Are You Ready for E-Invoicing?
HMRC recently published research examining how small and medium-sized businesses across the UK currently use, and feel about, electronic invoicing. With mandatory e-invoicing for VAT invoices on the horizon, it's worth understanding what the findings mean for your business and what steps you can take now.
What is e-invoicing?
An e-invoice is an invoice that is sent and received in a structured digital format suitable for automatic electronic processing. Crucially, this does not include PDFs sent by email — although that's how most businesses currently handle their invoicing.
E-invoicing systems can integrate directly with your accounting software, making bookkeeping more straightforward and helping to reduce errors in tax returns. The government sees this as a key part of modernising the UK's tax system and cutting paperwork for businesses.
What's changing?
In the Autumn Budget 2025, the Chancellor announced plans to make e-invoicing mandatory for VAT invoices from 2029. A consultation was launched in early 2025 to gather views on how to standardise and increase adoption of e-invoicing across UK businesses and the public sector.
What did the HMRC research find?
The research, carried out by IFF Research in early 2025, surveyed 800 VAT-registered SMEs by telephone. Some of the headline findings were striking:
59% of SMEs said they were familiar with the concept of e-invoicing — but familiarity didn't always translate into action.
Only 29% reported actually using e-invoicing in any form.
Just 10% of SMEs said they both send and receive e-invoices.
The most common method of invoicing, for both sending and receiving, remains PDF or email, with many businesses still relying on paper and physical mail.
Medium-sized businesses were somewhat more likely to be using e-invoicing than smaller firms (36% vs 29%).
91% of respondents hadn't seen any HMRC communications about e-invoicing at the time of the survey.
In terms of accounting software, Sage was the most widely used (48%), followed by Xero (17%) and QuickBooks (9%). Only 5% of businesses surveyed said they didn't use any accounting software at all.
What does this mean for you?
The 2029 deadline may feel distant, but it's worth thinking about your readiness now — particularly if your business currently relies on PDFs, email attachments, or paper invoices. Here are a few things to consider:
Check your software. Does your current accounting package support structured e-invoicing, or will it need updating? If you're already using cloud software like Xero, you're likely in a strong position to adapt when the time comes.
Review your processes. Think about how invoices flow through your business — both inbound and outbound. Are there manual steps that could be automated?
Stay informed. The government consultation is still shaping the detail of what mandatory e-invoicing will look like. We'll keep you updated as the policy develops.
How we can help
At Alera, we work closely with our clients on their accounting systems and processes. If you'd like to talk through whether your current setup is ready for e-invoicing — or if you'd like help exploring your options — please get in touch. We're happy to help you plan ahead so there are no surprises when the requirements come into force.
You can read the full HMRC research paper here: Electronic invoicing: SME usage and attitudes