E-invoicing in the European B2C Market

The European Commission (EC) is currently devoting much-needed attention to electronic invoicing (e-invoicing), the main plank of its flagship initiative ‘A Digital Agenda for Europe’. The EC’s aim is to achieve a single digital market and has called for removal of the regulatory and technical barriers that prevent mass adoption of e-invoicing.

The commission wants to see e-invoicing become the predominant method of invoicing in Europe by 2020 and has set up a European multi-stakeholder forum on e-invoicing. This is a welcomed development as the average market penetration of e-invoicing is currently estimated at less than 10% of all invoices annually exchanged for business-to-consumer (B2C) transactions in the majority of European countries.

In order to push forward adoption, the EC is constructing the business case for e-invoicing – it is estimated that moving from paper to e-invoices will generate savings of around €240bn over a six-year period. The commission has explained that businesses will benefit from shorter payment delays, fewer errors, reduced printing and postage costs. In addition, structured e-invoices facilitate business process integration from purchase to payment, meaning that invoices could be sent, received and processed without manual intervention.

Corporate Benefits of E-invoicing

For corporates, the main reason to move away from paper invoices is to gain efficiency in the order-to-cash (O2C) cycle. Every part of the process is electronic except when an invoice is sent – this is still paper-based. If a corporate can automate this step then the end-to-end O2C process will be electronic.

STP-related benefits are derived from a reduced number of errors because the invoice data doesn’t have to be re-entered, which is the normal practice today. Reducing manual errors creates a more efficient flow of information and therefore a more efficient payment process.

By using e-invoicing, a corporate’s payment process is more optimised and more efficient, which means it is optimising its financial supply chain (FSC). The FSC includes all the trade and payments activity that provides the parties in the supply chain with all the information they need to effectively complete their business transactions.

That is not to say that if an e-invoice is sent, then automatically the invoice is paid earlier. But because the process is more efficient, there are fewer errors in the overall process and invoices are commonly paid earlier. Usually an invoice is left unpaid because it is incorrect, not because the customer doesn’t want to pay. Therefore, if a company can reduce these errors or solve these errors quicker, then the payment process will be smoother and result in an optimisation of its FSC.

In addition to these benefits, using e-invoicing will also decrease a corporate’s environmental footprint. The company will be able to reduce paper consumption and energy costs for transportation. It is estimated that the switch to e-invoices will generate carbon savings amounting to reductions in CO2 emissions of 1 million tonnes per annum for the EU.

Developments in the Netherlands

As a result of the EC’s lead, many governments of European countries are also developing an e-invoicing strategy. This is important for e-invoicing will only really take off when there is mass adoption – i.e. a critical mass of interested parties that start with and enforce the move away from paper. Essentially, this is because invoicing is considered to be a secondary process in an organisation, despite its importance in the O2C cycle – i.e. if a company can’t invoice it will not receive payment, which in turn will lead to bankruptcy.

In addition, the invoice process is well established in most companies, and so they are reluctant to make changes to something that works well enough. Although most companies know that their invoicing process could be improved, they have other, more important priorities related to their core business.

One issue that is holding back adoption of e-invoicing is the fact that there are (perceived or real) barriers in Europe. In 2010, PricewaterhouseCoopers (PwC) investigated how the barriers to e-invoicing adoption could be overcome and made a number of recommendations to the EC; the primary recommendation was that paper and e-invoices should be treated equally. The Dutch government picked up the report and in the same year announced that it was going to make it easier for the country to start e-invoicing.

Another Dutch government initiative to increase adoption is the definition of a standard called Universal Business Language (UBL) 2.0. Implementations of e-invoices based on UBL are common, most importantly in the public sector in Denmark as it was the first country where UBL is mandated by law for all the invoices of the public sector. Further implementations are under way in the Scandinavian countries as result of the North European Subset (NES) project; and also underway in Italy and Spain.

Following on from the Danish government, which legislated that all public institutions in Denmark were required only to accept invoices from suppliers in electronic format in February 2005, the Dutch government has prescribed that 80% of all of its incoming invoices will be electronically received and processed by 2014. It is using a universal platform called Digiport, where all government suppliers send their UBL 2.0 formatted e-invoices. Currently the e-invoice is not obligatory, so a supplier can also send the paper invoice by post.

Last year, another 15% of Dutch companies switched to e-invoices, so that currently more than 39% use e-invoices. All accounting technology vendors are also working on including the standard in their packages, in order to make it easier for business partners to send and receive e-invoices.

Creating a Good User Environment in the B2C Arena

However, the willingness to change and adopt e-invoicing is a different matter. This is observed not just in the business-to-business (B2B) marketplace, but also in the B2C space. If a consumer has received invoices – or Acceptgiros as they are called in the Netherlands – on paper for the past 20 years, then they are reluctant to change, particularly if that change is forced upon them without understanding the benefits.

In the B2C space, consumers don’t want to go to the 20 or 30 different invoice environments of the large corporates that they deal with – they want to have one place where all the invoices are delivered for processing. In order to solve this issue, the three major retail banks in the Netherlands developed Digitale Nota. This is a free service for consumers: their financial documents and invoices, such as the Acceptgiro, are delivered in their internet banking environment, where they can pay with just one click.

To date about 150 corporates are offering Digitale Nota to their corporates. When the initiative was first introduced four year ago, only the very large corporates decided to engage but now smaller companies are also signing up because the technology is more mature and connecting to it has been made easier.

SEPA Gives E-invoicing a Boost

The single euro payments area (SEPA) is making corporates re-think their payments processes and adjust their systems in order to be prepared for implementation. Therefore, if a company is in the process of getting ready for SEPA, why not also rethink the invoicing process and gain efficiencies in this area?

With SEPA, Europe will become one payment landscape. Local payment products, such as the Acceptgiro, will be phased out in the near future – the exact end dates are still under negotiation. An alternative to the Acceptgiro could be e-invoicing or Digitale Nota.

For example, an insurance company sends its client an invoice every month with an Acceptgiro attached. The client can do two things: fill in the form, put it in the envelope and post it to the bank. Or they can open their internet banking environment, retype the payment reference number, the amount, the account number of the sender, and then make an internet banking payment.

This is what 80% of Dutch consumers are doing today; therefore it is more efficient to send the information directly into the internet banking environment so that the company doesn’t need to continue to send the Acceptgiro. Digitale Nota does exactly this – it takes the Acceptgiro information and sends it directly to the internet banking environment.


In Europe, e-invoicing is a rising star. From all areas initiatives are being started up to knock down barriers, to set standards and to make it easier for all parties to start. In the Netherlands, the government is very active in promoting e-invoicing and they have set a target for 2014 of 80%. And the banks are also putting effort into increasing the adoption rate by improving the Digitale Nota service. ING is one of the banks who recognises the importance of e-invoicing for organisations, and particularly for a better management of working capital. E-invoicing is an important enabler for this.

Case Study: A Dutch Health Insurance Company Implements Digitale Nota

ONVZ, a Dutch health insurance company that sends about two million Acceptgiros per year to its customers, wanted to focus on digitising its documents and have these electronic documents (e-documents) available to its customers. Its aim was to reduce paper output as much as possible, which included policies as well as invoices, and make them available through different channels, including the internet banking environment so that customers could directly pay their invoices.

ONVZ’s strategy was to prepare itself for a digital world and also look to the future: what happens if the Acceptgiro is phased out? The company also thought about optimising the invoicing process through early payment resulting from the e-invoice arriving earlier, as it doesn’t have to travel through the postal system.

The company started the Digitale Nota project a little over two years ago, together with ING Invoice Service. In the beginning the customer adoption rate was low because their customers weren’t used to it.  Communicating the new functionality of this service to the customers through various channels resulted in a significant adoption curve.

Introducing Digitale Nota has resulted in less paper and earlier payments. However, the adoption rate was still considerably lower then expected – this was because the major drawback of the Digitale Nota was that consumers have to register for this service in their internet banking environment and not with the company they receive the invoice from. This means that companies such as ONVZ  can’t influence  adoption behaviour. 

This issue was identified by the co-operating banks and new functionality will be introduced in October this year. Corporates can ask their consumers directly how they want to be invoiced – by paper or via Digitale Nota? The company can collect the customer information of those that want to receive digital invoices and send it to the bank. This method gives corporations more influence on customers’ behaviour. This functionality was piloted last year, which resulted in increased e-invoicing uptake. ONVZ was one of the companies in the pilot and they experienced a steep rise in subscriptions to the service.

To read more from ING, please visit the company’s microsite.


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