Best E-Invoice Software & Tools

What is E-Invoicing Software?

E-Invoicing software is a digital solution designed to automate the creation, transmission, processing, and archiving of electronic invoices. This type of software helps companies comply with legal obligations related to invoicing requirements, enhances the efficiency of the invoicing process, and ensures a transparent, traceable, and seamless workflow for both the invoice issuer and the invoice recipient.

In a business environment increasingly shaped by digitalization and legally mandated standards such as XRechnung or ZUGFeRD, e-invoicing software has become an essential component of modern financial and accounting operations. And it's not just large corporations that are affected—regulatory developments at both the EU and national levels, such as mandatory e-invoicing for public procurement, are prompting small and medium-sized enterprises to transition as well.

E-invoicing software replaces paper-based and manual processes with automated workflows that reduce errors, shorten processing times, and lower costs. Additionally, it ensures legally compliant archiving and simplifies collaboration with tax advisors, financial authorities, and business partners.

Key Features of E-Invoicing Software

1. Creation of standardized e-invoices: Automatically generates compliant formats such as XRechnung or ZUGFeRD directly from ERP or accounting systems.
2. Legally compliant transmission: Sends invoices via Peppol, email, or portal interfaces with validation tools to ensure deliverability.
3. Reception and processing systems: Automatically detects and extracts data from incoming e-invoices.
4. Workflow management: Maps individual approval and validation processes for both invoice issuers and recipients.
5. Archiving and audit trails: Provides audit-proof storage of all invoices, including status tracking and processing logs.

Core Functions of E-Invoicing Software

Digital Creation and Format Compliance

A core function of any e-invoicing software is the ability to create invoices entirely digitally and in the correct format. This means the entire invoicing process—from capturing invoice data to formatting and delivery—occurs without media disruptions. The software supports all common e-invoicing formats, particularly the legally mandated XRechnung for public sector clients and the hybrid ZUGFeRD format.

In practice, this allows the invoice issuer to avoid manual entry and formatting of invoice data. Instead, relevant information is extracted directly from the ERP or accounting system and automatically structured into the e-invoice. Mandatory fields like invoice number, payment terms, service date, or tax information are formatted and validated in line with legal standards.

Automated validation mechanisms detect errors before the invoice is sent, reducing follow-up questions, payment delays, and the need for corrections. This leads to a more efficient workflow on the part of the invoice recipient.

Electronic Transmission and Receipt

Alongside creation, electronic transmission is a central pillar. Most e-invoicing software enables standardized delivery via various channels such as Peppol, email with structured XML attachments, or direct upload to invoice portals. These channels guarantee fast and secure delivery, with each invoice receiving a unique timestamp and status label.

On the recipient's side, the software provides robust invoice intake features. Incoming invoices are extracted from mailboxes or portals, analyzed, and cross-checked with existing accounting and ERP data. This enables early detection of duplicates, discrepancies, or missing mandatory fields, which can then be quickly resolved.

This is especially beneficial for companies with high invoice volumes, ensuring that payments are processed correctly and on time—an essential component of complying with invoicing obligations.

Automated Validation and Approval Workflows

A significant advantage of modern e-invoicing solutions is their ability to reflect complex internal validation and approval workflows. Companies can configure the software to route invoices through customized processes based on criteria such as invoice amount, vendor, project, or department.

These workflows are fully digital and transparent: stakeholders receive notifications, can leave comments, request changes, or approve and reject invoices directly. Every step is logged in a secure audit trail, offering full traceability for internal audits or external reviews.

This not only enhances control and security but also reduces the burden on the accounting team by eliminating many manual review steps. The entire process becomes leaner, faster, and more transparent.

Integration into Existing Systems

E-invoicing software unleashes its full potential when integrated into existing IT infrastructure. Most providers offer APIs or standard connectors for popular ERP, DMS, or accounting platforms, allowing data to be transferred automatically, invoices to be generated directly within the system, and receipts to be processed without delay.

Common integrations include SAP, DATEV, Microsoft Dynamics, Lexware, and Sage. This eliminates the need for double data entry, saving time and reducing errors. It also simplifies collaboration with tax consultants and external service providers.

Deeper integration also enables synchronization with procurement data (Purchase-to-Pay processes), verification of vendor master data, or automated posting of approved invoices. As a result, e-invoicing becomes a fully integrated element of overall enterprise management.

Audit-Proof Archiving and Legal Compliance

A frequently overlooked—but legally mandatory—function of e-invoicing software is audit-proof archiving. Every invoice must be retained for a legally defined period—ten years in Germany, for instance. The software handles this by automatically storing all invoices and their associated approvals, processing logs, and delivery receipts in a tamper-proof manner.

Storage is carried out in compliant formats that meet all GoBD (Principles for Proper Management and Storage of Books, Records, and Documents in Electronic Form) requirements. This ensures companies are fully prepared for tax audits and can retrieve relevant documents quickly and reliably.

Who Uses E-Invoicing Software?

Medium-Sized and Large Enterprises

Large companies with high invoice volumes often rely on e-invoicing software to streamline and automate their processes. These organizations particularly benefit from integration with existing ERP systems and the ability to process hundreds or thousands of invoices per month without manual intervention.

Small Businesses and Freelancers

Small businesses and self-employed professionals are increasingly required to use e-invoicing solutions, especially when working with public-sector clients. At the same time, the software allows them to present a professional image, avoid payment delays, and meet regulatory obligations without needing extensive internal resources.

Many vendors offer lightweight cloud-based solutions designed specifically for smaller users, enabling them to handle invoicing directly from quotes or order data.

Public Administration and Government Agencies

In Germany, public authorities are obligated to accept and process e-invoices. As a result, more and more government agencies are implementing specialized software to receive invoices electronically, integrate them with internal systems, and manage centralized invoicing platforms efficiently.

Tax Advisors and Accounting Firms

Tax advisors and outsourced accounting providers increasingly use e-invoicing software to simplify document processing for their clients. Integration with platforms like DATEV allows for seamless data transfer and facilitates compliance with GoBD regulations.

Benefits of E-Invoicing Software

Time and Cost Savings

Automating invoicing, delivery, validation, and archiving generates significant savings in time and costs. Manual tasks such as scanning, manually reviewing, or typing in invoice data are completely eliminated. This also reduces the risk of errors and speeds up the entire process.

Legal Compliance

Using e-invoicing software helps companies meet their invoicing obligations in a legally compliant way. They can be confident that all statutory requirements related to structure, transmission, deadlines, and storage are met—an increasingly important consideration as governments move toward digital tax systems.

Transparency and Traceability

Both invoice issuers and invoice recipients benefit from increased transparency: every step in the invoicing process—from creation to review and archiving—is digitally documented and traceable. This makes control easier, avoids misunderstandings, and improves cooperation across departments.

Faster Payment Cycles

With faster processing times, automated validation, and clearly defined approval workflows, payment cycles are significantly shortened. This improves cash flow and strengthens business relationships through reliable payments and a more professional approach.

Scalability and Flexibility

Whether you're a startup or a multinational, modern e-invoicing software is scalable and adapts flexibly to company size and structure. New users, clients, or invoice formats can be easily added, and the system can grow along with evolving IT landscapes and business needs.

Selecting the Right E-Invoicing Software

Requirements Analysis and Goal Definition

The selection process starts by identifying internal needs: What are the company’s requirements for invoicing, legal compliance, data formats, and system integration? All relevant departments—especially accounting, procurement, IT, and possibly project management—should be involved.

Creating a Long List

Next comes thorough market research. Based on recommendations, online reviews, and industry platforms, an initial long list of potential software solutions is compiled. It’s important to evaluate both cloud and on-premise options to find the best fit for your business model.

Defining Must-Have and Nice-to-Have Criteria

Clear requirements are then defined. Must-have features include support for XRechnung and ZUGFeRD formats, GoBD-compliant archiving, user management, and system interfaces. Nice-to-have features might include multi-client support, a mobile app, or dashboards for invoice tracking.

Creating a Short List

Based on the defined criteria, the long list is narrowed down to a short list of approximately three to five providers, who are then assessed more thoroughly.

Conducting Demos and Trial Runs

Product demos and trial environments allow for practical evaluation of the software’s usability. It's best to simulate real-world scenarios—such as processing and archiving an incoming invoice—to assess the solution’s fit.

Evaluation and Final Decision

After testing, each provider is evaluated using a structured scoring model. In addition to feature coverage, aspects such as customer support, pricing, references, and long-term viability are considered. The final decision should be made by an interdisciplinary team.

Implementation and Training

Once a contract is signed, implementation begins. This includes system integration, data migration (e.g., historical invoices), and user training. Accompanying change management measures can help ensure user acceptance across the organization.

Ongoing Optimization and Development

After go-live, regular evaluations should be conducted. New regulatory requirements, internal feedback, or technical developments may necessitate adjustments. Choosing a vendor with active support and continuous development is crucial for long-term success.