E-Invoice 2027: What German SMBs Need to Prepare Now

On January 1, 2025, Germany's Wachstumschancengesetz (Growth Opportunities Act) came into effect. Since then, every business operating in Germany must be able to receive electronic invoices. That was Phase 1. Most companies managed to comply just in time. But what comes next is far more involved: starting in 2027, businesses with annual revenue above EUR 800,000 must also actively send e-invoices. And from 2028 onward, this applies to everyone.

Over the past few months, I have spoken with many business owners from the Eifel and Rhineland regions. Most of them know something is coming. But very few know exactly what needs to be done. This article aims to change that.

The three phases of mandatory e-invoicing

The law lays out three stages. The first is already active. The second arrives in less than a year.

Phase 1: Mandatory receipt (since January 2025)

Since January 1, 2025, every business in Germany must be capable of receiving and processing electronic invoices in a structured format. This applies to all domestic B2B transactions.

Quick reality check: a simple PDF sent by email is not an e-invoice. Many people confuse this. E-invoice means machine-readable, structured data conforming to the European standard EN 16931. That is a specific data format, not a file format. A scanned PDF with an invoice image? Does not count. A PDF you exported from Word? Also does not count.

What does count: XRechnung (pure XML) or ZUGFeRD (PDF with embedded XML). More on that in a moment.

If you have not implemented this phase yet, you should do so immediately. This is no longer optional. Every business partner who takes their obligations seriously will send you e-invoices from now on. If your system cannot read them, you have a problem.

Phase 2: Mandatory sending above EUR 800,000 (January 2027)

Starting January 1, 2027, businesses whose prior-year revenue exceeded EUR 800,000 must send their B2B invoices electronically. Paper invoices and regular PDFs will no longer be permitted for B2B transactions.

This affects many trade businesses, engineering firms, and service providers. A roofing company with four employees can easily exceed that threshold. An IT consultancy with two freelancers, too. A restaurant with a catering arm, certainly.

Important: what matters is total revenue from the previous year, not just the B2B portion. Even if you sell primarily to consumers but your total revenue exceeds EUR 800,000, the 2027 deadline applies to you.

Phase 3: Mandatory sending for all (January 2028)

Starting January 1, 2028, the transition period ends completely. From that point on, all businesses must send e-invoices for B2B transactions, regardless of revenue. No exceptions.

This sounds like a lot of red tape. It is. But there is also a real opportunity here, which I will come back to at the end.

One more note: the phases only apply to domestic B2B revenue. Invoices to consumers (B2C) and cross-border invoices are not yet covered. An EU-wide regulation will likely follow eventually, but that is a topic for another article.

XRechnung or ZUGFeRD: Which format do I need?

When you look into this topic, you immediately encounter two terms: XRechnung and ZUGFeRD. Both comply with the required EN 16931 standard. But they work differently.

XRechnung

XRechnung is a pure XML format. The invoice consists of a structured data file that only machines can read. No human can simply open an XRechnung and understand it. You need software to visualize the XML.

XRechnung was originally developed for B2G (Business-to-Government) use. If you send invoices to government agencies, municipalities, or public-sector clients, XRechnung is mandatory in most cases.

ZUGFeRD

ZUGFeRD (also known as Factur-X) is a hybrid format. You get a regular PDF file that looks like a normal invoice. Embedded inside that PDF is an XML file with all the structured data. Humans can read the invoice. Machines can process it. The best of both worlds.

For most SMBs doing B2B business, ZUGFeRD is the more practical choice.

When to use which?

Here is a simple guide:

1. You invoice government agencies or public-sector clients? Then you need XRechnung
2. You work exclusively with other businesses? Then ZUGFeRD is sufficient
3. You do both? Then you need software that supports both formats
4. Your accountant or accounting software dictates a format? Then follow their lead
5. You are unsure? Start with ZUGFeRD. It covers the B2B requirement and is easier to handle

One detail that is often overlooked: your accounting software does not only need to generate e-invoices. It must also automatically read and process incoming e-invoices. Check this with your provider.

Procedural documentation: the blind spot

Now I come to the point that almost nobody talks about. The e-invoice mandate brings with it a requirement that has existed for years but is ignored by most SMBs: procedural documentation under Germany's GoBD rules.

What is that?

The GoBD (Principles for the Proper Management and Storage of Books, Records, and Documents in Electronic Form) require you to document how your business handles electronic records. Specifically: how do invoices come in? How are they verified? Where are they stored? Who has access? How long are they archived?

This is not an optional nice-to-have. It is mandatory. During a tax audit, the tax office can request this documentation. If you do not have it, things get uncomfortable.

Why your accountant does not do this for you

Many business owners think: "My accountant takes care of that." They usually do not. Accountants are obligated to inform you that procedural documentation is necessary. They are not required to create it. And honestly, most do not, because they do not know your internal processes in detail.

The procedural documentation describes your internal workflows. Not your accountant's. You need to take action yourself, or get help from someone who understands your processes.

What belongs in procedural documentation?

Essentially, four areas:

1. General description: what does your business do? What software do you use? What does your invoicing process look like?
2. User documentation: who does what? Which employees have which permissions?
3. Technical system documentation: which systems are involved? How are they configured? Where is the data stored?

Plus an operational documentation section that describes how you handle data backups, updates, and system migrations.

This sounds like a lot. For a small business with one accounting tool and one archive folder, it usually amounts to 10 to 20 pages in practice. The effort is manageable.

Common mistakes in procedural documentation

What I frequently see in practice:

1. The documentation is created once and never updated. But if you switch accounting software or hire a new employee, the documentation must be updated
2. Only the target process is described, not the actual process. The tax office wants to know how you actually do things. Not how you would like to do them
3. Retention periods are forgotten. Electronic invoices must be stored in their original format for ten years. Not printed and filed in a binder, but kept digitally
4. Data backup plans are missing. Where is your backup? How often do you back up? What happens if your hard drive dies or your cloud provider shuts down?

These points sound obvious. They are not. In most small businesses, at least two of these questions have no clear answer.

What software do SMBs need?

The good news: you do not need to buy a specialized e-invoice system. Most modern accounting programs already support it or are adding it now. Here is an overview of the most common solutions for small and mid-sized businesses in Germany.

sevDesk

sevDesk is especially popular with freelancers and small businesses. The software can create and read both XRechnung and ZUGFeRD. Onboarding is simple, the interface is clean. For businesses with up to 10 employees, sevDesk is often the fastest solution.

lexoffice (Lexware Office)

lexoffice targets small to mid-sized businesses and also supports both e-invoice formats. The DATEV interface works well, which makes collaboration with your accountant easier. If you are already in the Lexware ecosystem, this is a solid choice.

DATEV

For businesses that work closely with their accountant, DATEV Unternehmen online is often the first choice. The software reads XRechnung and ZUGFeRD invoices automatically. However, setup is more involved than sevDesk or lexoffice, and costs are higher.

What to look for when choosing

Regardless of which software you use, check these four points:

1. Can the software create both XRechnung and ZUGFeRD?
2. Can it automatically read incoming e-invoices and match them to accounting entries?
3. Is there an interface to DATEV or your accountant's system?
4. Does the archiving meet GoBD requirements (audit-proof, ten years, original format)?

If your current software does not cover these four points, you have two options: switch to a provider that natively supports e-invoicing, or use a specialized conversion service that transforms your existing invoices into the correct format.

Switching is effort, no question. But a permanently shaky workaround costs more in the long run than a clean transition. And let's be honest: if you have to switch anyway, better to do it calmly now than in December 2026 under time pressure.

Common misconceptions about e-invoicing

Before we get to the concrete steps, I want to clear up a few misunderstandings that come up in conversations again and again.

"I only write three invoices a month, this does not apply to me." It does. The requirement applies regardless of how many invoices you write. Whether you send three or three hundred B2B invoices per month makes no difference.

"My accountant takes care of everything." Your accountant handles bookkeeping, not your outgoing invoice format. The switch to e-invoicing affects your invoice creation process. You need to handle this yourself.

"I already use invoicing software, so I am safe." Not necessarily. Many older programs generate PDFs, not structured e-invoices. Check whether your software actually outputs XRechnung or ZUGFeRD.

"Nobody checks this anyway." Many people thought the same about receipt requirements. The tax authority is currently building the technical infrastructure for a reporting system. It is only a matter of time before e-invoices are automatically cross-referenced. I would not count on that.

What you can do this week

I am not a fan of articles that describe a problem without offering a solution. So here are five concrete steps you can take this week:

1. Check your accounting software. Can it create and read XRechnung and ZUGFeRD? If in doubt, call support. It takes ten minutes
2. Clarify your revenue threshold. Was your prior-year revenue above EUR 800,000? Then the sending requirement kicks in for you starting January 2027
3. Talk to your accountant about procedural documentation. Ask specifically: "Do we have one? If not, who creates it?" You will be surprised how often the answer is "no"
4. Test receiving an e-invoice. Ask a business partner or supplier to send you a test invoice in ZUGFeRD format. See if your software reads it correctly
5. Set a calendar reminder: "Implement e-invoicing." Not someday. This week. Because experience shows: what does not have a deadline does not happen

Why this is actually a good thing

I know the typical reaction from business owners to new regulation is: groaning. Understandable. More bureaucracy, more rules, more costs.

But after years in software engineering, including time at DHL, Instacart, and Delivery Hero, I see it differently. At all of these companies, data quality was a central success factor. And that is exactly what e-invoicing delivers: clean, structured data instead of scanned PDFs and handwritten notes.

When your invoices exist as structured data, things happen:

• Your bookkeeping gets faster because manual data entry disappears
• Errors in data transfer between systems vanish
• Your accountant can work more efficiently, which lowers your costs
• You always have a clean overview of open items, payment terms, and cash flow
• Automated workflows become possible that were unthinkable before
• Meeting early-payment discount deadlines becomes easier when invoices are processed immediately instead of sitting on a desk for days

The e-invoice mandate is, when you strip it down, a digitization push. And digitization pays off when done right. Businesses that position themselves well now will save time and money in the medium term.

I have seen this at previous employers again and again. At DHL, automating the invoicing process was one of the levers that shortened workflows from days to minutes. At Delivery Hero, the ability to automatically process thousands of restaurant invoices was a central building block of the business model. These are obviously different scales than a five-person shop in the Eifel. But the principle is the same: structured data is the foundation for everything that comes after.

At Plexito, we help businesses from the Eifel and Rhineland set up exactly these kinds of processes. Not with massive IT projects, but with practical solutions that fit the business. When invoice data is cleanly structured, you can build automations on top of it that save real hours.

At a glance: your roadmap

| When | What | Who | | -------------- | ------------------------------- | ------------------------ | | Now | Be able to receive e-invoices | All businesses | | Now | Create procedural documentation | All businesses | | Now | Check your accounting software | All businesses | | By end of 2026 | Set up e-invoice sending | Businesses > EUR 800k | | By end of 2027 | Set up e-invoice sending | All remaining businesses |

E-invoicing is coming. That is certain. The only question is whether you are prepared or scrambling for solutions in January 2027. I would recommend tackling this calmly now. Talk to your accountant, check your software, and start on the procedural documentation. Those are three tasks you can complete in the next two weeks.

Have questions about the technical implementation? Get in touch. We will look at your situation and give you honest advice on what you need and what you do not.