Are EDI and E-invoicing the same thing?
We went deeper on this topic on a previous blog. On a technical side, note that if you have an EDI solution, you are most likely ready to do e-invoicing, which is not the case the way around! An EDI solution requires technical set ups, and if your company has already made this step, e-invoicing shouldn’t be an issue.
We also have to highlight the fact that many countries are regulating their VAT processes, making e-invoicing mandatory in B2B transactions. If you’re subject to VAT in Europe, bear in mind that ViDA is set to be in place by 2030. Thus, an e-invoicing solution will most likely be the technology you will have to implement within the close future.
While EDI can be a substitute for e-invoicing, both technologies have their own purpose and applications. EDI uses norms that differ from e-invoicing regulations, this is why you have to assess your company’s needs.
Should my company choose EDI, e-invoicing, or both?
As we were mentioning before, e-invoicing ready doesn’t mean that you’re EDI ready. Thus, the first logical step you be to define the needs of your company.
Do you plan to use e-invoices with your customers or also with the tax office? If you’re in a country that enforces e-invoicing, like Poland, e-invoicing should be your top priority! On the other hand, if you plan to use e-invoices only with your customers, make sure they are also convinced to switch to e-invoices.
Let’s say your customers are in the automotive industry, they have a stronger focus on the supply chain data with their own regulations. E-invoicing might not be their top priority and they might refuse to follow you on this journey.
Another case could be that your business partners don’t have an EDI solution in place, so they might be more interested in implementing an e-invoicing solution as it is usually cheaper.
While e-invoicing might be the next logical investment for your company – as it will be soon mandatory for many European countries, why should you stop there? If your business environment is already switching to electronic invoices, it would be perfectly normal to do the same with orders or shipment notice! With EDI, you can automatically reconcile invoices and orders. You get a better visibility on your supply chain, your payments, stocks…
At SPS Commerce, we will always encourage digitalizing your whole supply chain as it is worth the investment; EDI saves time, money and is also a safer way to exchange documents. Plus, we are already connected to thousands of companies, ERP and other business partners, as well as international networks such as Peppol.
What about archiving?
Back to your company’s needs, you also shouldn’t forget about archiving your invoices. It is regulated differently depending on the country, but it can go up to 10 years (and it usually does)! If your invoices are processed electronically, you should also consider archiving them in the electronic way. Printing an e-invoice doesn’t really make sense (it’s just a bunch of code which you anyway won’t be able to read), and most solution providers offer legal archiving solutions.
What are the technical requirements?
Adopting solutions to digitalize your documents requires some technical preparation. Depending on how far you want to go into your digitalization: how many types of documents are you aiming to exchange, the number of those documents, with how many business partners, answering to what norms and standards… Those questions are going to be asked by your provider in order to offer the solution that suits best your needs.
First, what is the technical capability of your company? You have to assess your existing solutions. Are you using an ERP? An accounting solution? Is it capable of issuing an electronic document and or invoice? The solution you are choosing should be integrated seamlessly into your existing system.
Second, it is important to dig around in your business environment to gather as many information as possible. Are your partners ready to exchange electronically with you? Are they willing to exchange e-invoices only? Are they submitted to local regulations that might affect you?
After you’ve answered all those questions, you should be able to determine if an e-invoicing solution would be enough, or if you should consider EDI to exchange your documents. Either way, the budget will also be an important item to discuss, those solutions concern the whole company, not only the IT department but also accounting, partnerships, financial…
- E-invoicing, the quickest path to one need
Again, depending on the country your company is based, you’ll have to answer to different regulations. In Europe, you have to make sure you’re compliant with the EN 16931 standard; because of the Directive 2014/55/EU, all electronic invoices must answer the same semantic rules. You also have to be careful to local regulations implementing mandatory e-invoicing to regulate taxes.
That being said, using an e-invoicing solution is usually the best answer to one specific need and it is less flexible if your company decides to extend its e-invoicing solution to a broader range of document exchange. It is good if you are a small company with limited resources, and if your local government and/or customers are asking you to issue electronic invoices.
- EDI, go full digitalization
When you go for an EDI solution, you should start with an investment that might seem important for your company. However, it Is way more flexible than an e-invoicing solution: in fact, you can digitalize virtually any document that you want, following international standards and regulations. If you already are using an EDI solution, it is most likely that your solution provider can also provide an e-invoicing solution that meets your needs and the ones of local regulations.
If you still have doubts, at SPS commerce, we are already connected to thousands of companies, but also networks, such as Peppol, and those connectors combined to our expertise will make the transition easier for you!