E-Invoicing at the Click of a Button?

SAP Document and Reporting Compliance: Efficiency Through Smart Automation

Companies around the world are facing the challenge of complying with legal e-invoicing requirements in an increasing number of countries. With SAP Document and Reporting Compliance (DRC), SAP offers a powerful solution to meet these demands.

E-invoicing is becoming the global standard – and is already mandatory in many countries. This presents companies with the challenge of implementing legal requirements in a timely and efficient manner. SAP’s answer to this is SAP Document and Reporting Compliance, a dedicated tool designed to help businesses navigate the “compliance jungle” and seamlessly integrate regulatory obligations into existing processes.

What Exactly Can SAP Document and Reporting Compliance Do?

SAP’s solution ensures compliance with local tax regulations by adhering to the respective country-specific tax laws and rules. If a company operates in multiple countries, the applicable tax configuration is automatically used for each transaction. Additionally, the tool enables real-time transmission of tax documents to the relevant authorities.

SAP DRC can be used across different SAP system landscapes – including SAP S/4HANA Cloud, On-Premise, or classic SAP ERP:
In SAP S/4HANA Cloud, the solution is already tightly integrated into the system architecture. In the On-Premise version of S/4HANA and in classic ERP, SAP DRC can still be used, but integration and customization require more effort.

Regardless of the system landscape, electronic documents or reports are generated within the business system and forwarded via a secure connection to the SAP DRC Cloud Service on the SAP Business Technology Platform (BTP). From there, communication takes place with the relevant government platforms – for example, to submit e-invoices or tax returns in accordance with local regulations. SAP DRC distinguishes between two main components, which are connected via the Cloud Connector:

• The Compliance Cockpit, embedded directly within the SAP ERP system, is used to create, edit, and correct tax-relevant documents.
• Compliance Integration, which runs on the SAP BTP, handles the technical connection to country-specific authority platforms and ensures legal requirements are met.

Automation of e-invoices with SAP Document and Reporting Compliance
Architecture of SAP Document and Reporting Compliance (own illustration based on SAP Help, 2024)


Implementing SAP DRC

On-Premise:

  • Requires SAP S/4HANA version 1610 or higher.
  • SAP Fiori Server and SAP Gateway must be installed and active.
  • Country-specific formats and requirements for tax returns and documents must be maintained and configured.


Cloud Edition:

  • No additional system add-ons or patches required, as the solution is integrated into the cloud infrastructure.
  • A global enterprise account on SAP BTP is required to subscribe to and activate the cloud services.


How Does SAP DRC Support E-Invoicing?

SAP DRC is SAP’s central tool for the automated creation, validation, and transmission of e-invoices, ensuring they comply with applicable legal requirements and are formatted correctly.

Process Flow:
The user first creates an invoice in the SAP system. Upon saving, an associated eDocument is automatically generated, representing the e-invoice in the required XML format. Before sending, the invoice undergoes technical and business validation. The invoice can also be previewed in the cockpit. After validation, the e-invoice is transmitted to the recipient’s system. Once received, the status of the e-invoice is updated in the DRC cockpit.

SAP DRC supports both the XRechnung and ZUGFeRD formats:

  • For ZUGFeRD, a PDF container is generated after validation, which includes the XML file. The e-invoice is then sent via email as a PDF with the embedded XML file.
  • For XRechnung, transmission occurs via the PEPPOL network. Since the XML format is not human-readable, SAP DRC offers an HTML preview for easier review prior to sending.


For custom extensions, the BAdI EDOC_ADAPTOR is available, allowing additional fields or structural modifications to be integrated into the e-invoice as needed.
 

Automate e-invoices with SAP Document and Reporting Compliance
SAP, SAP Document and Reporting Compliance Architecture


Disadvantages of DRC

The solution is often marketed by SAP as an “all-in-one package.” However, a closer look reveals weaknesses and limitations that companies must be aware of – especially if they are considering SAP DRC to meet legal e-invoicing obligations.
 

  1. High Implementation Effort: Setting up DRC requires extensive customization for country-specific requirements, as well as testing with sandbox systems provided by the authorities.
     
  2. Limited Flexibility: DRC is heavily oriented toward SAP standard processes. Introducing custom invoice formats, special logic, or non-SAP source systems significantly increases complexity.
     
  3. Cost-Benefit Ratio: An additional license is required, and high implementation costs should be expected.


SAP DRC – Who Really Benefits?

If a company operates primarily within a single country or is only expanding nationally, SAP DRC may not always be the most optimal solution. In such cases, it is worth evaluating whether a simpler and more cost-effective alternative might be better suited.

The following factors should be considered when evaluating the value of SAP DRC for e-invoice processing:
 

  1. SAP Usage and System Landscape: SAP DRC offers the greatest benefit in an S/4HANA environment, particularly when standardized processes are used.
     
  2. Invoice Volume: When e-invoice transaction volumes are high, automation through DRC can provide a strong return on investment.
     
  3. Organizational Structure and International Presence: If a company operates multiple legal entities across countries and centralizes invoice processing in a shared service center, implementing SAP DRC can deliver advantages such as error reduction, improved capacity management, and faster processing times.
     

Why SAP DRC Can Still Be a Smart Choice

Even though many third-party providers offer lower-cost solutions with fewer barriers to entry, SAP DRC should still be considered when choosing the right solution.

Most importantly, companies should make an early decision to adopt a global standard solution for e-invoicing – whether through SAP Standard or partner solutions.

E-invoicing obligations should never be ignored, as legal reporting requirements will continue to increase. SAP DRC offers a reliable and sustainable solution to ensure that current and future regulatory requirements are met securely and automatically.

More SAP solutions especially for german e-invoicing obligations are exemplifies here.

SAP DRC may not be the ideal solution for every company – but for businesses with high invoice volumes and complex compliance needs, especially those operating internationally, it can provide a decisive advantage. In light of continuously growing regulatory reporting duties, it is crucial to address compliance proactively to respond in time and reliably meet legal requirements.

XEPTUM Helps You Find the Right Path:
Is DRC worthwhile for your company? What advantages does it offer and where are its limits? We provide a well-founded assessment and help you turn compliance into real added value.

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