Ensuring operational efficiency and legal compliance are the top two priorities for CFOs. In this context, the electronic invoice plays a key role, as in addition to replacing paper documents, it is profoundly transforming companies’ financial management. That’s why we want to give you a detailed overview of how electronic invoices work, as well as their legal framework in Spain and how solutions like easyap facilitate their implementation.
To begin, what is an electronic invoice?
An electronic invoice is a digital document that meets the same legal requirements as a paper invoice, but is issued and received in electronic format. Its validity is backed by laws that ensure its authenticity and integrity.
Likewise, this type of document has specific characteristics, such as:
- Electronic format. They are generated and transmitted digitally.
- Authenticity. They guarantee the identity of the issuer with the electronic signature.
- Integrity. They ensure that the content has not been altered since the invoice was issued.
- Readability. The document must be understandable by both humans and computer systems.
In fact, these four characteristics are the pillars upon which those specific laws we referred to are based.
How does an electronic invoice work step by step?
Nevertheless, now we will delve into the most relevant part of this article. That is, how electronic invoices work. Specifically, the process consists of five steps that we will explain with an example.
1. Invoice Generation
First, the issuer creates the invoice using invoicing software that complies with legal standards. This document includes all mandatory invoicing data: identification of the issuer and recipient, description of goods or services, amount, applicable taxes, etc.
- Example:The company TechSoluciones S.A. sells software to Innovatech S.L. for €5,000. It uses its invoicing program to generate the electronic invoice in XML format with the NIF (tax identification number), description, amount, VAT…
2. Electronic Signature
With the complete document, and to guarantee authenticity and integrity, the invoice is digitally signed. How? With a recognized certificate. This ensures that the invoice has not been modified and that it originates from the legitimate issuer.
- Example: TechSoluciones S.A. digitally signs with its recognized digital certificate to ensure the authenticity and integrity of the document.
3. Transmission to the recipient
Afterwards, the invoice is sent to the recipient through secure electronic means. Currently, email is still valid, but there are Electronic Data Interchange platforms (EDI) or portals that provide a much more convenient and unified service.
- Example: the signed invoice is sent to Innovatech S.L. via an EDI securely and efficiently.
4. Reception and Validation
From there, the recipient verifies the electronic signature and validates that the invoice complies with legal and contractual requirements. Once validated, it is stored in the accounting and management systems.
- Example: Innovatech S.L. receives the invoice, and its system automatically validates it, verifying the electronic signature and checking that it complies with the requirements.
- Storage and Preservation
Finally, there is one last step or aspect to consider. And that is that both parties must retain the electronic invoices for the legal period established by each country or territory. And not only that, but they must also guarantee their accessibility and legibility for potential inspections, queries, or audits.
- Example: both companies store the invoice in their respective document management systems,keeping them for the legal period (between 4 and 6 years in Spain, starting from each fiscal year’s tax declaration).
In turn, this process or operation is applicable to any type of invoice. In this regard, we must point out that there are two types of electronic invoices:
Legal regulations in Spain on how these invoices work
Furthermore, electronic invoicing in Spain is regulated by several norms. Specific laws establish their use and requirements:
- Royal Decree 1619/2012. Regulates invoicing obligations, including those related to electronic invoices.
- Law 18/2022 (Create and Grow Law). Establishes the mandatory use of online invoices in all B2B commercial relationships. That is, between companies.
- Law 11/2021 (Anti-Fraud Law). Promotes the use of invoicing systems compatible with the platform Verifactu. Furthermore, it prohibits so-called dual-use software.
Implementation Deadlines
At the same time, these laws, which have been approved in recent years, have established (or are going to establish) mandatory electronic invoicing in our country. But, when will it become effective?
- Companies with a turnover exceeding €8 million. Presumably, they will start e-invoicing in 2026. The law sets a one-year period from the publication of the electronic invoicing regulation. Therefore, the exact date will depend on when said regulation is approved. If, for example, it is published in 2025, it will be effective in 2026.
- Other companies and self-employed individuals. For the same reason, everything indicates that the obligation will be effective in 2026, although, likewise, everything will depend on the development of the regulation.
Why is e-invoicing mandatory in Spain?
The mandatory implementation of electronic invoicing has three clear objectives:
- Reduce late payments. Online invoicing facilitates the tracking and control of payments, for both companies themselves and the Public Administration.
- Combat tax fraud. Precisely, by increasing transparency in transactions through this visibility and tracking, tax fraud is combatted.
- Foster digitalization. With this operation of electronic invoices, the modernization of the entire business sector is driven.
And how has electronic invoicing been adopted internationally?
In any case, Spain is not the first country to establish these measures. In fact, several countries have already implemented mandatory electronic invoicing. We see several cases:
- Italy, which with FatturaPA has reduced tax fraud by 17% after its implementation.
- France, which has already established it as mandatory for all B2B transactions.
- Germany, which this year is already immersed in its full implementation.
Even, in Latin America there are countries like Mexico, Chile, and Colombia that are adopting similar systems for their electronic invoicing.
How easyap facilitates electronic invoicing
This is where we come in: easyap. Our tailored solutions help you control your electronic invoicing operations from start to finish. Furthermore, we adapt to the needs of each company to offer:
- Comprehensive legal compliance. Constant updates to align with each client’s local and international regulations.
- Scalability and customization. Our solutions adapt to the size and sector of each company.
- Technical support. We provide continuous assistance to resolve questions and optimize software usage.
- Integration with existing systems. We integrate with major ERP, CRM, and other business tools.
- Automated accounting.We automate the accounting record of all your invoices, which reduces and eliminates errors and, consequently, improves operational efficiency.
- Multi-device and flexible deployment.You can access the software from different devices, as we operate in the cloud.
Therefore, the transition to electronic invoicing is a necessary step for companies seeking efficiency, compliance, and sustainability. So understanding how electronic invoices work and having solutions like easyap’s will make a differencein the financial and operational management of any organization. If you want to know more, you just have to contact us.
