Germany’s new B2G e-invoice mandate for suppliers: ensuring compliance from day one

Electronic invoicing is no longer a trend – it’s the norm. With the spread of e-invoicing surging across the globe, with it comes a myriad of laws, mandates, and new compliance requirements. Read to learn how which to pay attention to and how to best adhere.

E-invoicing is here to stay. While in the past, developments on the topic have largely been pushed by the private sector, there is an ongoing and notable shift towards governments driving the adoption of e-invoicing during the past years.

This can particularly be observed within the European Union: after the EU-wide harmonisation of e-invoicing standards through EN16931, an increasing amount of EU member-states rely on the Peppol network’s specifications for the exchange of electronic business documents. While the option to send e-invoices to public sector entities at the federal level (Bund) started in 2018, other confederal levels didn’t apply this option till 2020.

On November 27^th, 2020, Germany’s federal B2G e-invoice mandate for suppliers comes into force, marking another large economy’s path towards the adoption of e-invoicing.

Germany’s layers of governance & the federal B2G e-invoice mandate

The push for the adoption of electronic invoicing, or e-invoicing, has been on the agenda of governments around the world for quite some time. This comes as no surprise, as the electronic exchange of business documents (such as invoices) brings about increased compliance, process efficiencies, and supports the move away from a paper-based administration.

While private-sector adoption of e-invoicing has become increasingly common, so far adoption in Germany’s public sector has lagged significantly. However, this is about to change starting November 27, 2020, when a new e-invoicing mandate will come into force - affecting all business-to-government (B2G) invoices to the federal state (Bund) as well as the state (Bundesland) of Bremen. The remaining fifteen states are not mandating e-invoicing for suppliers yet.

XRechnung, Leitweg-ID & Peppol: what matters & how to be compliant

The new mandate aims to bring about German compliance with the EU norm EN16931 on the harmonisation of e-invoicing standards. In a nutshell, this norm provides guidance to EU member states on which technical standards should be followed when they locally guide the implementation of e-invoicing. There are three main technical aspects that are relevant to any organisation that aims to stay compliant with the new German mandate.

The first item to consider is the structured data format. The specific e-invoice format can vary from country to country, and from a technical standpoint, all are based on EN16931 and define more details in their Core Invoice Usage Specifications (CIUS). For example, Peppol BIS Billing 3.0 is a CIUS format specification, which is valid in all countries. Apart from Peppol BIS 3.0, Germany has 2 domestic formats compliant with EN 16931, which are XRechnung 2.0 and ZuGFERD 2.0. To ensure compliance with the mandate now and in the future (when the rest of the German states follow and implement the mandate), the preferred choice by the government is the XRechnung format.

Secondly, and what is specific to Germany, every invoice needs to carry a “Leitweg-ID” (which translates into “routing-ID”). Every invoice recipient of the public sector carries a distinct identification number, which enables a precise routing of the invoice. The recipient behind Leitweg-ID can be defined in many ways, routing the invoice to a legal entity or even more specific sub-entities. As of now, there is no public registry for the IDs, therefore, the Leitweg-ID needs to be communicated from the buyer’s side during the order process so the supplier can add it to its customer master data. Under the mandate, the Leitweg-ID is a mandatory invoice field.

Finally, the invoice delivery method to the recipient is important to note. It’s not only about the ability to send an e-invoice in a specific data format. The receiving side (e.g. a body of the federal state) must be able to receive the structured data electronically. For this exchange, there are different options offered by the federal and states (e.g. Peppol), various portals (e.g. ZRE and OZG), file upload, and email receiving. Therefore, to ensure that you address all German public sector entities, the safest delivery method is to send your invoices via Peppol network or email. Peppol is a delivery network where invoices in a certain format can be sent and received. While the Peppol network is widely known and accepted across all of Europe, its advantages have also made it attractive worldwide. For instance, countries like Australia, New Zealand, or Singapore have invested heavily in the Peppol network as the local standard e-invoice delivery network. Basware is a certified Peppol access point service provider since the early days of Peppol and is actively transacting documents across Europe and APAC.

Making the most of it: seize the opportunity & become e-invoice ready now

While it’s true that there is an initial investment required to stay compliant when sending B2G invoices in Germany, adopting an e-invoicing solution comes with many benefits.

• Structured data formats result in high-quality data for everyone involved, ensuring better spend visibility & improved invoice processing times

• Clear process efficiencies can reduce the time required for delivering and processing invoices, ultimately reducing your AR (Accounts Receivable) team’s DSO (days sales outstanding)

• In addition to cost savings through improved throughput, you’ll also experience reduced delivery costs through e-invoicing

• As e-invoicing mandates continue to become the global invoicing standard, guarantee compliance now and in the future

Basware provides compliance with the German e-invoicing mandate from day one

As a global market leader in e-invoicing, Basware is the strongest partner to consider for global e-invoicing compliance requirements. No matter the customer, Basware helps you cover all e-invoice delivery channels.

The new German B2G mandate is no exception, which is why Basware offers compliance with the mandate from day one. To meet the local requirements, Basware offers:

• Transferring various invoice formats into the correct format

• Direct delivery of e-invoices in XRechnung- and Peppol BIS-format through Peppol

• Delivery of e-invoices in the correct format via email to government portals for public bodies that do not yet support Peppol

Gain e-invoice compliance in Germany from day one

For organisations already active in the German market, e-invoicing is critical to ensure ongoing compliance with the new ruling. E-invoicing optimises processes for organisations both sending and receiving invoices. For questions on how Basware can help make this transition smooth or for more information on how e-invoicing can help your business improve operations, contact Basware support. For a quick guide on how to achieve a successful transition from manual to paperless e-invoicing, download our e-book, “6 Steps to E-Invoicing Success.”