E-Invoicing Explained: Formats, Mandates, and How It Works

E-invoicing is the automated exchange of structured, machine-readable invoice data between a seller's and buyer's financial systems using standardized formats like UBL or CII, transmitted through networks such as Peppol. Unlike a PDF sent by email, e-invoices require no manual data entry: the data flows directly into accounting software.

This guide covers the three-way distinction between e-invoicing, PDF invoicing, and digitization, compares the major formats side by side, maps the global mandate timeline heading into 2026 and beyond, and provides practical guidance for businesses receiving e-invoices for the first time.

The most common point of confusion is also the most consequential: understanding what qualifies as an e-invoice and what does not. That distinction is where this guide begins.

E-Invoicing, PDF Invoicing, and Digitization: Three Distinct Concepts

The confusion between these three concepts is the single biggest misunderstanding in the e-invoicing space. Many businesses believe they are already "e-invoicing" because they send invoices as email attachments. They are not. Before evaluating compliance timelines or technology options, you need to know exactly which category your current process falls into.

E-invoicing is the automated exchange of structured, machine-readable invoice data between business systems. The invoice is created in a standardized format, such as UBL (Universal Business Language) or CII (Cross-Industry Invoice), and transmitted through a regulated network like Peppol. No human reads the file. Your accounting system generates the data, sends it through the network, and the recipient's system ingests it directly. Fields like supplier ID, line items, tax amounts, and payment terms arrive as structured data that the receiving system can validate, match, and book without manual intervention.

PDF invoicing is sending a PDF file by email. The PDF looks digital, but it is functionally a picture of an invoice. Your recipient's accounting system cannot read the data inside a PDF. To extract supplier names, line items, or totals, someone must either re-key the information manually or run the file through optical character recognition (OCR). The distinction between e-invoicing and PDF invoicing is not a technicality. It is the difference between machine-readable data exchange and a document that requires human processing at the other end. A PDF sent by email does not qualify as e-invoicing under any national mandate.

Invoice digitization is the process of converting paper invoices into digital format through scanning, OCR, or AI-based data extraction. Digitization solves a real problem (eliminating paper from your workflow), but the output is not necessarily in a structured e-invoicing format. A scanned invoice processed through OCR gives you searchable text or extracted field data, not a UBL or CII file ready for transmission through Peppol. If you want to understand how invoice digitization works across the full paper-to-digital spectrum, it covers the broader set of technologies and approaches. But digitization and e-invoicing are solving different problems: one converts existing documents into usable data, the other eliminates the document entirely by exchanging structured data from the start.

The practical implication is significant. Under upcoming mandates across the EU, Southeast Asia, and other regions, sending a PDF by email will not satisfy e-invoicing requirements. If your current workflow is PDF-based, whether you generate PDFs from your accounting software or scan paper invoices and email the files, you will need to adopt structured formats and, in most jurisdictions, route invoices through a certified network. The distinction between e-invoicing and digital invoicing is not academic; it determines whether your process is compliant or not.

With these three categories clearly separated, the question becomes a practical one: what happens between the moment your system generates an invoice and the moment it arrives in your trading partner's system?

How E-Invoicing Works

Understanding e-invoicing as a concept is one thing. Seeing how an e-invoice actually travels from seller to buyer makes the process concrete. The workflow follows four sequential stages, each building on the previous one.

Step 1: Invoice creation. The process begins in the seller's ERP or accounting system. Rather than producing a visual document, the software generates the invoice as structured data: line items, tax amounts, buyer and seller identifiers, payment terms, and every other required field stored as discrete, labeled data elements.

Step 2: Format conversion. That structured data is then converted into a standardized e-invoicing format. The two dominant syntaxes are UBL 2.1 (Universal Business Language) and CII (Cross-Industry Invoice), both of which conform to the EN 16931 semantic data model used across European e-invoicing. EN 16931 defines what data fields an e-invoice must contain and how those fields relate to each other, regardless of which syntax carries the data. This standardization is what makes interoperability possible: a French supplier and a German buyer can exchange invoices because both systems speak the same semantic language, even if one uses UBL and the other uses CII.

Step 3: Transmission. The formatted invoice is transmitted through an e-invoicing network, and here the process diverges depending on which transmission model applies.

In the network model, used by Peppol (Pan-European Public Procurement OnLine), the infrastructure is decentralized. The seller connects through a certified Peppol access point, and the buyer connects through their own. The seller's access point routes the invoice to the buyer's access point using standardized protocols. No central government system touches the data. Peppol operates across more than 30 countries and is expanding beyond Europe into regions like Singapore and Australia.

In the clearance model, used by countries such as Italy, Poland, and Saudi Arabia, the infrastructure is centralized. Invoices pass through a government-operated platform before reaching the buyer. Italy's SDI (Sistema di Interscambio) validates each invoice and forwards it to the recipient. Poland's KSeF (Krajowy System e-Faktur) follows a similar approach, with the government platform acting as the mandatory intermediary. This model gives tax authorities real-time visibility into transactions, which is precisely why these governments mandate it.

Step 4: Receipt and ingestion. The buyer's system receives the structured data and can automatically ingest it into their accounting software, general ledger, or ERP. Because the invoice arrives as machine-readable, semantically defined data rather than a flat image or text file, no manual data entry is required. Line items map directly to purchase orders, tax codes populate automatically, and three-way matching between the invoice, purchase order, and goods receipt can happen without human intervention.

While this four-step workflow follows common principles everywhere e-invoicing operates, the specific format, network, and compliance requirements vary significantly by country and mandate.

E-Invoicing Formats Compared

Multiple e-invoicing formats exist today because electronic invoicing did not emerge from a single global initiative. Instead, it evolved through parallel efforts: national governments, international standards bodies, and regional trade networks each developed their own approaches. The result is that several formats coexist, each with distinct origins, syntax, and use cases.

Understanding how these formats relate to one another starts with one key standard: EN 16931, the European semantic standard for electronic invoicing. EN 16931 defines what data an e-invoice must contain, but not how that data is structured. Two XML-based syntaxes express it: UBL and CII. Most national and regional formats are implementations built on top of one of these two syntaxes.

UBL 2.1 (Universal Business Language)

UBL is an OASIS open standard that defines XML document formats for common business documents, including invoices. It serves as the syntax that Peppol invoices are written in. UBL 2.1 is widely adopted across Europe and is gaining traction globally as more countries join the Peppol network. Its broad adoption makes it the closest thing to a universal e-invoicing syntax currently in use.

CII (Cross Industry Invoice)

Where UBL dominates international e-invoicing, CII is the syntax behind Europe's hybrid invoice formats. A UN/CEFACT standard also recognized under EN 16931, CII uses a different XML schema and structure from UBL. It serves as the foundation for Factur-X and ZUGFeRD, making it the format organizations in France and Germany most frequently encounter.

Peppol BIS Billing 3.0

Rather than a standalone format, Peppol BIS Billing 3.0 layers business rules and validation requirements on top of UBL 2.1, defining how invoices must be structured for exchange over the Peppol network. Peppol e-invoicing is used across the EU, the UK, Singapore, Australia, New Zealand, and a growing number of other countries. When a supplier sends an invoice "via Peppol," the underlying data follows UBL 2.1 syntax with Peppol-specific validation applied.

FatturaPA (Italy)

Italy was the first EU country to mandate B2B e-invoicing nationwide, effective January 2019. FatturaPA is the required XML format, and all invoices must be submitted through Italy's clearance platform, the SDI (Sistema di Interscambio). FatturaPA predates EN 16931 and uses its own XML schema rather than UBL or CII, making it structurally distinct from other European formats.

Factur-X (France) and ZUGFeRD (Germany)

Factur-X and ZUGFeRD are the same format under different names, the result of Franco-German collaboration on a single specification. Both are hybrid formats that embed CII-based structured XML data inside a PDF/A-3 document. Recipients get both a human-readable PDF and machine-readable structured data in a single file: the PDF layer for visual review, the XML layer for automated processing. The technical standard is identical; only the branding differs by market.

XRechnung (Germany)

XRechnung is Germany's national implementation of EN 16931, required for B2G (business-to-government) invoicing in public procurement. Unlike the hybrid approach of ZUGFeRD, XRechnung is pure XML and can be expressed in either UBL or CII syntax. Any supplier invoicing a German public entity must submit in XRechnung format.

Format Comparison

Format	Syntax/Standard	Region/Use	Key Characteristic
UBL 2.1	OASIS XML	Europe, global (via Peppol)	Dominant international e-invoicing syntax
CII	UN/CEFACT XML	Europe (France, Germany)	Alternative EN 16931 syntax; basis for hybrid formats
Peppol BIS 3.0	UBL 2.1 with Peppol rules	EU, UK, Singapore, Australia, NZ	Network specification, not a standalone format
FatturaPA	Proprietary XML	Italy (B2B and B2G)	Mandatory since 2019; routed through SDI clearance
Factur-X / ZUGFeRD	CII XML embedded in PDF/A-3	France, Germany, broader EU	Hybrid: human-readable PDF + machine-readable XML
XRechnung	UBL or CII XML	Germany (B2G)	Pure XML; required for German public procurement

How the Formats Relate

The hierarchy is straightforward. EN 16931 sits at the top as the semantic data model. UBL and CII are the two syntaxes that encode that model into XML. National and regional formats (FatturaPA, Factur-X/ZUGFeRD, XRechnung, Peppol BIS) are implementations that layer country-specific rules, validation, or delivery mechanisms on top of one or both of those syntaxes. FatturaPA is the exception: it predates EN 16931 and follows its own schema entirely.

For businesses that receive invoices across multiple formats, particularly hybrid formats or national XML schemas, capturing and extracting data from electronic invoices becomes a practical concern. Not every format arrives in a structure your accounting system can ingest natively, and handling multiple syntaxes adds complexity to accounts payable workflows.

Which format a business ultimately needs to support depends on two factors: which country's mandates apply to its transactions, and which network it connects to for invoice exchange. The next section maps out those mandates by region and timeline.

The Global Mandate Landscape: Who Requires E-Invoicing and When

Dozens of countries have already implemented mandatory e-invoicing, and dozens more are finalizing timelines. The driving forces are consistent everywhere: governments want real-time tax visibility, reduced VAT fraud, and lower administrative costs. The momentum is substantial, and research from IMARC Group projects the global e-invoicing market will reach USD 70.3 billion by 2034, up from USD 18.5 billion in 2025, reflecting a compound annual growth rate of 15.96%. That growth is fueled almost entirely by regulatory mandates.

What follows is a region-by-region breakdown of where mandates stand today.

Europe

Europe presents the most fragmented mandate picture. Each country is building its own national system while the EU works toward harmonization through ViDA.

Italy was the pioneer. Mandatory B2B and B2C e-invoicing has been in effect since January 2019, with all invoices routed through the SDI (Sistema di Interscambio) platform in FatturaPA format. Italy extended these requirements to cross-border transactions in 2022, making it one of the most far-reaching mandates globally.

France is rolling out mandatory B2B e-invoicing starting September 2026 for large enterprises, with full implementation covering all businesses by September 2027. The system uses the Chorus Pro platform, which has already handled B2G invoicing for years.

Germany made B2G e-invoicing (using the XRechnung format) mandatory several years ago. For B2B, all businesses have been required to receive structured e-invoices since January 2025. Mandatory sending obligations will phase in from 2027 to 2028, depending on company size.

Poland has built the KSeF (Krajowy System e-Faktur), a centralized national e-invoicing system. After delays, mandatory B2B e-invoicing through KSeF takes effect in February 2026.

Belgium requires mandatory B2B e-invoicing from January 2026, using the Peppol BIS framework, making it one of the first countries to adopt Peppol as the backbone of a national mandate.

Spain is progressing toward a full B2B e-invoicing mandate through its Veri*factu system, which is already operational for tax reporting purposes. Full B2B e-invoicing obligations are expected between 2026 and 2027.

ViDA (VAT in the Digital Age) is the EU's overarching directive that will eventually unify cross-border e-invoicing across all member states. Under ViDA, e-invoicing will be required for cross-border B2B transactions, with enforcement expected by 2030. ViDA also establishes that any member state can mandate domestic B2B e-invoicing without requesting a special derogation from the European Commission. In the long term, ViDA will create a more uniform EU-wide framework. In the interim, businesses operating across European borders must navigate a patchwork of national systems, each with its own format requirements and platform.

Latin America

Latin America is the most mature e-invoicing region in the world. Mandates here predate most European initiatives by a decade or more.

Brazil launched NFe (Nota Fiscal Eletronica) in 2008, making it one of the earliest national e-invoicing mandates globally. The system is deeply embedded in Brazil's tax infrastructure.

Mexico mandated CFDI (Comprobante Fiscal Digital por Internet) in 2014. Every invoice is processed and validated through the SAT (Servicio de Administracion Tributaria) tax authority platform.

Chile, Colombia, and Argentina all operate mandatory e-invoicing systems that have been in production for years. Latin American governments generally treat e-invoicing as settled infrastructure rather than an emerging initiative.

Asia-Pacific

India introduced GST e-invoicing with a phased rollout starting in 2020, initially applying only to businesses with annual turnover above INR 500 crore (approximately USD 60 million). The threshold has been progressively lowered to INR 5 crore in 2023, bringing millions of additional businesses into scope. The trajectory points toward universal coverage across all business sizes.

Indonesia has required e-invoicing (e-Faktur) since 2014 for VAT-registered businesses. The system is fully integrated with the Directorate General of Taxes.

Singapore adopted InvoiceNow, a Peppol-based system, for B2G invoicing. B2B adoption remains voluntary but is expanding as more businesses connect to the network.

Australia and New Zealand have adopted Peppol e-invoicing for government procurement. B2B use is voluntary in both countries, though government incentives are driving broader adoption.

Middle East

Saudi Arabia launched its ZATCA (Zakat, Tax and Customs Authority) e-invoicing mandate in 2021 with Phase 1, requiring all businesses to generate and store e-invoices electronically. Phase 2, which involves integration with ZATCA's Fatoora platform for real-time reporting and validation, is rolling out progressively across business segments.

United States

No federal e-invoicing mandate exists in the US, and none is currently planned. However, US businesses are affected in three important ways:

Inbound compliance. US companies trading with European, Latin American, or other mandated-region suppliers and customers may need to send or receive e-invoices to comply with those jurisdictions' requirements. Concretely: if you purchase from a French supplier after September 2026, they will send you a structured e-invoice rather than a PDF. Your AP team needs to be able to receive and process that format, even though no US law requires it.
Voluntary frameworks. The Business Payments Coalition has been developing a Peppol-based e-invoicing framework for voluntary adoption within the US market.
State and local procurement. Some state and local governments have begun accepting Peppol invoices for procurement, creating pockets of e-invoicing adoption at the sub-federal level.

Even without a domestic mandate, US businesses should prepare for inbound e-invoices from mandated jurisdictions. For many organizations, this preparation involves transitioning to paperless invoice processing so that structured electronic documents can be received and processed without manual intervention.

Enforcement mechanisms vary by jurisdiction. Italy's SDI rejects non-compliant invoices outright, meaning the transaction cannot proceed until a valid e-invoice is submitted. Other countries impose financial penalties, delayed VAT refunds, or increased audit scrutiny. The specifics depend on the mandate, but the pattern is consistent: non-compliance creates operational friction, not just regulatory risk.

Note: Mandate dates current as of February 2026. Timelines are subject to change as governments adjust implementation schedules.

Regardless of which specific mandates apply to your organization today, the direction is clear: every business will eventually receive an e-invoice from a trading partner operating under a mandate.

What to Do When You Receive an E-Invoice

Nearly all e-invoicing guidance focuses on the sender: how to generate compliant invoices, which formats to use, how to connect to a government clearance platform. But compliance is a two-way street. If a supplier has sent you a structured e-invoice, you need to know how to receive, validate, and process it. This section covers exactly that.

Step 1: Identify the Format You Received

Before anything else, determine what landed in your inbox or system. The format dictates your entire workflow:

A UBL or CII XML file attached to an email or delivered through a portal. This is a pure structured data file with no visual layout.
A Factur-X or ZUGFeRD hybrid PDF that looks like a normal invoice when opened but contains embedded XML data carrying the machine-readable invoice fields.
A notification from a Peppol access point indicating that a supplier has transmitted an invoice to your registered Peppol ID.

Each of these requires a different handling approach, so confirming the format is the necessary first step.

Step 2: Check Your Accounting Software's E-Invoicing Support

Many modern accounting and ERP systems already support structured e-invoice ingestion. SAP, Oracle NetSuite, Sage, Xero, and QuickBooks Online (in markets where e-invoicing mandates are active) can import UBL, CII, or Peppol invoice data directly, often with minimal configuration.

Check your software's documentation or contact your vendor to confirm:

Which e-invoice formats are supported natively
Whether import is automatic (file watch, API, or Peppol integration) or requires manual upload
What mapping or configuration is needed for your chart of accounts

If your software supports the format you received, the import process is typically straightforward and may already be partially automated.

Step 3: Connect to Peppol (If Applicable)

If your suppliers send invoices through the Peppol network, you will need a Peppol ID and a connection through a certified Peppol access point. This is the receiver-side equivalent of registering as a sender.

A Peppol access point acts as your gateway to the network. Options range from ERP-integrated solutions (where your accounting software connects directly) to standalone service providers that receive invoices on your behalf and forward them to your systems. To register, contact a certified access point provider in your country. The Peppol authority maintains a public directory of certified providers. Registration typically involves providing your business identifiers (such as a VAT number or company registration number) and choosing a connection method. Once registered, suppliers can route invoices to your Peppol ID automatically, eliminating manual file transfers entirely.

Step 4: Handle Hybrid Formats Correctly

If you received a Factur-X or ZUGFeRD invoice, resist the temptation to treat it as a regular PDF. Yes, you can open it and read the invoice visually. But the real value is in the embedded XML data, which contains every invoice field in a structured, machine-readable format.

Extract and import the XML data rather than manually keying figures from the PDF. Your accounting software may do this automatically when you upload the file. If it does not, dedicated e-invoice processing tools can parse the embedded XML and map it to your system's fields. Manual entry from the PDF defeats the purpose of the hybrid format and reintroduces the same data-entry errors that e-invoicing is designed to eliminate.

Step 5: Validate the Invoice Data

Structured data is more reliable than manually entered data, but it is not immune to errors. Once the e-invoice data is imported into your system, verify the key fields:

Line item amounts and totals match the purchase order or contract terms
Tax calculations are correct for the applicable jurisdiction and rate
PO numbers, delivery references, and supplier identifiers match your records

This validation step is where how 2-way and 3-way invoice matching works becomes critical. Matching the invoice against your purchase order (2-way) or against both the PO and goods receipt (3-way) catches discrepancies before payment, regardless of whether the invoice arrived as structured data or on paper.

E-invoicing dramatically reduces transcription errors, but it does not replace the need for systematic matching and approval workflows.

Step 6: If Your Software Cannot Process E-Invoices

Not every business runs software that can ingest structured e-invoice formats natively. If that describes your situation, you have two practical paths forward:

Upgrade or configure your accounting software to support e-invoice imports. Many vendors have added this capability in recent updates, and it may require only enabling a module or installing a plugin rather than switching platforms entirely.
Extract the data from the structured file directly. Because e-invoice XML is already machine-readable, extracting fields like supplier name, amounts, tax IDs, and line items is far more reliable than extracting the same data from a scanned PDF or image. The data is explicitly labeled and consistently formatted, making automated extraction highly accurate even with basic tools.

Option two is a pragmatic short-term solution, but as more of your suppliers adopt e-invoicing, native software support will save significant time and reduce manual handling.

The Receiver's On-Ramp

For many businesses, receiving an e-invoice from a supplier is their first real encounter with the e-invoicing ecosystem. Once structured invoice data flows into your systems without manual re-keying, the practical benefits become clear: faster processing, fewer errors, and cleaner audit trails. The receiving side is often where the operational value of structured data exchange becomes concrete rather than theoretical.

Why E-Invoicing Matters Beyond Compliance

Mandates are pushing organizations toward e-invoicing, but compliance is only part of the story. Structured, machine-readable data delivers operational benefits that generic invoice automation cannot match.

Data integrity from source. When invoice data travels as structured XML between systems, transcription errors, transposition mistakes, and OCR misreads disappear entirely. The data the seller entered is exactly what the buyer receives. An e-invoice that would take 5-15 minutes to key in manually can be ingested in seconds, and the ingested data is guaranteed to match the original. No re-keying, no reconciliation against a scanned image, no "the OCR read a 6 as an 8."

Cross-partner interoperability. E-invoicing standards like UBL and Peppol BIS create a shared language between trading partners. Once your system speaks that language, every supplier on the same network can send you structured invoices that flow directly into your accounting software, regardless of which ERP or platform they use. This is different from bilateral integrations or EDI, which require per-partner setup. The network effect grows with each new mandate: as more countries require e-invoicing, more of your suppliers will send structured data by default.

Real-time tax visibility and audit readiness. In clearance-model jurisdictions (Italy, Poland, Saudi Arabia), the tax authority validates every invoice in real time. Your compliance obligations are met at the point of transaction, not during a year-end audit scramble. Even in network-model jurisdictions, structured invoice data creates a clean, cross-referenced audit trail from day one, reducing the time your finance team spends gathering documentation and reconciling discrepancies.

Your Next Steps

Where you start depends on where you stand today.

If a mandate applies to you now, identify the required format and network for your jurisdiction, select an access point or platform provider that supports that standard, and begin testing with a small batch of suppliers. Focus on getting the technical connection working before scaling to your full supplier base.

If a mandate is coming in 2026-2027, start evaluating your accounting software's e-invoicing capabilities now. Determine whether your current system can generate and receive the required format natively or whether you need middleware or a new provider. Register with the relevant network or platform before the deadline so you have time to test and resolve integration issues without compliance pressure.

If no mandate applies to your jurisdiction yet, prepare for inbound e-invoices from international suppliers operating in mandated jurisdictions. Check whether your accounting software can import UBL, CII, or Peppol BIS documents. Consider voluntary adoption through Peppol to capture processing benefits ahead of any future mandate.

The transition to e-invoicing is accelerating globally, with new mandates announced each year and existing mandates expanding in scope. Organizations that prepare early reduce the compliance burden when mandates arrive in their jurisdiction while capturing immediate processing benefits from every structured invoice they send or receive. The question is not whether e-invoicing will reach your operations, but whether you will be ready when it does.