What Is Electronic Invoicing (E-Invoicing)? A Practical Guide for UK Finance Teams

Digital delivery has come a long way in accounts payable, but most invoices still arrive as documents rather than data. The format is easy to send and familiar to handle — but it limits how much of the process can be automated.

Electronic invoicing (e-invoicing) removes these limitations by switching the invoice from a visual file to a structured data record that finance systems can validate and post automatically. 

Momentum for e-invoicing is building across the UK and Europe. Many private sector organisations are using it to accelerate invoice processing and improve control, while public bodies such as the NHS already exchange structured invoices via PEPPOL. 

As more supply chains expect data-based invoicing as standard, now is a sensible time to prepare for e-invoicing. This guide explains what electronic invoicing means in practice, how it works, and how to adopt it without disrupting your finance operations.

Table of contents

• Definition of electronic invoicing
• How the e-invoicing process works
• UK landscape and compliance essentials 
• Security and compliance in the UK
• E-invoicing vs manual/PDF invoicing: A quick comparison 
• How to start your e-invoicing journey 
• Real-life example: Smithfield Foods

Definition of electronic invoicing

Electronic invoicing (e-invoicing) is the B2B exchange of invoice data in a structured, machine-readable format. Unlike PDF attachments or scanned documents, which are visual files, an e-invoice is sent as structured data that accounting systems and ERP software can automatically validate, post and archive.

Behind the scenes, every e-invoicing process relies on a few core elements: 

1. A standardised format — such as XML/UBL aligned to EN 16931 — to structure the invoice data.
2. Validation rules to ensure the invoice meets legal and accounting requirements.
3. A secure transmission channel, typically via a network or API.
4. A compliant digital archive to store the invoice for the required retention period.

Key benefits of e-invoicing at a glance 

• Fewer manual steps, meaning lower error rates and fewer exceptions
• Faster processing to support earlier approvals and on-time payments 
• Better data quality for stronger VAT evidence and analytics
• Improved supplier experience as your company can instantly acknowledge invoices and check status visibility

How the e-invoicing process works 

E-invoicing replaces the stop-and-start steps of paper and PDF invoicing with a connected digital workflow. While individual setups vary by supplier and finance system, the core process follows the same pattern:

• Invoice creation: The supplier generates an e-invoice directly from their ERP or AP system in a recognised format such as UBL/EN 16931.
• Secure transmission: The invoice is sent through a trusted network or API, ensuring the data reaches the buyer’s system in a consistent, verifiable format.
• Automated validation: The buyer’s finance system checks syntax, supplier identity, purchase order details and tax rules — all without manual input.
• Touchless processing: Valid invoices are posted straight to the buyer’s ERP system for recording and payment, while exceptions are flagged for review.
• Digital archiving: The approved invoice is stored in a compliant archive with retention controls, audit logs and (where required) a legal e-signature.

By moving every stage into a single AP automation process, finance teams gain real-time visibility, reduce processing time from weeks to hours, and stay fully prepared for audits and VAT checks.

UK landscape and compliance essentials 

Today, the UK has no nationwide B2B e-invoicing mandate. However, electronic invoicing is already required for public sector purchasing under the Public Procurement (Electronic Invoices etc.) Regulations 2019. Many organisations — including the NHS — exchange invoices via the PEPPOL network to ensure secure, standardised delivery.

The UK government is currently exploring how to expand electronic invoice management standards, signalling that broader adoption is on the horizon.

Even without a legal deadline, many UK businesses are switching to structured e-invoices to reduce admin, speed up payments and keep finance data consistent. 

Sending invoices in a recognised format (like EN 16931 via PEPPOL) and storing them in a controlled digital archive with clear access, retention and audit tracking is now considered good practice.

It's worth noting that this standards-based exchange of invoices differs from Continuous Transaction Controls (CTC) models seen in countries such as Italy and Poland, where every invoice must be submitted to the tax authority in real time for approval or e-reporting before it reaches the buyer. 

The UK hasn’t taken this route — but businesses that adopt structured e-invoicing now will find it far easier to adapt if similar rules are introduced in the future.

Automate Invoice Processing

This helpful e-book contains effective tips on how to optimise your invoice processing processes and thus save massive amounts of time and money.

Download now

Security and compliance in the UK 

E-invoicing isn’t just an opportunity to work more efficiently; it also supports compliance. Under the UK GDPR and the Data Protection Act 2018, organisations must be able to demonstrate that personal and financial data is processed securely, accessed appropriately and retained for the correct duration. This framework applies as much to invoices as to any other business record.

A compliant setup depends not only on how invoices are exchanged, but also on how they are stored. A secure document management system (DMS) should provide:

• Certified security controls to protect invoice data at rest and in transit
• User-based access permissions to ensure only authorised staff can view or approve financial documents
• Retention management to automatically store invoices for the legally required number of years
• Full audit trails to prove who accessed or modified a document (and when)

With these elements in place, e-invoicing strengthens your compliance position and makes audit readiness a built-in feature rather than an annual scramble. Your DMS should offer certified security controls and features that support these obligations end-to-end.

DocuWare: Relevant standards, certifications and controls

For organisations that want the advantages of e-invoicing without compromising security or regulatory obligations, DocuWare provides a platform with independently verified protection across every layer.

DocuWare’s compliance foundation includes:

• SOC 2 Type 2 certification (AICPA): Recurring, third-party audits verify that DocuWare Cloud maintains strict controls for security, availability and operational integrity.
• ISO/IEC 27001 Information Security Management: A fully certified ISMS ensures that policies, risk management and continual improvement practices are embedded across our organisation.
• GDPR / UK GDPR support: Built-in tools help fulfil data subject requests — including locating, exporting, correcting and deleting records — while protecting personal data throughout its lifecycle.
• Encryption by default: All traffic is secured via HTTPS/TLS and stored with strong at-rest encryption (including AES), with strict tenant separation in DocuWare Cloud.
• Access control, audit and retention: Role-based permissions, complete audit trails and compliant archiving ensure financial records remain traceable, tamper-resistant and retained for the required duration.
• Hardened hosting environment: DocuWare runs in high-security, Azure-backed data centres designed for resilience, redundancy and 24/7 availability.

In short: DocuWare gives finance and IT teams confidence that every invoice is handled in a secure, compliant and audit-ready environment.

E-invoicing vs manual/PDF invoicing: A quick comparison 

Even when invoices arrive by email as PDFs, they still behave like paper. Someone has to read them, key in the figures and chase approvals. With structured e-invoicing, most of that effort disappears.

Here’s how the two approaches compare:

How to start your e-invoicing journey 

Most organisations don’t switch to structured electronic invoice management overnight. Instead, they phase it in alongside existing processes. A good starting point is to treat e-invoicing as an upgrade to your current AP workflow rather than a full replacement on day one.

A typical e-invoicing deployment follows five steps:

• Analyse: Review your current invoice volumes by supplier, spot where exceptions or delays are most common, and check for recurring tax or audit compliance gaps.
• Prioritise: Focus your supplier onboarding on vendors with a high invoice volume and a clean purchase order process. They’ll deliver the fastest gains with minimal change management.
• Choose: Select a solution that supports recognised standards such as UBL/EN 16931 and PEPPOL, and can support ERP integration for system interoperability.
• Pilot: Run a hybrid setup where you accept both structured e-invoices and PDFs. Use intelligent document processing (IDP) to capture data from the latter so you progress without waiting for full supplier adoption.
• Roll out: Extend to more suppliers, introduce automated matching and approvals, and use e-reporting to track improvements in processing time and exception rates.

Real-life example: Smithfield Foods

To understand what structured, automated electronic invoice processing looks like in practice, let’s examine Smithfield Foods — a major UK-based manufacturer processing over 12,000 invoices a year.

Until recently, Smithfield’s approvals were entirely paper based. Invoices were printed, passed around for sign-off, filed and re-filed through multiple stages, before being archived offsite. 

Staff often handled the same document up to four times, and approved invoices ended up back in circulation while waiting for the next 14-day payment run.

Working with a local DocuWare partner, Smithfield replaced its manual maze with a fully digitised invoice workflow in just four weeks:

• DocuWare reads key invoice data and matches it against open purchase orders
• If everything aligns, the invoice is automatically approved. If not, DocuWare starts a routed approval process based on internal authority levels
• Every approved invoice is securely stored via e-archiving and is instantly accessible from the company’s DeFacto ERP

“Thanks to our DMS, we aren't wasting time on searches and filing. For our organisation, this amounts to recapturing a good 85 hours per month — roughly the working time of a part-time employee,” says Ralph Farrow, IT Manager, Smithfield Foods.

Read the full case study.

Want to write your own success story? 

Get started now.