How to do a proper electronic invoice?

Electronic invoicing is at the heart of the dematerialisation challenges for all companies. The paper invoice is disappearing to be replaced by the electronic invoice, which offers many advantages to companies, such as faster processing and financial gains. But all these changes raise questions about e-invoicing and above all the most important question of all: how to make an e-invoice in practice?

What is the procedure to follow? What information needs to be entered? How to use the Inland Revenue website to create an electronic invoice without errors?

Appvizer provides you with all the answers in this article.

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How to make an e-invoice: where to start?

To make an e-invoice nowadays, it is easy to find software that takes care of the entire process quickly and efficiently. Most are fee-based, but there is also a free solution that requires a little more familiarity made available by the Chamber of Commerce.

However, if you want to draft your e-invoice yourself, you can take advantage of the special service offered by the Inland Revenue.

The Inland Revenue, thanks to its computer system called Sistema d'interscambio, after receiving electronic invoices from the portal of the Inland Revenue or from software allows you to

• Verify that electronic invoices are correctly filled out, the authenticity of the signature.
• Deliver electronic invoices to the addressee.

The following parties are eligible for this service

• all VAT holders
• flat-rate, minimum and farmers (they are not obliged, so the choice remains optional)

The interchange system is also convenient for the Internal Revenue Service and the MEF, as they can check all economic transactions carried out for taxpayers subject to VAT. Both B2B (trade between companies) and B2C (trade between companies and customers) transactions will be scrutinised.

Registration on the Inland Revenue website

The first operation to be performed is registration on the Inland Revenue website. You have to click on the registration icon in your 'Reserved Area'.

When registering, the following data must be entered:

• tax code;
• last tax return;
• entity through which the aforementioned declaration was submitted;
• total income.

Once registration is complete, the web service will email you your personal PIN code that will allow you to access your personal area. The code you will receive by e-mail contains only 4 of the 6 digits that make up the PIN. The two missing digits will be sent by mail within a maximum of two weeks.

A less lengthy and less complex procedure is offered to holders of the National Services Card: they have the advantage of receiving the PIN in its entirety when registering on the Agenzia delle Entrate website.

If you have the SPID digital code, you can access your personal area without any additional procedures.

How to make an electronic invoice on the Agenzia delle Entrate website

Once you have registered on the portal of the Internal Revenue Service, you can access your personal area. Amongst all the services offered, you will also find the e-Invoicing section, from which you can create, send and receive electronic invoices.

Simply go to the 'Invoices and fees' section , choose the type of invoice from ordinary, simplified or PA invoice, and proceed to create your electronic invoice.

The data for compiling an electronic invoice

The e-invoice can be of different types: ordinary, simplified or PA (Public Administration). However, when drafting the e-invoice, there is some information that absolutely must be mentioned

• the details of the issuer: company name, VAT number, tax code, legal address;
• the customer's details: in addition to the above data, the recipient code must be added, an essential element through which the interchange system can send the invoice to the recipient
• the general details concerning the invoice: invoice number, date of issue, amount for goods and services subject to payment; VAT rate. It must also be specified whether exemptions are to be considered (citing the relevant article of law) or whether split payment has been applied;
• the reason for payment;
• the details of the contract: this last item is only required if the e-invoice concerns works for public works or financed by EU subsidies. If this is the case, then the GIP code (tender identification code) and the CUP code (unique project code) must be indicated. Without these two elements, public administrations will not be able to account for the payment of the invoice.

If all fields of the e-invoice have been properly filled in, you can proceed to the review by accessing the 'Summary' section. If you have not found any errors, you can confirm. Once you have also received the OK from the 'Receiving System', you can store the e-invoice on your PC, so that you can add the digital signature.

Sending the e-Invoice

As we have just said, you can save the e-invoice, created thanks to the Inland Revenue website, on your PC, by clicking on "Save XML" (eXtensible Markup Language). The XML format is the only format available and validated by the interchange system.

Once you have saved the file on your computer, you need to carry out one more manipulation before final sending: adding the digital signature. You will need special software to affix the digital signature to the document.

The electronic invoice, duly completed and signed, must then be uploaded to the personal area created for sending electronic invoices. You will need to select the 'Transmission' option and upload the .XML file.

After the e-invoice has been sent, the sender will receive a transmission confirmation message. In this notice, the time, date and ID code are indicated. You will be able to check the progress of the operation again from your personal area.

The step by step procedure: tips to avoid mistakes

• Remember that the first time you try to create an electronic invoice, you must be very careful when entering data, especially supplier data. The easiest way to make sure that you have entered all the information correctly is to consult the Tax Registry. You will find a pre-formatted template with all the data you need, which you can change according to your needs. The only field that cannot be changed is the VAT number.
• When entering the recipient data for the e-invoice, it very often happens that the 'Recipient Code' field is left out or is filled in incorrectly. This can cause problems when receiving the e-invoice. If the telematic address is missing, the e-invoice cannot be delivered to the correct recipient. The telematic address for receiving the invoice can be of three different types. Apart from the addressee code for the e-invoice, there are two other possible ways:
  • The PEC address or PEC box. When compiling the invoice, the supplier must fill in the following entries according to these rules:
    • the addressee code shall be assigned the value "0000000" (seven times zero)
    • In the "PEC Recipient" box, the supplier shall enter the PEC address communicated by the customer.
  • The simple numeric code "0000000 " (seven times zero) will be assigned if the customer has not communicated any PEC address or addressee code. If the customer wishes to retrieve his e-invoice in the future, he must go to his reserved 'Consultation' area of the 'Invoices and Invoices' portal.
    • If you use the procedure offered by the Inland Revenue, the proposed template is that for an ordinary invoice with the data set out in Article 21 of Presidential Decree No. 633/1972. If you have to enter additional information required by a non-ordinary invoice, the website allows you to enter it manually. You will thus be able to add the withholding tax or social security fund in the case of an invoice issued by a professional, the entry of discounts or surcharges, or other required generalities.

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Why choose software over the Inland Revenue website

Of course, the Inland Revenue website is available, so why choose software? Many companies prefer to use software such as Invoices in the Cloud instead of the Inland Revenue website because by using software they can benefit from several advantages that make the invoicing process much simpler and faster.

First of all, the most common e-invoicing software essentially has three features:

• The encoding of the invoice file in XML format automatically. This is a format that identifies the different key elements of the invoice and allows them to be read by the Interchange System. Moreover, given the security of an XML format, it is more difficult to forge it.
• Sending the invoice to the Interchange System: once the invoice has been compiled, the software allows the invoice to be sent to the Interchange System quickly and easily: often only one click is needed.
• A unique recipient code to be provided to customers in order to receive passive electronic invoices within the software. With this 6-digit alphanumeric code, the Interchange System identifies the recipient of the electronic invoice.

All these tools ensure that electronic invoices are legally stored for 10 years. Furthermore, in most software, the digital signature is automatically affixed by the software alongside a time stamp.

But it does not end there. Electronic invoicing software often goes beyond simple invoicing. In fact, they integrate broader functionalities linked to the world of accounting that centralise information and streamline processes.

For example:

• Integrated payment management
• Issuing of transport documents
• Issuing of quotations and subsequent transformation into invoices
• First note
• Payment reminders

All these extra functionalities are not to be underestimated when it comes to centralising information that will inevitably be linked to your invoicing processes. As good a tool as the Inland Revenue website is, for large volumes of invoices looking for a more comprehensive solution means going further and streamlining your processes. Sometimes going a step further in your choice of tools means gaining a competitive advantage.

Do you have all the cards in hand to start making your first electronic invoice?