EN 16931 is a European regulation which outlines the mandate and standards for electronic invoicing. Compliance to EN 16931 requires adherence to structured data syntaxes, the inclusion of mandatory data fields and automated validation.
For many organisations, compliance to EN 16931 is mandatory – but verifying the bank details on the invoices are not. This leaves businesses exposed to payment fraud and supplier impersonation scams. We therefore recommend pairing your e invoicing standards with bank account validation and monitoring with software from Trustpair.
Key Takeaways for EN 16931 compliance:
- EN 16931 shares the standards for electronic invoicing in the European Union focusing on public procurement
- Requirements of EN 16931 include structured data, syntax bindings, mandatory fields, invoice validation and interoperability
- EN 19361 compliance provides cross-border trade opportunities, cheaper processing thanks to automation and a competitive advantage
- Compliance to EN 19361 involves checking current systems for alignment, changing standard formatting, implementing e-invoice validation and ongoing monitoring
What is EN 16931?
EN 16931 are the rules defined by the European Committee: their standard for electronic invoicing. It covers features like format, necessary information, compliant sender requirements and the secure receiving of e-invoices.
It was introduced to standardise the electronic invoice process in the public sector across member states, promoting interoperability with machine-readable invoices to increase efficiency and reduce costs. EN 16931 also helps organisations in different member states to remain transparent with tax authorities, and increase resilience against payment threats.
EN 16931 was developed under Directive 2014/55/EU, which is the legislation mandating all public sector organisations to be able to receive, process and archive e-invoices (B2G) according to the standard business process. Now though, in some countries such as Germany, the mandate has been extended to business to business (B2B) invoices for a wider digital transformation.
The main feature of an electronic invoice document is the core semantic data model, which refers to the machine-readable invoice content. Typically, this is XML based format, and users may choose to send invoices with only machine-readable information, or choose a hybrid format which still includes this data, but looks closer to a human readable PDF.
What are the key EN 16931 requirements?
The core elements of EN 16931 electronic invoice requirements and EU directive are as follows:
| Requirement | Details |
| Structured invoice data format | In a machine-readable format, specifically supporting Universal Business Language. |
| Mandatory data fields (semantics) | Mandatory e-invoicing information to include: the unique invoice number, VAT number, seller and buyer information, payment terms and additional data like total amounts. |
| Syntax bindings | Defines how the ‘business terms’ in the semantic model are represented in the XML structure (technical specifications). In this case, receiving parties must accept invoices in at least two, and often three, specific XML based syntaxes. |
| Validation rules | A compliant receiver must pass invoices through Schematron, which is the ISO-standard rule-based validation of XML. |
| Interoperability | Regardless of the ERP system, the standard ensures that any receiver can process invoices from any invoice issuers for seamless integration. |
While the core invoice usage specifications have been in business-to-government transactions since 2019, those sending and receiving B2B payments may also want to pay attention, because the EU-wide mandate in this area will be in force from 2030 onwards. This will also align with the new VAT in the Digital Age (ViDA) regulation in the UK, increasing transparency and efficiency in the tax world.
What are the benefits of EN 16931 compliance?
EN 16931 legal compliance can be highly-beneficial to organisations, because of:
- Interoperability
- Cross-border trade opportunities
- Automation
- Faster and cheaper processing
Interoperability
Allowing complex data systems to securely exchange data without manual intervention has significant efficiency and cost-saving benefits. This hits even harder when you find out that 77% of CEOs and COOs dedicate their own time each month to dealing with invoice processing and payment issues such as chasing overdue invoices, with 4 in 10 having to intervene every week.
<H3> Cross-border trade opportunities <H3>
By adhering to the international standard, organisations gain instant credibility within the RFP process. It’s a competitive advantage in the bid to become a government supplier.
Automation
EN 16931 replaces paper or PDF-based invoices, which are typically processed either manually or with limited finance automation through optical character recognition. Instead, e-invoices can be processed and validated without any human intervention. Reducing administrative burdens, this frees up finance teams and executives to focus on higher-value tasks, such as the month close process, delivering better business value.
Faster and cheaper processing
It’s estimated that e-invoices cost between €3-6 to process, compared to paper and PDFs, at approximately €9 per invoice. With faster processing times too, companies can work to manage their transactions to maintain supplier relationships while optimising payment cycles.
What challenges do businesses face?
Although there are many benefits to EN 16931, e invoicing systems can also bring challenges throughout business processes, from cross border transactions to accounting systems.
ERP integration
During the transition phase, providing a smooth integration with existing ERP systems and legacy tech is a big challenge. Not only do businesses have concerns over operational disruptions (the very factor that this regulation aims to solve), but each third party added into the supply chain increases risks to cybersecurity.
ERP integrations can be very complex, and small businesses, or those with limited IT capacity are those likely to struggle the most. Moreover, although the technical standards of EN 16931 are clear, short lead times could result in non-compliance.
Fortunately, many member states recommend different e invoicing systems to help. For example, in Germany, XRechnung and ZUGFeRD are two types of ‘approved’ e invoicing softwares for organisations to use, depending on whether they work with government or other businesses.
Data mapping
Another key challenge for EN 16931 is in the data mapping, because a generic mapping system will simply not suffice. Because the legislation is built to promote interoperability, there’s every chance that organisations will be dealing with multiple invoices across different tax jurisdictions. This adds significant complexity and brings a risk of processing errors.
Solving this challenge requires a reliance on automation, streamlining the data mapping across different invoice fields and structured data formats.
Multi-country mandates
Although the aim of EN 16931 was to harmonise cross industry invoice systems in the EU, member states still wanted to meet their local implementation standards. This causes fragmentation challenges for organisations operating across more than one jurisdiction.
In particular, varying timelines and scopes create challenges for compliance and implementation teams. For example, countries like Belgium favour e-invoice validation through the Peppol network. But Italian organisations must pass their e-invoices through a government portal for real-time clearance. Learn about the requirements in Germany here.
Teams working across multiple jurisdictions and facilitating cross border trade must manage these differences carefully as they send and receive invoices.
Risk of automation without controls
EN 16931 introduced the widespread automation of many invoicing processes, saving both time and costs. But without verification and internal controls, many of these processes carry the same level of risk.
For example, if the system ingests incorrect data, it can cause an error that creates a knock-on effect throughout the entire chain of autonomous AI agents. This is how hallucinations typically occur in LLMs: one agent makes a decision based on the outcome of another, and when the outcome is erroneous, the next action gets further from the correct outcome.
In the case of e-invoicing without set internal processes, it could mean duplicating invoices and paying twice, or not paying at all! Either scenario is a disaster for your vendor relationships. The risk of fraud is also still present, because while EN 16931 ensures your invoices are structured compliantly, it doesn’t require that users verify the payment details themselves.
Therefore, teams must introduce controls at every stage of the process in order to have true oversight over the entire e-invoicing process. In the case of fraud prevention in the e-invoicing environment, companies can complement their compliance with independent bank account validation and continuous vendor data monitoring, such as Trustpair.
How to become EN 16931 compliant?
Becoming EN 16931 compliant requires a deliberate strategy. Here are some of the steps you may need to take to prime your business for the regulation and ensure a smooth transition:
- Gap analysis: Conduct a comprehensive audit of current invoicing workflows to identify the technical discrepancies or data improvements you need to make to become EN 16931 compliant.
- Assessing compliant formats: Evaluate which of the approved softwares and syntaxes best fit with your current systems, and can integrate with your ERP systems.
- Implementing validation: the rules require every single invoice to be automatically validated against the rules of EN 16931 to prevent technical errors and non-compliance penalties.
- Monitoring ongoing compliance: the rules are evolving, and in 2030, they will expand again. Ensure compliance by performing continuous monitoring, and iterating when you need to, including within your IT standards.
Recapping EN 16931 compliance
EN 16931 compliance helps EU organisations to adhere to electronic invoicing standards. To stay compliant, structured invoice formats and automatic validation provides interoperability, efficiency and automation. Outside of these requirements, companies must still introduce independent controls like payment validation to secure e-invoices against fraud.