures compliance and real-time reporting without using a network like Peppol.
USA
On the other hand, some countries are still lagging behind. For example, despite the launch of the DBNAlliance open exchange network, the US has yet to implement widespread mandatory e-invoicing for businesses, despite its potential benefits for reducing fraud and increasing tax revenues.
Similarly, whilst India and Canada are gradually adopting e-invoicing but are not yet at the level of mandatory enforcement seen in Europe or Latin America.
United Kingdom
In the UK, e-invoicing adoption has been progressing, particularly in the public sector, though it lags behind some European counterparts like the Nordics and Italy. The UK government has taken steps toward e-invoicing through initiatives aimed at improving public sector procurement and financial efficiency. In 2019, the UK implemented the EU Directive 2014/55/EU, requiring public sector bodies to accept e-invoices that comply with the European Standard (EN16931). This applies mainly to B2G transactions, and while public authorities are required to process e-invoices, its adoption has been slow compared to some other EU countries.
E-invoicing is not yet mandatory in the UK’s B2B sector. However, many large corporations and multinational companies operating in the UK have adopted e-invoicing voluntarily, particularly those involved in global supply chains or sectors like retail and manufacturing. The lack of a national mandate for e-invoicing in the UK private sector is one of the reasons for its slower uptake compared to other countries. UK businesses are encouraged to adopt e-invoicing, but as yet there is no legal requirement.
However, in September 2024 the UK government announced plans for a consultation to explore the broader adoption of e-invoicing. This initiative is part of a larger economic strategy. The consultation suggests full implementation is potentially for 2028. This aligns with HMRC's upcoming 2025 "Digital Transformation Roadmap," aiming to establish a digital-first tax system that promotes digital inclusion across UK businesses.
The consultation follows similar initiatives in Europe, where countries like Germany and Spain are also advancing e-invoicing mandates to improve tax compliance and business efficiency.
The future
The future of invoicing globally is much more digitisation and automation. As more organisations embrace the use of artificial intelligence and machine learning to automate the mundane and repetitive tasks associated to invoice management, government authorities will continue to tackle tax fraud and avoidance via e-invoicing.
On the horizon we have simpler, automated accounts payable cycles, faster and more efficient transactions, higher levels of control and compliance with regulatory requirements, improved real-time, audited record-keeping. Integration and interoperability will be key.
The AI platform providers that partner with key access point providers partners to offer integration of intelligent document processing tools with the public networks for government mandated e-invoicing and reporting will be a safe choice for global organisations.
About inSTREAM
Celaton are the authors of inSTREAM and part of the AdvT Group. inSTREAM is a Intelligent Document Processing Platform popular with global enterprises. It uses artificial intelligence and machine learning to automate invoice management, sales order processing and correspondence categorisation. Deployment partners of Celaton including Capgemini, DHL and IBSS have chosen inSTREAM as their IDP platform of choice for their customers. inSTREAM customers include major on-line and high-street retailers, global manufacturers, service companies, travel operators, NHS Trusts and law firms.
inSTREAM has API integration to public networks, Peppol and DBNAlliance via API access Points, and to some private networks too. This means inSTREAM can pick up invoices from the likes of Peppol and process through inSTREAM in the usual way.
This means invoices can be emailed into inSTREAM directly, picked up from SFTP or picked up from e-invoicing networks. They are then processed through the platform as follows:
Intelligent Document Processing
• Invoices are onboarded (from a variety of formats)
• Using the latest machine learning technologies that are taught from huge volumes of AP documents, relevant invoice data is extracted automatically from the pages of the invoice. It takes both header level data and line items data.
• Once as much data has been auto-extracted as possible, inSTREAM will queue invoices for human-in-the loop operator input. This happens for invoices received from a brand new supplier that inSTREAM is seeing for the first time. It also happens for any exceptional invoices or query invoices. A human operator will check and bolster the learning for the new format, or it will teach inSTREAM how it needs to handle similar exceptions or queries in the future. This builds inSTREAM's confidence quickly, and reinforces the machine learning to fill in any blanks. This very specific teaching approach achieves high levels of data extraction accuracy and builds inSTREAM confidence fast.
• inSTREAM via business rules will validate, verify and enrich the invoice data and interact with master data from internal and external sources
• inSTREAM facilitates invoice queries, rejections, approvals and will archive documents applying specific retention rules
• Then the invoice (its data and a render) will be delivered to your finance or ERP system for payment
• inSTREAM also offers a suite of dashboards and reports showing data by supplier, average invoice handling times and the levels of straight-through-processing (how many invoices are going through without human intervention, how many are queried, rejected and why etc.).
• When documents arrive in structured formats via email, API or e-invoicing networks (e.g. Peppol, DBNAlliance etc.) these go through the same validation and workflow business rules as any other invoices, and will typically achieve 100% straight-through-processing.
For More Information About inSTREAM
For more information about inSTREAM please visit www.celaton.com.
Celaton is an Advanced AdvT company – www.advancedadvt.com.
To book a discovery call please complete our contact form or email olivia.oconnor@celaton.com
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