This was a question that was recently addressed at a leading accounting industry event, Accountex Summit Manchester, where Xero warned that e-invoicing will likely follow closely behind the rollout of Making Tax Digital for Income Tax (MTD IT). For fast-growth businesses looking to scale efficiently, it’s a warning worth noting.
In this month’s Scale Monthly, we explore what e-invoicing actually is, what’s happening in the EU and what ambitious UK businesses should be doing now to prepare.
What is e-invoicing?
E-invoicing is more than sending a PDF by email. It refers to the digital exchange of invoice data between buyer and supplier in a structured format that allows for automatic processing, typically through cloud accounting platforms like Xero.
With e-invoicing, fast-growth businesses can operate across borders with fewer complications, reduced manual input and improved visibility over every transaction.
What’s happening in the EU?
The EU has already committed to mandatory e-invoicing and digital reporting for B2B intra-EU transactions by 2030, with some member states opting for early adoption. Non-EU businesses that trade with EU clients will also need to comply.
That means:
- If your business operates internationally, you’ll need to adopt e-invoicing sooner rather than later.
- Adopting now ensures consistency across EU and UK operations.
Will it become mandatory in the UK?
While there’s no UK mandate yet, the direction of travel is clear.
The rollout of MTD for VAT and IT is steadily digitising the UK tax system. The next logical step to harness better data and to lower the risk of fraud is to take the lead from the EU on e-invoicing and digital reporting.
Industry experts, including those at Xero, are already advising businesses to prepare. And, much like MTD, those who adopt early will be better placed to adapt and are likely to be perceived by EU businesses as having a competitive edge over those that don’t.
Why fast-growth businesses should act now
For scaling businesses, e-invoicing isn’t just about compliance for the future – it’s a chance to streamline operations and improve cash flow.
Early adoption helps you:
- Speed up payments through automation
- Improve accuracy by reducing manual data entry
- Improve visibility over receivables and payables
- Integrate finance systems for better reporting
- Improved security for your financial data
- Reduce the chance of late payments
- Stay ahead of evolving compliance requirements by automating compliance with local laws
How to get started with e-invoicing in Xero
If you’re already using Xero, you’re already well-positioned and can register to receive einvoices from within your existing account, enabling you to:
- Create and send structured e-invoices
- Share data seamlessly between systems
- Keep a digital audit trail of all transactions
How can we help?
At Harold Sharp, we help fast-growth businesses adopt the systems they need to scale efficiently and compliantly. From setting up e-invoicing to building a finance function that grows with you, our team are on hand to make sure everything is set up correctly and integrated into your wider finance process.
To discuss how e-invoicing fits into your growth strategy, contact James Turner on the below or complete our Contact Form.
James Turner
Accountant | Fast growth
0161 905 1616
jt@haroldsharp.co.uk