The introduction of e-invoicing mandates in the European Union is driving substantial changes in the B2B ecosystem, particularly for small and medium-sized enterprises (SMEs). As this becomes the standard, SMEs will increasingly adopt software to manage various business processes, including contracting, invoicing, and payment.
This shift is enhancing the availability and accessibility of valuable, authentic, and certified data on B2B transactions, unlocking opportunities for embedded lending. Traditional players and fintechs alike need to adapt by providing innovative financing solutions and forming partnerships that capitalize on the data generated by e-invoicing.
EU e-invoicing rules open new opportunities for providers
Many EU countries are introducing mandates for B2B e-invoicing, following the lead of Italy, which did so in 2019. For example, mandates will come into force in both France and Belgium in 2026. As a result, SMEs will be required to use software solutions for e-invoicing. This creates significant potential for e-invoicing providers such as vendors of software for accounting, order-to-cash, procure-to-pay, and enterprise resource planning.
Authentic e-invoicing data strengthens SME access to finance
Delivery, invoicing, and payment are decoupled in time in B2B trade interactions, with payment typically due after 30 days. This can create cashflow problems for sellers, for example in sectors with seasonal demand. Therefore, effectively managing working capital is one of the most pressing concerns for SMEs.
Financing solutions such as factoring and supply chain finance can help SMEs to manage their working capital needs to some extent. These traditional financing solutions, which are more relevant for the sell side of the business, also present significant disadvantages for SMEs. For instance, access to factoring and supply chain finance is often limited due to complex creditworthiness assessments and high fees. Additionally, these solutions require substantial administrative effort and can lead to a loss of control over the SME’s relationships with buyers and suppliers.
The increased availability of standardized data resulting from e-invoicing offers a promising opportunity to address these disadvantages with embedded lending. After all, e-invoicing improves the authenticity of invoice data — particularly in countries like France, where government-certified e-invoicing providers must be used. Additionally, new relevant data will become available, including invoice status (accepted, rejected), payment status (approved, paid), transaction history, and customer preferences.
Individual invoices can become high-quality collateral when there is minimal uncertainty about their existence and payment status. To facilitate embedded lending, this “golden data” obtained from e-invoicing providers can be leveraged for risk assessments.
A new era demands that traditional players reinvent SME financing
Ultimately, SMEs will seek the most convenient “one-stop-shop” solution for e-invoicing — one that encompasses all services related to B2B interactions, including contracting, ordering, shipping, invoicing, and payment.
As the opportunities for embedded lending grow, e-invoicing providers are well placed to expand their financing options beyond traditional solutions and offer SMEs improved solutions for managing working capital, for both the sell and buy sides of their business. Meanwhile, traditional financing providers, such as banks and factoring companies, will face increased competition. This could disrupt their existing relationships with SMEs. To remain competitive, traditional players should consider the following actions:
Explore strategic partnerships to expand SME reach and e-invoicing benefits. Identify potential collaborations with e-invoicing providers to enhance their relevance, value add, and reach to SME clients. E-invoicing providers benefit from this strategic partnership as it provides opportunities to become the one-stop-shop solution for customers by seamlessly integrating lending propositions into their software solutions.
Enhance financing solutions to better serve SMEs. Innovate existing creditworthiness assessments and minimize the administrative burden for SMEs to onboard financing products.
Expand the use of e-invoicing in the banking network. Consider diversifying roles in the e-invoicing ecosystem to strengthen positioning in SME financing. For example, players could move beyond strategic partnerships and establish themselves as an e-invoicing provider. There are numerous examples of banks that are integrating e-invoicing solutions through M&A or strategic investments (for example, Credit Agricole & Kolecto, or BPIFrance and iPaidThat).
As e-invoicing becomes the norm across the EU, it is not only reshaping SME operations but also redefining the competitive landscape for financing — demanding bold innovation, strategic partnerships, and a reimagining of how financial services are delivered.