In my last blog, I examined how electronic data interchange (EDI) and digital signatures fare against one another when it comes to data processing and integration. In this blog, I will examine how effective EDI and digital signatures are for archiving e-Invoices and enabling human readability.

Buyers and suppliers within member states of the European Union are required by law to store electronic invoices for a set period of time and this timeframe varies from country to country. This VAT regulation applies for all forms of electronic invoices, regardless of their format, and so this includes both signed and unsigned EDI as well as digitally signed documents. While there are some country-to-country variations in the length of time for which invoices are stored and what information is required, the archival of e-Invoices must follow the overarching European law. As this regulation pertains to all electronic formats, neither EDI nor digital signatures have the advantage when it comes to archival.

However, the difference between the two lies in the fact that the documents have to be presented in a human readable format upon request of the tax auditor. Digitally signed PDF format documents are often already human readable by default, and when XML-based standards are used, human readability is easily achieved through style-sheets.

On the other hand, non-XML EDI must be converted through a rendering tool, typically in real-time, and historically, there was confusion in some countries as to whether EDI must be printed to paper for storage as a compliant invoice.

So, digital signatures are easier to present in a human readable format, but in order to remain compliant with European VAT regulations there are a number of other key considerations that cannot be ignored. It is important that your e-Invoicing solution can store data within a secure environment, provide, upon request, an audit trail of transactions in order to prove that the invoice was processed and delivered without any modification. Your e-Invoicing solution must be able to swiftly provide auditors with information relevant to demonstrate compliance with the necessary regulations, without consuming excessive time and resources.