Factur-X, the future of the electronic invoice?

Factur-X was introduced in France in July 2017. On this date, the FNFE (National Forum of Electronic Billing) presented Factur-X as the future standard of electronic invoices.

But the future implementation of this so-called mixed invoice format is also linked to a legislative and technological context. In effect, the tax authorities are pursuing an incentive policy to the transition to paperless billing. The shift to electronic invoices is accelerating globally: 2.5 billion inter-company invoices are issued each year, 15% in 2019 were paperless, compared to 5% in 2015. Find out all the ins and outs in this article!

The shift to electronic invoices is accelerating

In their fight against VAT fraud, the government is pursuing an incentive policy to move to paperless billing.

Simplification of the paperless processes

Until 2014, paperless invoicing was a billing process based on the EDI (Computerized Data Exchange) Tax or EDI DMF. As of 1 January 2014, companies’ choice of electronic invoice processes expanded to include PDFs:

  • Electronically signed PDF invoices,
  • Simple PDFs, provided that permanent controls establish a reliable audit trail, and the dispensing of paper invoices is subject to the same conditions.

New obligations for all businesses

  • Since 1 January 2020 an extension has been granted to all companies regarding their obligation to commence paperless invoices in the context of public procurement (B2G or Business to Government),
  • Article 153 of the Finance Act 2019-1479 of 28 December 2019, progressively makes the use of the paperless invoices compulsory in B2B (Business to Business) exchanges from 2023, and for widespread use for all businesses by 2025.

However, in practice, with the exception of the EDI, there is no standard for paperless billing accessible to all businesses. Only secure invoice channels.

What secure invoice channels exist today?

Let’s discover the channels that provide a digital file, image or PDF, the same authenticity and legal value as the original paper invoice (with unalterable integrity). But also the channels available to legally archive these invoices for the legal period of 10 years, and transmit invoices from the transmitter to the receiver.

Tax EDI as a paperless bill channel

The EDI allows the direct sending of paperless invoices from the information system of the issuer to that of the receiver. This mode is that of large companies, and requires significant software investment and prior agreements between issuers and receivers on the formats and structures to be used. In economic sectors such as Automotive and Retail, contractors rely on standards bodies (GALIA, GS1),to promote electronic invoices to companies.

Supplier portals as a means to file invoices

The vendor portal on which the issuer comes to deposit its invoices in the form of digital files (simple or signed PDFs, and image formats). EDF and the major construction groups all have intranets open to their subcontractors, on which they exchange documents, tenders, quotes, invoices, etc. Chorus Pro, developed by AIFE (State Financial Informatics Agency), is a portal of public services for filing B2G invoices. This mode of operation requires supplier authentication controls and specific data processing before the invoices are integrated into the official accounting systems.

E-bill attachments

When the sender transmits digital invoices to a receiver’s mailbox as an attachment. Upon receipt, billing data will need to be manually entered in a central database like a spreadsheet, or a LAD/RAD (Automatic Document Recognition Reading) solution will be used to automate the process. This method is simple to implement, and removes the need for paper. But it requires the maintenance of a reliable audit trail similar to that utilized for the paper invoice, during tax checks.

Is Factur-X accessible to all companies?

Is Factur-X, presented in 2017, the solution for a generalized process of paperless billing for all companies, as its promoters predict?

How does it work? And, finally, what future does it have?

Factur-X is a Franco-German standard electronic invoice published in France on 9 July 2017 by the FNFE. This type of invoice is also called a mixed or hybrid invoice able to be read by man and by machine. Factur-X is a PDF/A3 file that incorporates an XML file containing billing data in structured form.

Factur-X is therefore readable as a PDF invoice and is also read directly by information systems without going through complex LAD/RAD operations.

So that the Factur-X can be received and processed by all companies, that wish to be able to integrate it directly into their information system, its standard format allows several data profiles to be structured according to regulatory and business requirements:

  • MINIMUM profile: minimum data required by the Chorus Pro portal,
  • BASIC and BASIC WL profiles: minimum data with or without bill lines,
  • Profiles EN 16931 and EXTENDED: compliant with new European billing standards.

Thus, issuing companies can charge electronically and benefit paperless invoices without worrying about whether or not their partners can process a paperless invoice.

The simple implementation of Factur-X

For the invoice-issuing company, the implementation of the Factur-X format is simple. It requires no billing software changes, and no significant investment.

All the issuer has to do is continue to edit their invoices in PDF format with all the usual legal and business requirements required.

To convert the PDF invoice to a Factur-X, it will need to go through an intermediary or paperless platform to support the conversion of the PDF to PDF/A3 format. The sender, for example, can opt for a PDF/A3 format signed electronically with a RGS (General Security Reference) certificate. The PDF/A3 invoice is then sent to the receiver. The information is recorded and in this way, the issuing company frees itself from the obligation of recording a reliable audit trail.

At the initiative of the issuer

Previously, the switch to electronic invoices was imposed by a company’s contractors. Each contractor imposed its own electronic invoice channel on its suppliers by various means:

  • EDI Fiscal, where the issuer then had to invest in an EDI solution,
  • An intranet portal on which the supplier filed its invoices in PDF format requested by the client,
  • A simple or signed PDF sent to a dedicated mailbox.

That system created as many invoice channels as commercial partners. By adopting the Factur-X, the issuer takes the initiative to simplify its paperless billing.

Factur-X will accelerate the transition to paperless invoicing.

Factur-X fills the system compatibility gap with a paperless standard that is financially and technically accessible to all small, medium, and large businesses. Nevertheless, EDI tax remains the standard for large companies who trade with subcontractors.

After Factur-X, what is the future of the electronic invoice?

As of 1 January 2025, all B2B and B2G billings will be paperless.

Will this obligation to go paperless be extended to e-commerce? BtoC (Business to Customer)? These questions still await an answer.

Yet already with the general adoption of the electronic invoice, all invoice data can be communicated to the tax authorities so that it can exploit them for VAT control purposes. This allows the tax office to automatically cross-reference all issued and received invoices, and propose pre-filled VAT returns.

Does the generalization of the electronic invoice with Factur-X pave the way for a new billing model? The Clearance model is certainly one of the options on the table. To find out more, please consult this excellent article on the Clearance model.

Tenor has been supporting its customers in the management of their data for more than 30 years. Paperless/EDI invoices are no longer tricky for our teams. In contrast, our paperless tax solutions are already operational for a smooth transition to Factur-X. Contact-us for more information.

What is the Clearance model in the electronic invoice?

Regulations around electronic invoices are rapidly changing. Whilst all countries adopt the electronic invoice, not all have the same model of financial control. In France we are governed by the Post Audit model, but with Article 56 of the Finance Act 2020 presented on 27 September 2019, France is moving towards a Clearance model.

Post-Audit or Clearance model for e-invoicing?

To control VAT in B2B (Business-to-Business) circumstances, and in the fight against fraud, there are two control models to consider:

The Post-Audit model

Currently used in France and in most European countries (with the exception of Italy and soon Greece). Business partners issue, receive, and archive paper and electronic invoices. Businesses are required by regulation to ensure the authenticity, integrity and legibility of these invoices. The tax administration operates VAT and anti-fraud checks on company records and archived invoices.

The Clearance model

This is a tripartite model between seller, buyer, and administration. Prior to the issue of each invoice, the supplier of a good or service must receive approval from administration before charging the buyer. Thus, the issue of each invoice is declared and authorized by the tax authorities. The invoice is registered with the tax authorities immediately, and “approval received” is mentioned on the invoice. Administration is aware of the amounts of VAT being collected. This model is already used in many Latin American countries, Russia, and China.

clearance model

Section 153 of the Finance Act 2020 and the Clearance model

The Finance Act 2020 states that:

“Invoices for transactions between value-added tax are issued electronically and the data in them is forwarded to administration for operations purposes, including modernizing the collection and control of value-added tax.”

“The government is submitting to Parliament, before 1 September 2020, a report on the conditions for implementation, at the earliest from 1 January 2023 and no later than 1 January 2025, of the obligation to bill electronically in business relations. This report identifies and evaluates the most appropriate technical, legal, and operational solutions, including the transmission of data directly to the tax administration, taking into account the operational constraints of stakeholders. It assesses, for each of the options under consideration, the expected gains in value-added tax recovery and the expected benefits for businesses.”

Towards a change in the way invoices are transmitted …

By making the electronic invoice (e-invoicing) mandatory for all inter-company exchanges, the government is considering as its next step the transmission of the electronic invoice directly to the tax administration. This will give the tax administration access to all billing data, and the full and perfect visibility of VAT being collected in real time.

Big changes soon to come for the electronic bill?

The electronic invoice will become a legal requirement over the period 2023–2025 for all B2B transactions. In addition, the continuous control of transactions is already under consideration.

Establishing this system is a matter of setting up a “monitored mode” or a Clearance model. The core idea is that the tax administration intervenes between the seller and the buyer in order to carry out tax and VAT checks. In a Clearance model the administration has two ways to collect VAT:

Split Payment:

The principle of Split Payment is based on the provider opening a special bank account to receive the collected VAT. Upon receipt of payment of the invoice (without VAT]) net amount reaches regular bank account of the seller and VAT amount is transferred to a special VAT bank account. This special VAT account supervised by the tax administration can only receive VAT and refund operations. Poland and Italy have chosen this mode of operation.


The principle of e-reporting is that suppliers and buyers report their transactions on a government platform via e-books, and continue to file their VAT returns on the basis of their accounting ledgers. If a discrepancy arises between e-reporting and VAT returns, the company can correct the discrepancy or justify it. This mode has been chosen in Greece with the myDATA (My Digital Accounting and Tax Application) platform.

Model clearance: the Italian example

Italy, Europe’s leading country for VAT fraud, began implementing a Clearance model in early 2019. Today, the scheme affects 3.6 million Italian companies. The Clearance model also includes B2G billing.

The Italian Clearance model relies on an exchange server called SDI (Sistema di Interscambio), between the invoice transmitter and the receiver. This SDI records invoices, transmits, and archives them. In return, it produces follow-up information on the invoice processing end. And the system manages the delivery code required on each invoice by law, and inserts the VAT numbers of both parties.

Implementation of the Clearance model leaves some questions unanswered …

The future implementation of a Clearance model is a near certainty internationally. This shift towards greater transparency is the current trend. Companies will provide their local tax administration with real-time social, accounting and financial data. In exchange, the tax administration will facilitate their administrative tasks by offering VAT pre-reporting services.

But before that, key points remain to be clarified:

  • Its limits:
    • Billing types: B2G, B2B and B2C?
    • Bills issued abroad: Eurozone, or out with the Eurozone?
  • Should the timetable for implementation be according to company size?
  • Which electronic invoice formats will be accepted: EDI Tax, structured files, signed or simple PDFs, Factur-X for online payments?
  • The type of platform that will be used:
    • A platform like the SDI in Italy?
    • An extension of Chorus Pro to the private sphere?
    • Third-party platforms communicating with the tax administration’s information system?

What are the consequences for businesses?

After the adoption of electronic invoices, the issues surrounding a move to a Clearance model present significant changes for companies.

The fact that the tax authority interferes between the issuer of the invoice and the receiver, and whether or not to approve the invoice, is a major regulatory and technological constraint, which will impose new steps on the billing services of companies: follow-up of applications for approval, and mentions of approval on the invoice, for example.

A model of operation with similar regulatory and technical constraints already exists. These are customs clearance operations, where operators submit requests for customs authorizations for services. For this reason, customs services offer a portal accessible to all and major operators (import-export companies, large companies) go through platforms approved by the customs office.

A new IaaS (Invoice as a Service) service?

This suggests that in the near future, IaaS platforms will offer companies a set of services around invoicing: billing, factoring, VAT management, etc.

For more than 30 years we have supported our clients in the implementation of their electronic billing and paperless taxation. Today the “everything paperless” trend involves big changes for companies. In order to anticipate and prepare for these developments, Tenor participates in various working groups (FNFE and GALIA and GS1).

If you liked this article, also read the one on the Factur-X. If you are wondering about paperless tax invoicing and paperless solutions, please contact our experts!

Is it mandatory to move to paperless billing?

Digitalizing your bills or invoices is one thing, but what is the real legal issue her? Are there any obligations today to move to paperless billing? And if so, are there any differences between the private and public spheres?

Paperless bills have been available for more than 20 years now, thanks, in particular, to the many advantages of going digital for your business (as we talked about in this news update about going paperless). Billing is no exception to the growing trend towards digitalization, and its increasing benefits. For example, going paperless with your bills saves production costs, productivity is increased, traceability and security are enhanced. Paperless invoices are now approached in the same fashion for many companies looking to improve their Corporate social responsibility (CSR), quality checks, or customer-relationship approach. As the demand for digital, on the whole, is increasing, this type of billing had to be codified. The primary goal here is to have an accurate record of both paper and electronic invoices.

In an ecological and process-simplification approach, the French State has, since 2013, passed several laws on the above issue. Whether public bills or policy guiding the relationships between companies, billing conditions are gradually changing. However, even if the electronic bill is spreading, legal inequalities still remain. The exchange of private/public or company billing is not always subject to the same rules.

Let’s first consider if going paperless is mandatory for everyone? Public sector and business-to-business enterprises alike?

Paperless billing within the public sector

In its most simple form: yes, all government suppliers have an obligation to use electronic invoices. As a result, paperless billing is mandatory in France. For contexts, out with France refer to our article on Factur-X.

As a reminder, the 26 June 2014 billing development order tells us that:

Article 1-I: “those under contract, as well as subcontractors, admitted to the direct payment of contracts concluded by the State, local authorities and public institutions send their invoices in electronic form”

Article 1-II “The State, local authorities and public institutions accept invoices in electronic form.”

To do this, the French State has set up a billing portal called Chorus Pro. This portal allows the filing, receipt, and transmission of electronic invoices in accordance with Section 2 of the above order. 

To help businesses, especially smaller ones, a timetable for rollout was put in place. The requirement was for companies to follow the following schedule:

  • Companies with more than 5,000 employees and the public were to comply by 1 January 2017
  • Companies with 250 to 5,000 employees by 1 January 2018
  • Companies with 10 to 250 employees from 1 January 2019
  • And finally for TPEs (enterprises with less than 10 employees) from 1 January 2020

In addition, Article 222 of the Macron Act strengthened this first ordinance because it aimed to modernize the French economy. The goal was for the government to save money by overall reducing costs. 

Of course, all billing rules must be respected both in terms of form and retention. However, an electronic invoice has some additional obligations such as:

Electronic invoices in B2B

Now we just have to know whether changing to paperless billing is mandatory between companies. The answer is no for the moment. However, the bill funds 2020 through Section 56 would change that response.

This bill echoes the Macron Law of 2015, which was abandoned because it would take time and resources to establish. The Finance Bill suggests that from 2023, companies will be obliged to issue their invoices electronically. As with private-public exchanges, a progressive timetable will exist. This schedule will require companies as determined by their size to shift to paperless invoices between 1 January 2023 and 1 January 2025.

As mentioned above, the shift towards paperless invoices entails obligations of form and preservation. Just like exchanges between the public and private sphere: authenticity, integrity, legibility, and set software tools will be mandatory. So, to comply, you’ll have to have some kind of reliable audit trail.

Even if today, this law is in a draft stage, there is a real desire to modernize billing by gradually reaching “zero-paper” procedures. That is why investing today in a high-performance paperless solution will allow you to anticipate these future obligations ahead of time. But paperless processes does not stop at being a legal issue. Going paperless will also allow you to improve your internal processes, save money by saving time, while additionally improving your customer experience. Choosing a digital solution today is therefore the answer to the various challenges of paperless invoices.

Tenor supports companies in their digitalization and paperless billing efforts by offering EDI, tax dematerialization, and EAI solution advice. Contact our experts today, to study your project and we can suggest ways to be compliant during or ahead of the legal necessity to go paperless.