Why the US is behind on e-invoicing — and what needs to change

E-invoicing has long promised to streamline the way businesses buy, sell, and pay. Yet in the U.S., adoption remains fragmented — slowed by technical complexity, inconsistent standards, and a lack of regulatory direction. While Europe and Asia move towards real-time indirect tax reporting and mandatory e-invoicing, the U.S. still lacks a cohesive framework and clear policy signals.

• U.S. e-invoicing adoption is fragmented, with no federal mandate or consistent standards. 
• Structured e-invoices improve efficiency and tax compliance, yet most U.S. businesses still rely on PDFs. 
• The DBNAlliance offers an interoperable solution, using global standards to connect businesses.

According to the Business Payments Coalition, more than 250 e-invoicing service providers operate in the U.S. market, supporting over 15 invoice formats and 40+ subsets. That diversity reflects a lack of central coordination. There’s no single government authority — federal or state — with the mandate or mechanism to require or harmonise e-invoicing across the country.

Unlike countries with VAT or GST systems, the U.S. does not rely on invoices for input tax credits or compliance reporting. As a result, invoices are treated like any other business document, and no formal e-invoice standard has taken hold at a federal level. This regulatory void leaves businesses — especially SMBs — without clear guidance on where to start.

In this environment, definitions vary. Many businesses still consider PDFs sent via email to be “electronic invoices.” But true e-invoices — defined by the Business Payments Coalition as structured, digital documents capable of automated processing — are rare. 

Avalara research suggests that only 20% of large U.S. businesses send structured e-invoices like EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport) or UBL (Universal Business Language), while over two-thirds still rely on PDFs.

This distinction matters. Structured e-invoices drive real efficiency. PDFs and other unstructured formats generally require manual processing or additional technologies such as optical character recognition, which slows down processing and increases the risk of error.

Paper and PDF invoices introduce friction in accounts payable (AP) and accounts receivable (AR) processes. These frictions impact efficiency, accuracy, compliance, and scalability. The persistence of paper invoices in the U.S. doesn’t just slow down processing — it extends into how payments are made. Many businesses still rely on checks, mailed through the postal system, to settle invoices. This not only delays cash flow but increases the risk of errors, fraud, and lost documents. In a digital-first world, printing and mailing checks should be the exception — not the default. Yet without structured, automated invoicing, electronic payment adoption remains patchy. The result is a finance process that’s slower, costlier, and less transparent than it should be.

Research shows that nearly 92% of e-invoices are paid on time, compared to just 45% of those submitted in paper form. Avalara’s own research indicates that switching to structured digital invoices could save U.S. businesses $5.4 billion annually — and contribute to a global productivity gain of up to $616 billion by 2030.

Structured e-invoices don’t just streamline accounts payable — they also lay the foundation for smarter tax compliance. With standardised, machine-readable data, businesses can automate use tax calculations, validate exemption claims, and prepare sales tax returns with greater accuracy. Instead of relying on manual reviews or disconnected systems, e-invoicing ensures that tax-relevant fields — like item codes, tax rates, and ship-to addresses — are consistently captured and processed. The result is fewer errors, faster filings, and audit-ready digital trails that reduce risk across state and local jurisdictions.

The opportunity is clear. Faster payments. Fewer disputes. Better data for both tax reporting and financial planning. Yet e-invoicing adoption in the U.S. remains limited, in part because of incompatible systems and the absence of a scalable model or standard.

Many large buyers rely on private procurement or accounts payable networks to digitise procurement and invoicing. But these closed-loop platforms create friction for suppliers and fail to scale across business ecosystems. Each buyer often requires its own portal and format, forcing suppliers to manage multiple logins, data standards, and onboarding processes. This “portal fatigue” undermines adoption and pushes accounts payable teams to revert to PDFs or paper.

Unlike interoperable and open networks that support many-to-many connections and shared supplier directories, private systems operate in silos. Each defines its own document structure and metadata, making integration with ERP or automation tools more complex. Most are also not built for compliance with global e-invoicing mandates, leaving businesses with fragmented solutions and duplicated effort. Added service provider or supplier fees and lack of end-to-end visibility only increase processing costs and delay payments. The result? Slower workflows, higher risk, and limited return on investment.

Unlike Europe, where governments play an active role in shaping e-invoicing frameworks, the U.S. has no equivalent of a national VAT authority. The federal government can regulate interstate commerce, but state and local jurisdictions set their own rules — and there are over 13,000 of them. Add to that the lack of formal tax invoice requirements, and it’s easy to see why adoption has lagged.

Even among federal agencies, a mandate to adopt e-invoicing hasn’t translated into broader market change. The U.S. lacks the central coordination or legislative authority to drive nationwide uptake on its own.

Despite these challenges, there is real momentum. The Digital Business Networks Alliance (DBNAlliance) has emerged as a nonprofit, industry-led solution to address fragmentation and unlock interoperability.

The DBNAlliance operates the B2B Digital Highway, a “four-corner” exchange model where businesses connect once via a certified access point, then send and receive structured e-invoices with any other participant. Built on global standards like UBL 2.3 and AS4, and designed for U.S. tax complexity, the framework includes machine-readable support for over 100 tax types and exemption codes, leveraging existing X12 code lists.

By supporting an open network model, the DBNAlliance removes the need for businesses to use the same provider or portal as their trading partner, reduces integration costs, and empowers small suppliers to compete on a level playing field. It also provides a potential path for future alignment with European systems — something the U.S.-EU Trade and Technology Council recently cited as a strategic goal.

The benefits are tangible: fewer payment delays, less manual effort, and clearer data for audits and compliance. As more U.S. businesses expand across borders — or face increasing demands for automation at home — digital transformation in invoicing is no longer optional.

E-invoicing isn’t just a European priority. It’s a global shift. And for U.S. businesses, catching up means adopting solutions built for scale, compliance, and collaboration. The DBNAlliance’s B2B Digital Highway is a game changer and has the potential to really democratise e-invoicing across the U.S. 

Avalara is a founding member of the DBNAlliance and is a certified service provider and access point and was the first service provider to successfully send an e-invoice on the DBNAlliance’s B2B Digital Highway. 

Speak to us today about our e-invoicing solution for the U.S. and other global markets.