Research and analysis

Electronic invoicing: Qualitative research into small and medium-sized enterprises’ usage and attitudes

Published 26 March 2026

Prepared by Ipsos for HM Revenue and Customs (HMRC).

Research report number: 846

September 2025

The views in this report are the authors’ own and do not necessarily reflect those of HMRC.

1. Glossary

Term	Definition
Accountancy software	A computer programme that helps with financial management tasks such as invoicing, payroll and expense management.
Business‑to‑business (B2B)	Commercial transactions between 2 businesses.
E-invoicing	E-invoices are invoices that are to be issued, sent, and received in a structured data format that allows for automatic and electronic processing by accounts payable (AP) systems. They differ from PDFs, emails, digital images and other digital forms of invoices because data from e-invoices does not need to be manually processed and can be automatically imported into AP systems.
HMRC	His Majesty’s Revenue and Customs – a government department which is the UK’s tax, payments, and customs authority.
Multiple systems	A company that uses ‘multiple systems’ offers e-invoices in combination with more traditional methods such as postal and PDFs.
SMEs	Small and medium-sized enterprises. Small businesses have 0 to 49 employees and medium-sized businesses have 50 to 249 employees.

2. Executive summary

Introduction and methodology

HM Revenue and Customs (HMRC) commissioned Ipsos to undertake qualitative research, exploring how and why UK small and medium-sized enterprises (SMEs) use e‑invoicing. The aim of this research was to provide HMRC with additional insights, building on quantitative work conducted by IFF Research in February and March 2025, which is published in the report ‘Electronic invoicing: Quantitative research into small and medium-sized enterprises’ usage and attitudes’.

Between May and June 2025, Ipsos conducted qualitative interviews with 48 individuals within 45 UK SMEs. These individuals had responsibility for decision‑making around invoicing protocol and procedure and included a mix of those currently using e‑invoicing, those familiar with the concept of e‑invoicing but not currently using it, and those who were, at the time of the research, unfamiliar with it.

The specific objectives were to understand:

• current invoicing practices and procedures
• levels of awareness and understanding of e-invoicing processes
• the perceived benefits and challenges associated with e-invoicing
• information and support needs related to the implementation of e-invoicing

Key findings

Invoicing practices and decision-making

While paper invoicing remained a routine practice for some small businesses, the most commonly cited practice among the SMEs who participated in the research was to use accountancy software to convert invoices into PDFs and send these via email. Some businesses also reported using e-invoicing functions available within their chosen accountancy software for specific clients.

Businesses commonly reported using multiple invoicing systems to send and receive invoices, and tailoring their invoicing method to the preferences of individual clients and suppliers. This meant using e-invoicing for some clients, and more traditional methods, like emailed PDFs, for others. Interviewees reported that switching between systems necessitated varying levels of checks, and more staff training, which was time consuming and subsequently costly for the business.

When making decisions about invoicing processes, interviewed businesses reported prioritising several key factors. They typically favoured tried-and-tested systems that they felt ensured timely payments and best maintained cash flow. Preserving good client relationships was also cited as an important factor, and one which often involved adhering to the preferred invoicing methods of individual clients or suppliers. Furthermore, compliance with tax and legal requirements and keeping costs to a minimum were important considerations. Among interviewed businesses, final decisions on invoicing policy were typically made by business owners or directors.

Awareness, understanding and use of e-invoicing

Among interviewed businesses not using e-invoicing, levels of awareness and understanding of the concept were generally low. Non-users often incorrectly defined e‑invoicing as any form of digital invoicing, such as sending a PDF via email.

Interviewees were then provided with the following definition of e-invoicing: “E-invoices allow invoices to be issued, sent, and received in a structured data format that allows for automatic and electronic processing by accounts payable (AP) systems. They differ from PDFs, emails, digital images and other digital forms of invoices because data from e‑invoices does not need to be manually processed and is automatically imported into AP systems”.

After being provided with this definition, non-users identified potential benefits such as saving staff time, reducing costs, and minimising data entry errors. Many had not seriously considered adopting it, primarily due to a reluctance to disrupt existing processes that were already working and ensuring they were paid. Further barriers to adoption included a perceived lack of widespread use, need or demand, concerns about losing the ability to create customised invoices, and worries that clients and suppliers, particularly for those in specific industries (such as construction), would not have compatible software.

For interviewed businesses that did report using e-invoicing, understanding was mixed, with adoption being a gradual process rather than a distinct transition. The primary drivers for adoption of e‑invoicing were requests from clients or suppliers, discovering the capability within existing accounting software, and adoption as part of wider business digitalisation efforts. This was sometimes accelerated by the implementation of digital solutions to support remote working during the COVID‑19 pandemic.

Users of e-invoicing reported many benefits, including increased efficiency, faster processing, improved cash flow, and greater accuracy due to reduced manual input. However, users also faced challenges that often prevented its universal application. The main challenge was the concern that e-invoicing software would not work for some of their clients and suppliers, especially those overseas (leading to the continued use of multiple systems including paper and PDF invoicing).

Information and support

When seeking information or troubleshooting issues with their current invoicing processes, interviewed SMEs primarily relied on their accountancy software providers and accountants. Many reported finding the support functions and tutorials from software providers particularly helpful.

When asked where they would seek information about e-invoicing, businesses indicated they would instinctively turn to these same trusted sources first. HMRC was not typically considered a primary source of information on the topic. However, if e-invoicing were to become mandatory, businesses stated they would expect clear policy and implementation guidance, similar to that of the ‘Making Tax Digital’ campaign.

Some non-users said they were considering adopting e-invoicing but were concerned about the costs and staff time required for training and upskilling of staff. Some smaller businesses suggested they would look to HMRC for financial support or grants if a mandate was introduced.

Most interviewees had not seen any specific messaging from HMRC about e-invoicing, although some recalled seeing messaging from accountancy software providers.

Conclusions

The research found that while SMEs were reliant on accounting software, the use of e‑invoicing functions was low, partly due to a widespread misunderstanding of what e‑invoicing is. Business decisions were heavily influenced by a desire for stability, with a focus on maintaining cash flow and client relationships. As a result, interviewed businesses were cautious about adopting new systems and processes.

Even e-invoicing users were sometimes hesitant about full adoption, as they were concerned about software incompatibility and their desire to customise invoices for clients who required specific information. For interviewed non-users, there were few compelling push factors (such as a client request or industry-wide shift) or pull factors (such as a clear, immediate and tangible benefit) to encourage a change from their current, functional processes. Without a mandate or strong industry-wide movement, interviewed non-users seemed unlikely to voluntarily adopt e-invoicing in the near future. However, greater awareness and understanding of e-invoicing could help to further drive levels of consideration and uptake.

3. Introduction

This report summarises findings from qualitative research into e-invoicing use amongst small and medium-sized enterprises (SMEs) in the UK. The aim of the research was to build on HMRC’s understanding of the current usage of e-invoicing by UK SMEs for business-to-business (B2B) transactions. It provides up-to-date insights on businesses’ invoicing practices and decision-making processes, along with perceptions, levels of awareness, and understanding of e-invoicing processes among those who currently use and do not use e-invoicing.

The research was commissioned by HMRC and was undertaken by Ipsos between May 2025 and June 2025.

The specific objectives of the research were to understand:

• which invoicing procedures SMEs currently use, including how they send, receive, report, and archive invoices
• how SMEs make decisions on invoicing processes, and the key factors they consider
• how SMEs initially respond to, and understand the concept of e-invoicing
• what SMEs consider to be the challenges and benefits of implementing e-invoicing technology
• how SMEs feel about their ability to implement e-invoicing
• where SMEs look for guidance and support when dealing with changes in their invoicing processes
• what other support SMEs require to implement e-invoicing (including expected support from HMRC)

Project context

HMRC commissioned research to better understand the current and future invoicing needs of UK SMEs. These insights will help HMRC make informed decisions and policy for e-invoicing.

This qualitative study built on previous quantitative research undertaken by IFF Research between February and March 2025, which sought to quantify e-invoicing awareness and usage amongst the UK SME population. That earlier work is published in the report ‘Electronic invoicing: Small and medium-sized enterprise usage and attitudes quantitative research’.

This qualitative research explored the following topics relating to e-invoicing among SMEs:

• current invoicing practices and procedures
• levels of awareness and understanding of e-invoicing processes
• the perceived benefits and challenges associated with e-invoicing
• information and support needs related to the implementation of e-invoicing

Method

A qualitative, in-depth interview approach was used to identify and explore the various invoicing practices amongst SMEs.

It was anticipated that attitudes and motivations relating to invoicing were likely to be influenced by individual business factors and circumstances. Therefore, they were best explored in a one-to-one environment, where interviewers could ask follow-up questions to understand the nuances of participants’ responses.

A total of 45 interviews were conducted over Microsoft Teams or telephone between May 2025 and June 2025.

Thirteen interviews were conducted with businesses currently using e-invoicing, 18 interviews with businesses who were not using e-invoicing but were somewhat familiar with the concept, and 14 interviews with businesses who were not using e-invoicing and were not familiar with e-invoicing.

By design, the research set out to capture a rich and detailed understanding of different behaviours and experiences, not to determine the prevalence of different experiences and views. Findings cannot be considered representative of all UK SMEs and should not be interpreted as generalisable to these populations.

Recruitment

Recruitment was undertaken using a sample of VAT-registered SMEs in the private sector who previously took part in the IFF Research quantitative survey, and consented to be re‑contacted.

Quotas were set across the 45 businesses who participated to ensure the research was based on a range of different business attributes and invoicing behaviours. These quotas ensured a mix of business size, awareness of e‑invoicing, current use of e‑invoicing, business accounting software used, business location and sector (see Annex 8.3 for numbers of achieved interviews).

4. Invoicing practices and decision making

This chapter details the invoicing practices and processes of businesses, including how they sent and received invoices. It also describes their decision-making priorities regarding invoicing.

Invoice sending

To create invoices, businesses used accountancy software. Although interviewed SMEs typically used one main software package, they often used the software differently depending on the client. Most commonly, businesses used the software to generate invoices, then converted the invoices into PDFs before emailing these directly to clients. For certain clients or suppliers, some businesses used the e-invoicing functions provided by their chosen software. Experiences of using multiple invoicing systems will be discussed in the next section. Occasionally businesses were still using paper invoicing for both sending and receiving. This was more common amongst interviewed small businesses. Larger SMEs sometimes used bespoke client management tools for quoting and storing project finance details, later importing the data into accounting software for archiving.

“We have a lot of invoicing methods for our customers. By default, any new customers get their invoices electronically, they can either opt to have them emailed to them as a PDF or they can log into one of 2 portals that we offer and they can download their invoices securely.” (Small business, Non-user)

The frequency of sending invoices varied depending on the business type, with some businesses producing multiple invoices per day, and others generating them at the end of the month or around specific project milestones. Of those interviewed, the business services sector sent invoices most frequently. This partly reflected interviewed SMEs in the business services sector often invoicing based on individual client needs, whereas those in the transport, retail and accommodation sectors were more likely to have set invoicing timings, often on a weekly or monthly basis. For example, a lamb feeding manufacturer issued and posted invoices to clients monthly, often combining multiple deliveries into one invoice.

“We tend to invoice them [corporate customers] on a regular basis every week, every Monday we check everything and make sure everything is correct or how they want. We check for any errors within the system and then we run all the invoices in a batch.” (Medium-sized business, Non-user)

Small businesses in particular reported often manually checking invoice details for accuracy before sending to clients. The purpose of businesses carrying out checks on invoices were to confirm supplier invoices against purchase orders, or to check VAT rates for accuracy.

Receiving invoices

In terms of receiving invoices from suppliers, SMEs reported that these usually came via email as PDFs. However, interviewed businesses described often receiving invoices differently depending on the supplier. For example, occasionally smaller businesses mentioned receiving invoices via post from some suppliers but receiving PDF invoices from others. Those who reported receiving invoices by post or PDFs stated that they would carry out checks, then input the data into their accounting software for electronic storage.

“Receiving [PDF and paper] invoices are a bit of a pain, [I] have to print everything off, [I] have to check against PO and delivery notes. Some companies don’t do that.” (Small business, User)

Use of multiple systems

SMEs reported often using multiple invoicing systems to cater to the requirements and preferences of their clients and suppliers. This meant that some were using e-invoicing for certain clients or suppliers who felt they had the technological capabilities to do so, and then also using more traditional forms of invoicing such as PDFs or post for others. For example, an agriculture products distribution company was able to use e-invoicing for certain clients who had the necessary technology but had to post invoices for those who didn’t.

Interviewed businesses acknowledged that having multiple systems often resulted in more time spent on invoicing. Interviewees reported that switching between systems necessitated varying levels of checks, and more staff training, which was time-consuming and subsequently costly for the business.

“With a number of systems in place, although [it’s] not [an] issue for me because I am used to it, training new interns on it can be difficult because there is a lot to take in.” (Medium-sized business, User)

Those who used e-invoicing regularly found it worked well and saved them time on invoicing, but often still had certain customers to whom they continued to manually send invoices. While they did report that they would rather use e-invoicing across the board, they often felt unable to do so. This was because they prioritised clients’ preferences, maintaining established relationships, and getting paid. As a result, they continued to use old systems that they knew worked and were preferred by certain clients.

“But the issue is, is most of our main suppliers don’t use it [e-invoicing]. So, even though we have it, it sits dormant. I mean, I would like to e-invoice everybody. That, for me, would work an absolute treat, but we can’t because, actually, no-one else does it.” (Small business, User)

“We are still having to use traditional e-mails for invoicing, because some clients are used to a certain format.” (Medium-sized business, User)

“We give the customers what they want. So normally giving customers choice is a positive experience for the customer.” (Small business, User)

Businesses that traded internationally, as well as in the UK, also often reported using multiple systems. This was driven by a perception that international clients used software that was not thought to be compatible with systems used in the UK. These businesses were therefore often using e-invoicing, at least in part for UK clients, and usually more manual processes for international clients. Occasionally these businesses also noted that due to differing compliance measures with international trade across multiple markets, some paper forms had to be filled out which prevented the potential use of e-invoicing.

Decision making around invoicing processes

Interviewed businesses had a number of key priorities when making decisions about invoicing. Firstly, businesses reported generally wanting to maintain tried and tested invoicing processes which they knew worked well (for them, their clients, and suppliers), and facilitated timely payments without frequent errors. Businesses, and in particular small businesses, prioritised maintaining cash flow. They sought invoicing practices that made getting paid as simple as possible. Small businesses were particularly concerned with this as they reported that they did not have sufficient cash reserves to cover payments being delayed.

Interviewed businesses also reported that maintaining good client relationships was a priority for them, particularly for those who relied on repeat business. Consequently, these businesses frequently created invoices tailored to the specific preferences of individual clients.

SMEs also prioritised adhering to relevant tax and legal requirements for their invoicing. Furthermore, businesses wanted to keep costs to a minimum, both general operational expenses and those specifically associated with invoicing. This meant that businesses wanted to use affordable invoicing options including lower cost accountancy software and avoiding having to retrain staff members in new invoicing processes where possible.

Among the interviewed SMEs, business directors or owners typically made final decisions relating to businesses’ invoicing policies. Where invoicing was overseen by separate finance teams, these teams were required to create businesses cases which aligned with the company’s priorities. These were then reviewed and signed off by senior management prior to implementation of any changes.

“It would be cost at the top. It would be based on feasibility – whether it’s actually feasible, whether we have the right manpower, to implement it, and then to manage it. And then, I guess, maybe customer relationships…if it’s something our customers are specifically asking for, we wouldn’t like to keep saying, ‘No’.” (Medium-sized business, Non-User)

“The managing director and business manager would make the decision - cost and efficiency are a priority. The main priority is how e-invoicing will work with our current cash management system.” (Medium-sized business, Non-user)

“Our current MD [Managing Director] is resistant to change, he likes traditional methods…We are getting a new MD next year, I think he might be more open to going paperless.” (Small business, Non-user)

5. Awareness, understanding, and use of e‑invoicing

Gaining insights into SME’s awareness, understanding and use of e-invoicing was a key priority in this research. This chapter details these findings from perspectives of both current users and non-users of e-invoicing.

Non-users of e-invoicing: awareness and understanding of e-invoicing

The non-users of e-invoicing interviewed in this research generally had low awareness of e-invoicing, though there were different levels of familiarity. On the lower end were interviewees who mistook any form of digital invoicing as e-invoicing and were only vaguely familiar with the term. Those who were more familiar were aware of the e‑invoicing capability within their accountancy software but had not made use of them. A minority had used e-invoicing in previous roles but did not use it in their current company and were therefore classed as non-users for the purposes of this research. Although not currently using, their previous experience meant that their awareness of e‑invoicing was higher than non-users who had never previously used e-invoicing.

Overall, understanding of e-invoicing and how it worked was very low amongst most non-users. During their interviews, those interviewed were asked to define e-invoicing and later were provided with an HMRC definition: ‘E-invoices allow invoices to be issued, sent, and received in a structured data format that allows for automatic and electronic processing by accounts payable (AP) systems. They differ from PDFs, emails, digital images and other digital forms of invoices because data from e-invoices does not need to be manually processed and is automatically imported into AP systems’. Non‑users often struggled to define it themselves and it was common for them to mistake email, PDF, or the use of accountancy software as e-invoicing.

Often those who had low awareness of e-invoicing correctly presumed it was an automated process, in which software processed the invoice information without the need for human input. There was also an assumption by some that automated systems like e-invoicing were more suited to very large organisations, such as the NHS.

“Well, I’ve heard about this [e-invoicing], but I’m not exactly sure 100% what it means. And what does HMRC mean by that? Because we already do a lot of emailing invoicing.” (Medium-sized business, Non-user)

“In my mind, I think it’s linked to a software package where it automatically sends invoices out. It’s done within the software rather than the person.” (Small business, Non-user)

Non-users of e-invoicing: perceived benefits and challenges of e-invoicing

After hearing the HMRC definition of e-invoicing, non-users were asked what they thought the potential benefits and challenges of adopting and using e-invoicing would be. For the most part, this group did identify some potential benefits. However, some businesses suggested their invoicing was too complex, detailed, or tailored for e‑invoicing, while others felt there was little evidence of industry‑wide usage, or supplier or client demand. These groups struggled to see how e‑invoicing could benefit their business.

For example, a lambing feed manufacturer reported that their manual pricing processes would make the adoption of e-invoicing difficult. They described having to check up to 20 different deliveries on each invoice which they said would most likely be impossible with e-invoicing.

“What else we’re concerned about, from our point of view is checking the invoices are all correct, because it’s pretty a pretty manual system, so we don’t have automated pricing within because everything’s priced separately.” (Small business, Non-user)

Non-users often highlighted how e-invoicing could potentially save staff time. Manual invoicing processes were seen as time-consuming, and automation was perceived as a way to potentially free up staff for other tasks. For example, small businesses whose finance manager was often also a managing director or founder welcomed the possibility of less time being spent on process-heavy invoicing tasks.

Non-users also saw e-invoicing as a way to save money, identifying potential cost reductions in a variety of areas. These included staff time which could be used for more profitable work, stationery costs for those who were printing and posting their invoices, and potentially staff headcount as fewer people could be needed to manually create, check, and process invoices.

Non-users also suggested that adopting e-invoicing could reduce invoicing errors. Where they were currently manually inputting itemised amounts of goods or services, amounts charged to clients, and purchase order numbers to their invoices, they felt that with automation, the room for error would be reduced. They suggested that this reduction in error could lead to reduced staff time and improved client relationships.

“My broad thought is that it could be time saving and it could cut down on errors, because there is less physical inputting of data, less of a manual process. Which also saves time.” (Small business, Non-user)

“Just an efficiency saving…massively cutting down on the amount of time it’s taking that person to input everything manually.” (Medium-sized business, Non-user)

Non-users of e-invoicing: consideration of e-invoicing and barriers to adoption

Non-users were also asked if their organisation had considered moving to e-invoicing and what the potential obstacles to adoption would be. For the most part, non-users had not considered moving to e-invoicing. This was largely down to their low awareness, but also due to a concern that e-invoicing would not be compatible with their business. It seemed that without notable push factors (such as a client request or industry-wide shift) or pull factors (such as a clear, immediate and tangible benefit), or at least greater understanding of e-invoicing and its benefits, non-users would be unlikely to seriously consider adopting it.

There was a cohort of non-users who provided tailored goods or services and who subsequently customised their invoices to clients to reflect this. They were used to having control over their invoices and did not feel that e-invoicing would allow for the level of tailoring they felt their invoices needed. They were also concerned about not being able to control when invoicing reminders were sent to clients and what the reminders said, fearing that they would not be personalised to clients’ needs or could affect their client relationships.

Non-users also felt there was no need to change or disrupt a system that they felt was already working well. Given the critical importance of consistent payments and healthy cash flow, they were hesitant to introduce any changes that might jeopardise these. This was a significant concern for businesses that relied on repeat customers.

As mentioned in Chapter 4 (Invoicing practices and decision-making), there were some businesses who took part in the research who did not invoice regularly. For those who only produced or processed a small number of invoices monthly, they did not see the need to invest in new systems, particularly when their current practices worked and did not take up significant amounts of staff time.

Businesses in certain industries felt that adopting e-invoicing might be more of a significant challenge than others. For example, interviewed businesses in the manufacturing and construction industries, and the transport, retail and accommodation industries were concerned that their clients might not have suitable software to receive e-invoices.

“I think some of our suppliers and clients may be resistant to this…especially the more traditional ones like our farmers who supply our wood chips.” (Small business, Non user)

Even those who were reluctant to change invoicing approaches, however, often said they would be more likely to adopt e-invoicing if others in their industry adopted it.

Users of e-invoicing: understanding of e-invoicing

Understanding of e-invoicing from the perspective of those currently using it was mixed. Usage among this group ranged from those who used it infrequently for particular clients, to those who used it more regularly and routinely for most of their clients and suppliers. There were also examples of businesses who didn’t necessarily consider themselves to be e-invoicing users, because they used e-invoicing so rarely and felt they didn’t have a good understanding of how it worked. For example, some used e-invoicing for only one client or supplier who requested it and therefore did not consider themselves to be a regular or routine ‘user’. For the most part, users were able to define e-invoicing as an automated process which required minimal human input.

“It involves electronically sending invoices through the internet. Straight to customers’ accounting system.” (Medium-sized business, User)

Users of e-invoicing: reasons for adopting e-invoicing and current usage

Users of e-invoicing were asked about what had prompted their businesses to start using e-invoicing. For the most part, this group didn’t feel that they had experienced a ‘transition’ to e-invoicing as they were mostly using it alongside other, more traditional forms of invoicing such as PDFs and email. As a result, their adoption of e-invoicing had often been slow and gradual.

Users were able to identify a number of reasons for initially trying e-invoicing. It was common for this group to use e-invoicing because it was suggested or requested by a client or supplier. In particular, businesses who prioritised accommodating client needs typically made an effort to use e-invoicing if there was a client-led demand. Some businesses adopted e-invoicing after discovering the functionality within their existing accounting software. While they found the implementation straightforward, this did not mean that their clients and suppliers had also adopted e-invoicing.

Other businesses had started to make a switch to e-invoicing as part of a wider digital transition. Often these businesses were digitalising large parts of their processes and moving data and records from paper to online. They found e-invoicing to be a good option to include as they upgraded their IT systems. A few of these businesses mentioned that they had needed to undergo unplanned digital transitions because of the COVID-19 pandemic and the proliferation of remote working. Particularly for those who had been using paper invoicing, moving to e-invoicing was necessary as they were unable to access physical records during lockdown.

Some reported that moving to e-invoicing was a part of their wider business growth or sustainability goals. In terms of business growth, they expected e-invoicing to free up staff time to allow for other kinds of work. For those who were using paper invoicing, switching to e-invoicing would reduce use of paper, therefore forming part of a sustainability transition.

There were also businesses who used e-invoicing to address staff resourcing challenges. Those businesses who were struggling to find staff, or to meet business demands with a limited workforce, felt that they could manage these challenges more effectively by reducing manual invoicing processing time.

Some participants noted that their business had used e-invoicing for so long that they could not recall the reason for initial take-up or noted that it was already in use before they joined the business.

“I don’t remember precisely when we started that, but we’ve probably done it for more than a decade.” (Small business, User)

“They [the business] started using e-invoicing when we changed [software] packages. We were a growing company, so we wanted to change our software to handle that.” (Medium-sized business, User)

Users of e‑invoicing: benefits and challenges of using e‑invoicing

Many of the e-invoicing benefits predicted by non-users were enjoyed by users. Indeed, interviewed e-invoicing users mentioned that e-invoicing was much more accurate, time‑ and cost‑efficient than other invoicing systems. This was because e-invoicing reduced manual inputting time which allowed staff resource to be utilised elsewhere, and in some cases reduced staff headcount.

In contrast to non-users’ concerns, e-invoicing users found that e-invoicing was often adaptable. They reported that they liked how e-invoices could be adapted to reflect varying product details and amounts for different clients. Moreover, while non-users had worried that e-invoicing would hurt cash flow, users reported that e-invoicing improved cash flow. They felt it was easier for clients or suppliers to pay using the system.

Interviewed users echoed many of the same concerns as non-users. For example, users were concerned that their software would be incompatible with some clients, particularly those based overseas. Some users also felt that e-invoicing wouldn’t be suitable for all of their goods and services. Finally, current users worried that a blanket adoption of e-invoicing wouldn’t fit the needs or preferences of some of their clients. For example, an IT consultancy reported that they had certain clients who felt that PDF invoices were easily readable and felt more ‘human’ than e-invoices.

“The advantages are that it gives you more accuracy … it’s recorded on the system …tracked … everything aligns. You can match the data.” (Medium-sized business, User)

“We are still having to use traditional e-mails for invoicing, because some clients are used to a certain format.” (Medium-sized business, User)

6. Information and support

This chapter covers the types of information and support that businesses were using in relation to invoicing, and the sources that potential users would look to for information and support regarding e-invoicing.

Information and support for current invoicing and potential e-invoicing needs

Businesses reported that they used their accountancy software providers and accountants to provide invoicing support. In particular, they identified the support functions and video tutorials offered by their software providers and noted that these were helpful for accessing information and troubleshooting issues. Interviewed SMEs also reported that accountants were reliable sources of information on invoicing issues, particularly in relation to compliance issues.

Businesses were asked where they would look for information regarding e-invoicing. For the most part, they would look again to their software providers and accountants, and would also utilise artificial intelligence tools and internet searches in the first instance. In terms of potential support on e-invoicing-related issues, businesses said they would contact software providers, accountants, and IT specialists.

Occasionally businesses identified HMRC as a potential source of information on e‑invoicing, though they did not typically associate HMRC with e‑invoicing issues. It was noted that should e‑invoicing become mandatory, businesses assumed HMRC would become more involved in providing information and support.

“I would go to my accountant in the first instance, as that is what they do.” (Small business, User)

“I would just look on the HMRC website first, to find out what is mandatory. What you have to do, don’t have to do…” (Small business, User)

Potential support needed to move to e-invoicing

Non-users of e-invoicing were asked what kinds of support they thought they would need to move from current processes to e-invoicing. These businesses often struggled to anticipate the kinds of support they would need, but reported concerns about their staff having to upskill and adapt to the new technology. Interviewed small businesses were particularly worried about the costs of this transitionary period and of potential staff training. Some small businesses reported that if e-invoicing were to become mandatory, they would expect help with the cost, or direct training support, from HMRC.

“If getting to know it took hours and hours, then I would struggle to put in the hours.” (Small business, Non-user)

“I really don’t know enough about it to talk about what support I need…I would do an online search and ask around from friends in the industry.” (Medium-sized business, Non‑user)

HMRC messaging

Businesses were asked if they recalled seeing any messages from HMRC about e‑invoicing. For the most part, they reported that they had not seen any communication or messages, although some recalled seeing e‑invoicing mentioned via accounting software providers. Businesses explained that they did not expect to see messaging from HMRC about e‑invoicing and didn’t necessarily expect HMRC to provide advice on e‑invoicing.

Interviewed businesses mentioned the ‘Making Tax Digital’ communications campaign as an example of a HMRC campaign that was highly visible to businesses. Those who mentioned this reported that they would expect similar levels or types of communication if adopting e-invoicing was advised by HMRC.

“I haven’t seen a lot of literature on it [e-invoicing] or messages from HMRC” (Medium-sized business, Non-user)

7. Conclusions

This section draws together findings from across the interviews with SMEs, drawing links across the data, to present conclusions for each research objective.

Businesses relied on accountancy software but most did not use the e-invoicing functions

Interviewed SMEs were heavily reliant on accountancy software for creating invoices. The most common procedure involved generating an invoice within the software, converting it into a PDF, and then manually emailing it to the client. Even though e‑invoicing functions were often available in their existing software, many of the interviewed businesses didn’t engage in e‑invoicing. Interviewed SMEs also reported that they often received invoices as emailed PDFs, which they then manually processed and archived electronically.

Businesses were often using multiple invoicing systems simultaneously to cater to differing client or supplier preferences. Interviewees felt that this approach required additional staff time for training and switching between processes.

Businesses wanted low-risk, trusted invoicing practices, prioritising getting paid and maintaining client relationships

Among interviewed SMEs, decisions regarding invoicing processes were typically made at a senior level, by directors or business owners who prioritised pragmatic and low‑risk invoicing options. Businesses prioritised using established, ‘tried and tested’ processes that they knew worked reliably to ensure prompt payment and protect their cash flow. This was especially critical for small businesses with limited cash reserves.

Maintaining positive client relationships was another major influence, often leading businesses to accommodate clients’ preferred invoicing methods, even if it was less efficient for their own respondent’s business. They also prioritised compliance with legal and tax obligations and minimising operational costs, which included software subscriptions and the cost of staff training. As a result, there was a general resistance to changing invoicing systems unless there was a compelling business case to do so, and one that aligned with current business needs and priorities.

Businesses generally had low awareness of e-invoicing, and even those using it were not always clear about what it was or how it worked

There was a lack of awareness and a general misunderstanding of e-invoicing among many of the interviewed SMEs. For non-users, the term was often confused with any form of digital invoicing, such as emailing a PDF. There was also confusion around the official definition. Some businesses who had claimed to be users of e-invoicing were actually using other digital methods, while others who claimed not to be users were, in fact, already using e-invoicing for a small subset of their transactions.

Even among active users, understanding was mixed and often depended on their level of usage. Regular users could define it as an automated process with minimal human input, but those who used it infrequently felt they lacked a full understanding of how it worked.

Businesses could identify certain potential benefits of e-invoicing, but felt barriers such as perceptions about software compatibility and client preferences were challenges to adoption

Both users and non-users could identify the potential benefits of e-invoicing. The most commonly cited advantages were increased efficiency and time savings for staff, cost reductions on stationery and manual processing, and improved accuracy by reducing the potential for human error. Interviewed users also reported that e-invoicing led to faster payments and improved cash flow.

However, significant challenges and perceived barriers prevented wider adoption. The most prominent concern was the perceived lack of compatibility between different accounting software systems used within their business and by their clients and suppliers. Businesses also worried that e-invoicing would not allow for the level of customisation they required for tailored invoices. This led to a reluctance to move away from systems that offered them direct control and the ability to personalise their client communications.

Businesses did not feel motivated to adopt or expand use of e-invoicing without push or pull factors

For the most part, interviewed non-users did not feel compelled to implement e‑invoicing and subsequently did not feel close to adopting it. They were reluctant to disrupt established processes that ensured they were paid, especially without a clear push factor (such as a client request or industry-wide shift) or a pull factor (such as a clear, immediate and tangible benefit).

For businesses that had adopted e-invoicing, the process was rarely a complete transition but rather a slow and partial adoption. Their ability to implement was often triggered by external factors, such as a request from a key client, as part of a wider business digitalisation project, or in response to challenges like the shift to remote work during the COVID-19 pandemic. Without such catalysts, most SMEs interviewed appeared unlikely to proactively implement e-invoicing.

Businesses looked for guidance and support from software providers and accountants

When faced with invoicing queries or the need for support, businesses turned to 2 trusted sources: their accountancy software providers and their accountants. They found the help functions, online tutorials, and direct support from software companies to be valuable resources. Accountants were seen as the primary source for advice on compliance and financial best practices. Should they consider e-invoicing, businesses stated they would look to these same sources for information and guidance in the first instance.

Businesses had generally not seen or recalled any specific communications from HMRC about e‑invoicing and did not currently view it as part of HMRC’s remit. However, they pointed to the ‘Making Tax Digital’ campaign as a comparator, noting they would expect a similarly comprehensive and visible communication campaign from HMRC if e‑invoicing were to be mandated or strongly recommended.

Businesses anticipated that they may need support with adopting e-invoicing if they were mandated to use it

Due to their low awareness, non-users struggled to specify the exact support they would need to transition to e-invoicing. However, they expressed general concerns about the potential costs and the staff time required for training and adapting to new technology. Small businesses in particular indicated that if e-invoicing were to become mandatory, they would expect financial assistance or direct training support from HMRC to manage the transition.

Clarifications needed to encourage uptake and increase usage

Overall, interviewed businesses felt the barriers to adopting or expanding their use of e‑invoicing outweighed the potential benefits. Many of these perceived barriers could be addressed with some myth‑busting to prompt businesses to seriously consider e‑invoicing. Clarifications could include information on how e‑invoicing works when used between different software providers and systems, and details about how e‑invoices can be customisable to particular goods or service sales.

8. Annex

Recruitment overview

Recruitment took place between May 2025 and June 2025 and was undertaken using a re-contact sample provided by HMRC of SMEs who had previously taken part in the IFF quantitative survey. The HMRC-provided sample contained names, email addresses, phone numbers, addresses and business sizes. It also contained businesses’ responses to 2 questions from the quantitative survey: whether or not they used e-invoicing, and how familiar they were with e-invoicing. Businesses’ responses to these questions were used in recruitment to ensure a mix of levels of familiarity and usage were targeted.

Where the respondent from the re-contact sample felt they had a colleague who was better placed to take part in the interview, their contact details were passed on with their consent and they were contacted to take part. Where re-contacted respondents felt another colleague had additional invoicing expertise, paired interviews were arranged. This resulted in interviews with 48 representatives from 45 businesses.

Incentives

An incentive was offered to all participants who took part in an interview. Participants were offered a choice between a £75 charity donation to a UK-registered charity from an approved list, or a £60 online shopping voucher.

In instances where 2 participants from the same company were recruited, the incentive was offered as up to 2 different charity donations or 2 £30 shopping vouchers, with each participant able to select their preferred choice.

Participant profile

Quotas were set on the recruitment to ensure the research encompassed a range of different business and invoicing characteristics.

Table 1: Business size

Business size	Number of interviews
Micro (0 to 9 employees)	7
Small (10 to 49 employees)	20
Medium (50 to 249 employees)	18

Table 2: Awareness of e-invoicing

Awareness of e-invoicing	Number of interviews
Familiar	31
Unfamiliar	14

Table 3: Current use of e-invoicing

Current use of e-invoicing	Number of interviews
Currently using	13
Not using, but at least somewhat familiar	18
Not using, not familiar	14

Table 4: Business location

Business location	Number of interviews
North East	2
North West	6
Yorkshire and the Humber	2
East Midlands	4
West Midlands	1
East of England	7
London	6
South East	3
South West	7
Scotland	3
Wales	4

Table 5: Business sector

Business sector	Number of interviews
Primary, Manufacturing and Construction	10
Transport, Retail, Accommodation	13
Business services	14
Other services	8

The business sector categorisation used in Table 5 is outlined below. ‘SIC 2007’ refers to the Standard Industrial Classification codes (a system used to categorise business’s core economic activity for statistical analysis and administrative purposes).

Table 6: Primary, Manufacturing and Construction

Sectors	SIC 2007	Definition
A	1 to 3	Agriculture, Forestry and Fishing
B, D and E	5 to 9, 35 to 39	Mining and Quarrying, Electricity, Gas, Steam and Air Conditioning Supply, Water Supply, Sewerage, Waste Management and Remediation Activities
C	10 to 33	Manufacturing
F	41 to 43	Construction

Table 7: Transport, Retail, Accommodation

Sectors	SIC 2007	Definition
G	45 to 47	Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles
H	49 to 53	Transportation and Storage
I	55 to 56	Accommodation and Food Service Activities
J	58 to 63	Information and Communication

Table 8: Business services

Sectors	SIC 2007	Definition
K	64 to 66	Financial and Insurance Activities
L	68	Real Estate Activities
M	69 to 75	Professional, Scientific and Technical Activities
N	77 to 82	Administrative and Support Service Activities

Table 9: Other services

Sectors	SIC 2007	Definition
P	85	Education
Q	86 to 88	Human Health and Social Work Activities
R	90 to 93	Arts, Entertainment and Recreation
S	94 to 96	Other Service Activities

Method

The method used for this research was qualitative in-depth interviews. These were conducted via Microsoft Teams or by telephone.

Interviews lasted 45 minutes to 1 hour.

Interviews were guided by a topic guide, which was developed in collaboration with HMRC. Separate topic guides were created and used for businesses who were familiar and unfamiliar with e-invoicing.

Analysis

All interviews were audio recorded, listened back to and interview notes written up in an analysis grid.

Group analysis sessions were then held mid-way through the fieldwork period and following completion of all interviews. These sessions included discussions to determine key themes relating to each research question and compare and contrast interviewer findings. HMRC colleagues were invited to observe the analysis sessions.