The UK has just wrapped up its consultation on e-invoicing, catching up, finally, with a conversation that has dominated the EU and Latin America for years. But what’s really driving this shift, and what does it mean for UK businesses, especially smaller ones?
Here’s what we learned from a recent panel discussion at the 2025 PPN P2P Transformation Summit with:
· Susie West, CEO, sharedserviceslink (moderator)
· Liz Barclay, UK Small Business Commissioner
· Matthew Jones, Founder of OpenECX
· Didier Lombard, Business Development Manager, OpenPeppol
The Big Driver: The VAT Gap
At the heart of e-invoicing mandates across Europe is a shared goal to close the VAT gap. That gap is costing governments an estimated €100 billion annually. By mandating e-invoicing, governments will reduce tax evasion, and VAT gaps will close, as they have in Chile and Mexico (to the tune of 50%).
The UK has, so far, lagged behind LATAM, Asia and the EU (with VAT in the Digital Age), partly due to concerns about the impact on small businesses. But that delay may soon be over.
“If our biggest trading partners are mandating e-invoicing, the UK can’t afford to fall behind,” said Liz Barclay.
Why E-Invoicing Mandates Can Help, Not Hinder
While voluntary e-invoicing has existed in the UK since 2000 when networks emerged, adoption has been slow. Also, as the market has matured, suppliers have found themselves managing multiple supplier portals, by way of trying to please each customer that asks them to onboard onto a specific platform, be it Ariba, or Tungsten, or Tradeshift.
“In some ways, mandates make life easier for the supplier,” said Susie West. “This is because mandates break networks. Suppliers now get to choose their own service provider, and it doesn’t need to be the same provider as the buyer. One provider recently admitted over 90% of its electronic invoice traffic in Italy was being sent by off-network suppliers.” Mandates are driving interoperability, and this is a huge relief for suppliers.
What Small Businesses Need to Hear
There’s still hesitation among small businesses. Concerns include:
- Cost
- Complexity
- Compatibility with existing systems
- Fear of choosing the "wrong" provider
But there are clear benefits when implemented properly. Suppliers will benefit from:
- Faster payments
- Fewer errors
- Lower administration costs
- Better cash flow visibility
The panel agreed: we need to communicate the benefits clearly and provide hands-on support to help smaller businesses transition. This shouldn’t feel like a burden—it should feel like a business enabler.
“We have got to position the benefits in everyone’s interest. Service providers have a role to play: make it open and accessible, keep it simple, and bring people with us rather than use force.” Matthew Jones, Founder of OpenECX
What Might the UK Rollout Look Like?
Didier Lombard of OpenPeppol stated that the UK is unlikely to opt for a monolithic, centralized portal. Instead, it may adopt a decentralized model, potentially built on Peppol, with a tax-reporting layer alongside it, drawing on lessons from Making Tax Digital.
According to Didier Lombard:
“Big IT infrastructure projects rarely succeed. The UK will likely go for something more agile: a phased, decentralized rollout using existing networks and standards.”
The Bottom Line: It’s Coming—With or Without a Mandate
Even without a mandate, e-invoicing is on the rise in the UK. Many large businesses already use it extensively. But if the UK wants to keep trading efficiently with countries like Italy, Poland, and France, it needs to ensure its systems are compatible.
So what should businesses do now?
For Enterprise UK companies:
- Educate senior management now. Inform them of what’s coming with global mandates and ViDA – and highlight the complexities.
- Collaborate with all key stakeholders: IT, Accounts Receivables, Accounts Payables, Tax and Procurement. Secure a team that has a shared vision and is aligned on how this can be done.
- Centralize your efforts. See that one strategic team runs this program for the whole company, so effort isn’t wasted. If you have a multi-country footprint, avoid locally run programs – it will get messy.
- Get ahead of the mandates. They are coming thick and fast, and the UK will very likely come online. So act now to avoid a reactive, rushed response.
- Yes, this is about compliance, but there is also a significant business case benefit here, especially for the larger organizations. Invest in building the business case to help rally senior executive support.
- Work with your suppliers to let them know what your plans are.
For smaller suppliers:
- E-Invoicing has shifted. We have moved away from a 3-Corner model, where buyers dictated what network to use. Suppliers now get to choose their own service provider. Work with Accounts Payable so you can use the same network on AR and AP.
- See if your accounting system has e-invoicing built in. Since Making Tax Digital, some accounting platforms have an integrated offering, where you can send an electronic invoice at the click of a button.
- Be ready for change at some point. The UK Government has not indicated its position, but given that 99 countries are looking at e-invoicing today, or have already implemented, it seems fair to say it’s only a matter of time.
Final Thoughts
The UK is lagging behind the EU and LATAM. It can move at its own pace. But given that the VAT gap in the UK stood at £9.5 billion in 2024, there is a very strong case to implement mandated e-invoicing soon. UK businesses should get ahead, and not wait. Engaging in voluntary e-invoicing now will set UK businesses up well, once the UK Government does decide to mandate in the coming years.
For more on updates on e-invoicing in the UK: Read our report: E-Invoicing: U.K. and U.S. Approaches in Focus
Register for the webinar: UK E-Invoicing Mandate: Predictions on Timing, Approach and Model
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