Procurement Glossary
Self-billing: definition, process and application in Procurement
November 19, 2025
Self-billing is an innovative invoicing process in which the buyer creates the invoice for the supplier and releases it directly for payment. This process revolutionizes traditional invoice processing and offers considerable efficiency benefits in procurement. Find out below what exactly self-billing means, how the process works and what strategic advantages it offers your company.
Key Facts
- Self-billing reverses the traditional invoicing process - the buyer creates the invoice
- Reduces invoice processing time by up to 80% by eliminating invoice verification
- Requires contractual agreement and consent of the supplier
- Particularly effective for recurring deliveries and standardized services
- Equivalent to supplier invoices for tax purposes if implemented correctly
Contents
What is self-billing?
Self-billing refers to an invoicing process in which the buyer creates the invoice and releases it for payment instead of the supplier.
Basic principle and mode of operation
With self-billing, the purchasing company creates the invoice based on incoming goods data or services rendered. The supplier receives a copy of the generated invoice and approves it or objects to it within a defined period.
Self-billing vs. traditional invoicing
In contrast to conventional invoicing, self-billing eliminates the need for invoice verification and the invoice approval workflow. This leads to a significant acceleration of the purchase-to-pay process.
Importance of self-billing in Procurement
Self-billing enables complete automation of invoice processing and supports the digital transformation in Procurement. It offers considerable efficiency gains, particularly in the case of standardized procurement processes and trusting supplier relationships.
Process steps and responsibilities
The successful implementation of self-billing requires clearly defined process steps and unambiguous responsibilities between all parties involved.
Creating a contractual basis
First of all, contractual agreements must be made with the supplier that explicitly allow self-billing. These include objection deadlines, data formats and tax law aspects. The terms and conditions of purchase must be adapted accordingly.
System integration and data flow
The technical implementation is carried out by integrating the ERP systems and automatically generating invoices based on deliveries or proof of performance. Seamless ERP integration is essential for success.
Monitoring and quality assurance
Regular coordination with suppliers and systematic monitoring of inconsistencies ensure process quality. The dual control principle should continue to be applied for critical transactions.
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Important KPIs and target figures for self-billing
The success of self-billing is measured using specific key figures that evaluate the efficiency and quality of the process.
Process efficiency key figures
The average invoice processing time and the degree of automation are key indicators. Typical target values are less than 24 hours processing time and over 95% automated processing without manual intervention.
Quality indicators
The objection rate of suppliers and the error rate in invoice creation show the process quality. Successful self-billing implementations achieve objection rates below 2% and error rates below 1%.
Cost savings
The reduction in invoice processing costs per transaction is an important ROI indicator. Companies typically achieve cost savings of 60-80% compared to traditional billing processes through self-billing.
Risks, dependencies and countermeasures
Self-billing involves specific risks that can be minimized by taking appropriate measures.
Compliance risks under tax law
Incorrect invoicing can lead to problems under tax law. Regular employee training and automated plausibility checks significantly reduce these risks.
Supplier dependencies
Self-billing requires the active participation and trust of suppliers. Contradictions or system failures can impair the entire process. Careful supplier qualification is therefore essential.
Data quality and system risks
Incomplete or incorrect master data can lead to incorrect invoices. Robust master data maintenance and regular data validation are critical success factors for self-billing processes.
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Practical example
An automotive manufacturer implements self-billing for recurring deliveries of standard parts. After goods receipt, the ERP system automatically generates an invoice based on the agreed conditions and sends it to the supplier. The supplier has 48 hours to object, otherwise the invoice is deemed accepted and released for payment.
- Invoice processing time reduced from 5 days to 2 hours
- Manual testing efforts are completely eliminated
- Payment terms can be optimized through faster processing
Trends & developments around self-billing
Self-billing is constantly evolving and is shaped by new technologies and regulatory changes.
AI-supported automation
Artificial intelligence enables even more precise automatic invoicing through pattern recognition and anomaly detection. Machine learning algorithms continuously optimize accuracy and further reduce manual intervention.
Blockchain integration
Blockchain technology offers new opportunities for transparent and tamper-proof self-billing processes. Smart contracts can enable automatic payment triggers when delivery conditions are met and strengthen trust between the parties.
Regulatory developments
The increasing digitalization of tax administration and new e-invoicing regulations are influencing the design of self-billing processes. Companies must continuously adapt their systems to changing legal requirements.
Conclusion
Self-billing represents a paradigm shift in invoice processing and offers considerable efficiency potential for modern procurement organizations. Successful implementation requires careful planning, trusting supplier relationships and robust system integration. When implemented correctly, self-billing enables almost complete automation of invoice processes and makes a significant contribution to the digital transformation of procurement.
FAQ
What are the legal requirements for self-billing?
Self-billing requires an explicit contractual agreement between the buyer and supplier. The invoices issued must contain all the information required under tax law and the supplier must agree to the invoicing. Proper accounting and archiving is also mandatory.
For which procurement categories is self-billing particularly suitable?
Self-billing is particularly effective for standardized, recurring deliveries with clear specifications and fixed prices. Typical areas of application are C-parts, consumables and regular services. Complex projects or individual services are less suitable.
How is data quality ensured with self-billing?
Automated plausibility checks, regular master data comparisons and systematic supplier reconciliations ensure high data quality. In addition, exception handling processes for deviations and continuous monitoring of process quality should be implemented.
What cost savings are realistic with self-billing?
Companies typically achieve cost savings of 60-80% on invoice processing costs. Amortization of implementation costs usually occurs within 12-18 months. Additional benefits arise from improved cash flow management and reduced error costs.
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