What is an electronic invoice?

An electronic invoice is a digital version of the traditional paper invoice. This type of invoice is prepared, sent and received electronically through various software solutions designed to automate and simplify the invoicing process. An electronic invoice contains the same information as a paper invoice, including the invoice number, date, payment terms, and details of the products or services billed.

The difference between an electronic invoice and a paper invoice lies in the way it is processed. Electronic invoices are created and sent through digital systems, making them faster and more reliable. They can also be easily integrated with accounting systems, making it easier to keep track of finances and avoid errors that often occur with manual entry.

You can also find our free invoice template here.

Electronic invoicing vs. paper invoicing

Electronic invoicing and paper invoicing differ from each other in several ways.

E-invoicing involves digital data transfer through online invoicing systems and standardized electronic formats such as PDF, XML or EDI. The invoicing process takes place through an encrypted data exchange and makes it easy to store and search for previous invoices digitally.

Paper invoicing requires manual processing and is typically slower due to postal services. This type of invoicing simply uses physical paper invoices sent through the mail, which requires physical filing and manual searching.

How does an electronic invoice work?

Electronic invoicing makes the entire invoicing process easier and faster. It starts with you creating the invoice in a digital invoicing system. You enter all the necessary information and the system generates an electronic invoice that is sent directly to the recipient's email or billing system.

When the recipient receives the invoice, they can easily import it into their own system, ensuring fast and error-free processing. Everything is done digitally, which means you avoid paperwork and mail handling. The system keeps track of all your invoices so you always have an overview of which ones have been paid and which ones are still outstanding.

Using electronic invoicing saves you both time and money, while providing a more efficient and transparent invoicing process. It's a smart way to keep track of your finances and ensure everything runs smoothly.

Key benefits of electronic invoicing

Electronic invoicing represents a modern and efficient approach to the invoicing process that offers a number of benefits for both businesses and customers.

Here are the main benefits of electronic invoicing:

1. Faster and more efficient processing - Electronic invoices can be sent and received instantly, saving time and reducing the risk of payment delays.
2. Error-free data - Automating the invoicing process also eliminates the need for manual data entry, as invoices can be automatically integrated into the company's financial system. This reduces the risk of errors and incorrect information.
3. Direct and secure communication - Electronic invoicing increases trust between businesses and their partners as it greatly reduces the risk of lost or misdelivered invoices. Security measures, such as encryption, protect confidential information during transmission.
4. Automatic bookkeeping - Electronic invoices can be easily integrated into your company's financial system, which means less manual data entry and less risk of errors. This saves you time and money.
5. Sustainability and environmental friendliness - Electronic invoices contribute to a more sustainable and environmentally friendly approach. By avoiding the use of paper and transporting documents by post, the company's carbon footprint is reduced.
6. Traceability - Electronic invoices provide a transparent and documented record of transactions, which is useful in the audit process.
7. Easy organization and storage - Electronic invoices can be stored electronically and searched for quickly and easily, making it simple and functional to store and find important documents while saving time and resources.

Overall, electronic invoicing enables a more efficient, accurate, environmentally friendly and economically sound approach to the invoicing process, allowing both businesses and individuals to enjoy its many benefits.

Why switch to electronic invoicing?

Electronic invoicing is an efficient way to save time and resources in your business. Here are the key elements that explain how:

• Instant delivery - Electronic invoices are sent instantly, significantly reducing processing time. Simply faster payments and improved service to your customers.
• Automatic integration - Electronic invoices can be easily integrated directly into your company's financial system. This eliminates the need for manual data entry and minimizes the risk of errors, saving you time and money.
• Effective follow-up - With e-invoicing, you can easily send digital reminders and reminders. This makes following up on unpaid invoices more efficient and enables you to get your money back faster.
• Paperless office - With electronic invoicing, you no longer need to print and store physical paper invoices.
• Simple storage system - Electronic invoices can be easily stored and categorized electronically, making it quick to find and retrieve necessary documents when required.

Overall, electronic invoicing allows you to free up valuable time, reduce workload and improve business efficiency, resulting in better financial management and more time to focus on your core business.

You can read more about the benefits of electronic invoicing here.

How do you create an electronic invoice?

Creating an electronic invoice is simple and can be done in just a few steps. First of all, you need to choose a reliable invoicing software that supports electronic invoicing. Once you've chosen your software, create a new invoice by entering all the necessary information, such as the recipient's name, address, invoice date, due date, and a description of the goods or services provided.

Requirements for an electronic invoice

For an electronic invoice to be valid, it must meet certain requirements. These include:

• Invoice number: Each invoice must have a unique number.
• Date: The date of issue must be clear.
• Payment terms: Specify the due date and any payment terms.
• Recipient information: Name, address and CVR number of the recipient, if applicable.
• Item description: A detailed description of the goods or services being invoiced, including price and VAT.

Once all this information is in place, you can send the invoice electronically directly from your invoicing software. This makes the whole process fast and secure, while ensuring that all necessary information is correctly included.

Who can receive electronic invoices?

Electronic invoices can be sent to both public authorities and private companies. Each type of recipient may have different requirements and procedures for receiving and processing invoices.

Electronic invoices to the public sector

Public authorities often have specific requirements for the format and content of electronic invoices. In Denmark, standardized systems such as OIOUBL are used, ensuring that invoices can be processed efficiently and correctly. These systems require invoices to comply with specific standards in order to be accepted. Typically, the public sector will also have specific portals or e-invoicing platforms where invoices are uploaded. This ensures fast and secure processing and reduces the risk of errors or delays.

See our great EAN guide for the public sector.

Electronic invoice for private companies

Private companies can also receive electronic invoices, and the requirements here can vary depending on the size of the company and their internal processes. Many larger companies also use standardized systems to facilitate integration with their accounting systems. Electronic invoices can be sent via email or through specific e-invoicing platforms that make it easy for businesses to import them directly into their systems. In general, private companies value the efficiency and accuracy that electronic invoices offer as it reduces the need for manual handling and minimizes the risk of errors.

For both public and private recipients, electronic invoices contribute to a more streamlined and efficient invoicing process, saving time and resources for both parties.

See our guide on how to send an EAN invoice.

How do you send an electronic invoice?

Sending electronic invoices doesn't have to be complicated and it can save you time and resources. Follow these simple steps to get started:

Step 1 - PreparationStart by gathering all the necessary information for your invoice. This includes your company details, the customer's details and optionally the specific EAN number or CVR number if it's relevant to your business. You can also invoice without a VAT number.

Step 2 - Choose an invoicing program: Choose a reliable invoicing program that supports e-invoicing. This ensures that your invoice meets all the requirements for electronic invoices and is legal and valid. Furthermore, you can customize the invoice template as needed at any time.

Step 3 - Create your invoiceEnter all necessary information in the invoicing program. This includes the invoice number, date, products or services, prices and VAT. It is important to double-check the correctness of all information.

Step 4 - Select "Send as e-invoice": When your invoice is ready, select the option to send it as an electronic invoice. This ensures that it is delivered quickly and securely to the recipient.

Step 5 - Confirm and send: Review all information one last time to make sure everything is correct. Finally, you can confirm and send the invoice. It will now be delivered electronically to the recipient with no further action required on your part.

The process may seem complicated at first, but over time it becomes a seamless and quick routine that saves you time.

Electronic invoicing: Best practices and tips for success

When it comes to electronic invoicing, it's just a matter of jumping in and getting started. It's a good idea to get help from a bookkeeper or accountant when creating your first electronic invoice - that way you can ensure that everything looks correct and that you can create e-invoices with peace of mind in the future.

Whether you're a private individual or a self-employed professional, you can also save time and resources on your invoicing process by outsourcing the entire process to an electronic invoice service.

Factofly as an invoice service

When you choose Factofly as your invoicing service, you can effectively outsource the entire invoicing process and simply invoice without having your own CVR number.

Factofly takes care of creating, sending and following up on invoices. This frees up time and lets you focus on your core business, while you can rest assured that your invoicing is in professional hands.

In addition, Factofly also handles all necessary reports and notifications to the tax authorities, which reduces the administrative burden significantly.

This ensures you comply with all regulatory requirements, including tax reporting and VAT accounting, and minimizes the risk of errors while digitizing your invoicing process.

Read more about Factofly as an invoice service here.