E-Invoice – a convenient tool or an unpleasant obligation for accounting with the public sector?

published on 8 May 2024 | reading time approx. 2 minutes

Already on 15 December 2016, the Riigikogu passed the amendments to the Accounting Act, with one of the objectives being the implementation of E-Accounting. Its wider purpose is to improve and develop the Estonian economy. Invoices on paper and in the .pdf format are expensive and require extra time and work. The implementation of E-Invoices, however, saves time and money by replacing paper-based financial and administrative transactions with automated data exchange. As a result of the amendments to the Accounting Act of the Republic of Estonia, invoices may only be sent to the public sector by means of E-Invoices from 1 July 2019. In order to make it easier to understand which entities are public, a national register of recipients of E-Invoices has been created, containing all the organisations that accept E-Invoices. This register is a part of the Estonian Commercial Register and available at the address.

E-Invoices have a standard

E-Invoice is not just an invoice that has been saved in the .pdf format and sent via e-mail. It is a computer-readable document based on a joint standard and sent from one software system to another in order to avoid entering data manually. An E-Invoice must conform to the official standard approved by the Estonian Centre for Standardisation and Accreditation. E-Invoices can be created with the help of enterprise resource planning (ERP) systems, i.e. via software. To summarise, ERP is a set of integrated applications created for the purpose of managing the main business functions – finance, staff, purchase, sale, production, etc.

The accounting software of the majority of Estonian companies is linked to ERP systems and all relevant accounting software used in Estonia offers the possibility of using E-Invoices. Furthermore, the Estonian
E-Business Register system offers an online financial platform for all start-ups and small enterprises and, along with it, web-based accounting software along with the possibility to create E-Invoices.

Mandatory E-Invoices for all companies?

Transition to computer-readable invoices definitely speeds up and simplifies accounting. A positive quality that must be noted is an increase in the quality of accounting by forcing companies and accountants to respond to innovation and comply with transparency requirements. This change could initially be troublesome for small companies both financially and technically, but in the long term, it would make accounting easier. However, in the next stage, it might even help save money – by eliminating the process of manually entering invoices, entrepreneurs and accountants would be free to deal with more important matters. Whether this step would increase demand for accounting services is uncertain. The answer is probably yes to some degree, if there is no capability or willingness to deal with technological issues. On the other hand, it is hard to assess the volume of expenditure, as it depends on the capacity of the programs that are already being used. Using E-Invoices could make accounting easier for entrepreneurs, but in this case, they would need more professional help and consulting when configuring their systems and making changes.

Several managers of accounting firms, however, have expressed the opinion that on a national level, having an overview of the entire sector would certainly become more convenient. The end-user would probably be concerned by excessive surveillance by the state, even if there is nothing to hide. After all, nobody wants to lay bare all their matters in front of the state, say the representatives of several firms.