Choosing an accounting software compatible with e-invoicing is no longer just a technical decision made by an accountant, but a choice that reflects on sales, inventory, taxes, branches, reports, and business continuity. An unsuitable system might issue an invoice that looks correct to the customer, but it may lack some data or specific electronic format requirements, or it may not properly handle returns and credit/debit notes.

Moreover, printing an invoice or generating a PDF file does not necessarily mean the system meets e-invoicing requirements. An establishment needs a solution that links the invoice with the sales process, customer profile, value-added tax (VAT), inventory movement, payment method, and accounting entry, and then supports integration requirements with the "Fatoora" platform when the establishment is subject to Phase Two.

This guide reviews the concept of accounting software and its classifications, explains what e-invoicing is and its types, the reasons for the importance of an integrated accounting system, and how the DigitalPro system can help establishments in Saudi Arabia organize accounts and e-invoicing within an interconnected operating ecosystem.

What is Accounting Software?

Accounting software are digital solutions designed to record, process, and archive financial transactions, and prepare related reports, instead of relying primarily on paper records or scattered Excel spreadsheets.

The accounting software's task begins upon entering a financial document, such as a sales or purchase invoice, and its role continues in analyzing the transaction, posting its impact to the appropriate accounts, and displaying its results within the reports.

Among the most prominent tasks provided by accounting software:

• Setting up the chart of accounts.
• Entering journal entries.
• Organizing sales and purchase operations.
• Issuing invoices and notices.
• Tracking customer and supplier balances.
• Recording receipt and payment vouchers.
• Organizing expenses and revenues.
• Managing inventory and warehouses.
• Calculating Value Added Tax (VAT).
• Managing branches and cost centers.
• Performing bank reconciliations.
• Issuing the trial balance.
• Preparing the income statement and statement of financial position.
• Preparing cash flow reports.
• Organizing users and permissions.
• Archiving documents and recording operations.

Not every system capable of issuing an invoice can be considered a fully integrated accounting software; some simple applications are limited to recording the customer's name, items, and outputting the invoice, without providing journal entries, a general ledger, inventory management, cost centers, or financial reports.

For example, when issuing a sales invoice through an independent invoicing software, the accountant may need to re-enter the transaction data into the accounting software. In an integrated accounting system, invoice data can seamlessly transfer to sales, tax, customer accounts, inventory, and reports within a single operating cycle.

The main components of accounting software include:

• A database for saving transactions.
• Chart of accounts.
• Modules for sales and purchases.
• Modules for managing customers and suppliers.
• An engine for taxes and accounting entries.
• A user permission system.
• Financial and operational reports.
• Tools for saving and backup.
• Integrations with other systems.

It is also necessary to ensure data accuracy and input clarity, because the system cannot prevent all errors that may result from selecting an inappropriate account, entering an incorrect tax number, or placing a product under an unsuitable tax classification.

Types of Accounting Software

Accounting software classifications vary depending on their operating method, the size of the establishment, the nature of the activity, and the required functions, therefore there is no single solution suitable for all types of companies.

Software Type	Key Functions	Suitable Usage
Invoicing Software	Issuing invoices and tracking collections	Businesses with limited transactions
Desktop Accounting Software	Accounts, journal entries, and reports	Establishments operating from a single location
Cloud Accounting Software	Managing accounts online	Companies with multiple branches or remote operations
Accounting and Inventory Software	Sales, purchases, and warehouse management	Stores and distribution companies
Accounting and Point of Sale (POS) Software	Cashier, inventory, and accounts	Shops and supermarkets
Specialized Software	Functions tailored for a specific sector	Restaurants, hotels, and contracting
ERP System	Integration of establishment departments	Medium and large companies

Invoicing Software

These programs focus on preparing invoices, quotations, and recording payments. They may be suitable in the early stages of a small service business, but they are not sufficient when the establishment needs comprehensive accounting or branch and inventory management.

Desktop Accounting Software

These systems are installed on a local device or server within the establishment, mostly operating over a local network. They can be a suitable choice when internet connectivity is limited, but they require continuous management of updates, backups, and branch linking.

Cloud Accounting Software

These programs rely on an internet connection, allowing authorized users to access accounts from multiple devices and locations. Small and medium enterprises can review the features of a cloud accounting system that combines accounting, e-invoicing, and financial reporting.

The DigitalPro Cloud page indicates that it is a cloud accounting solution targeting small and medium enterprises, supporting Arabic, archiving, e-invoicing, and reporting, and the page also details its compliance with Phase Two requirements.

Accounting and Inventory Software

These systems link sales and purchase invoices with quantities, costs, and warehouses, and are suitable for activities that need to know the actual stock balance, track transfers, inventory counts, damaged goods, and stagnant items.

Point of Sale (POS) Software

Used in shops, restaurants, and branches to record sales, receive payments, and issue invoices. It is crucial that the POS system is linked to inventory and accounts so that cashier data matches financial information.

Sector-Specific Specialized Software

These systems include functions that may not be available in general software. A restaurant, for example, needs to manage tables, kitchen, recipes, delivery, and meal costs, and can benefit from a restaurant and cafe management software that connects orders, inventory, invoicing, and accounts.

The DigitalPro restaurant system page displays functions for POS, order and inventory management, and reporting, alongside automated journal entry creation, VAT support, and compliance with the Fatoora platform requirements.

Enterprise Resource Planning (ERP) Systems

These systems connect accounting with sales, purchases, inventory, projects, and other departments of the establishment. They suit companies wishing to use a unified database instead of running separate systems that do not exchange data with each other.

When comparing different types, the selection criterion should not only be the number of features, but the system's ability to cover the actual business cycle of the establishment without complexity, with the possibility of scaling when the number of branches, users, and transactions increases.

What is E-Invoicing?

An electronic invoice is a document created and stored electronically in a structured format through an electronic system, containing the required tax invoice elements. A handwritten, scanned, or word processor-generated invoice is not considered an electronic invoice meeting the system's concept.

The e-invoicing system aims to transform the process of issuing invoices and notices from a paper format to an electronic process that allows creating, exchanging, and processing documents in a structured format between the seller and the buyer.

An electronic invoice consists of a set of interconnected aspects, including:

• Supplier data.
• Buyer data when required.
• Invoice classification.
• Date and time of issuance.
• Serial number.
• Goods or services data.
• Quantities, prices, and discounts.
• Value Added Tax (VAT).
• Total due.
• Quick Response (QR) code when applicable.
• Required technical and security data.
• XML file in Phase Two.
• Linking to original invoices when issuing notices.

E-invoicing was implemented in Saudi Arabia in two phases:

Phase One: Generation and Storage

Launched on December 4, 2021, it focused on generating and storing invoices and notices electronically using a technical solution that meets the specified requirements.

Phase Two: Integration and Linkage

Its gradual implementation began on January 1, 2023, requiring the linkage of the taxpayer's invoicing systems with the Fatoora platform and issuing documents in the specified electronic format. The Zakat, Tax and Customs Authority (ZATCA) notifies targeted establishments at least six months prior to their linkage date.

Accordingly, the accounting software should provide two integrated aspects:

1. Managing the invoice from a commercial and accounting perspective.
2. Applying e-invoicing requirements from a technical perspective.

The mere presence of the customer's name and tax amount on the document is not sufficient on its own to prove compliance, as the document may not be compliant if not issued and stored in the required format, or if the issuance unit is not configured and linked when the establishment is subject to Phase Two.

It is also important to know that the list of solution providers published by the Authority is indicative and non-binding, and does not mean the approval of every software or version offered by the provider. The taxpayer can choose any technical solution as long as the used system adheres to the requirements.

Read also: What is Electronic Invoicing

Types of Electronic Invoices

The primary electronic documents in Saudi Arabia include the tax invoice and the simplified tax invoice, along with credit and debit notes used to adjust the impact resulting from the original invoice.

Document Type	Common Usage	Phase Two Mechanism
Tax Invoice	Business-to-Business (B2B) transactions	Clearance before sharing it
Simplified Tax Invoice	Business-to-Consumer (B2C) sales	Reporting it within the specified timeframe
Credit Note	Decreasing the value of a previous invoice	Linked to the original invoice
Debit Note	Increasing the value of a previous invoice	Linked to the original invoice

Tax Invoice

The tax invoice is mostly used for B2B transactions and contains more details about the supplier, buyer, supply, and VAT.

Data it includes:

• Supplier's name and address.
• Supplier's Tax Identification Number (TIN).
• Required buyer data.
• Buyer's TIN when applicable.
• Invoice number and date.
• Description of goods or services.
• Quantities and prices.
• Discounts.
• Taxable value.
• Tax rate and amount.
• Final total.

In Phase Two, the standard tax invoice is sent to the Fatoora platform for verification and clearance before presenting the final copy to the buyer.

Simplified Tax Invoice

Commonly used in direct sales to consumers, such as purchases in retail shops, restaurants, and cafes.

It usually includes:

• Seller's data.
• Tax Identification Number (TIN).
• Time and date of issuance.
• Serial number.
• Item details.
• Tax amount.
• Total invoice amount.
• QR Code.

In the integration phase, simplified invoice data is reported to the Fatoora platform according to the approved timeframe and requirements.

Credit Note

A credit note is issued when the value of the invoice decreases after its issuance. Examples include:

• Returning a product.
• Canceling part of a service.
• Providing a subsequent discount.
• Correcting an overcharged amount.

Debit Note

A debit note is used when the due amount increases, such as in the following cases:

• Adding an unrecorded service.
• Correcting an undercharged amount.
• Adding a difference or fees related to the supply.

It is not advisable to process returns by modifying or deleting the original invoice after its issuance. Instead, a linked note should be created explaining the reason for the adjustment, while preserving the transaction's impact on accounts, inventory, and tax.

The Importance of Choosing Accounting Software Compatible with E-Invoicing

The importance of choosing an e-invoicing compatible accounting software becomes evident as the system manages interconnected financial, tax, and technical data, rather than merely outputting a printable invoice.

The importance of the accounting software is highlighted in the following aspects:

Issuing Invoices with the Required Data

The system helps organize the establishment's data, its tax number, issuance and supply dates, product data, tax, and totals in a structured manner.

Reducing Manual Calculation Errors

The system calculates taxes, discounts, and totals based on item settings, which minimizes calculation errors, provided that the tax classifications are set correctly.

Linking the Invoice to Accounts

Upon issuing the invoice, the system can automatically record the revenue, output tax, customer account, payment method, and accounting entry.

Updating Inventory

The system reduces sold quantities and restocks them upon registering a return, in addition to updating inventory costs and item movement reports.

Managing Branches and Cashier Devices

Establishments operating across multiple branches need to configure invoicing units and track document sequences and statuses through a centralized system.

Managing Rejected Invoices

It is important for the system to clarify the status of sending, clearance, warnings, and rejections, along with specifying the cause of the problem and the steps needed to resolve it.

Maintaining an Audit Trail

The system records the user who created or approved the transaction and the time of execution, and it restricts unauthorized modifications or deletions.

Providing Tax Reports

The system assists in reviewing sales, returns, output tax, and input tax before preparing the tax return.

Supporting Business Growth

The software should allow adding users, branches, warehouses, and POS terminals without the need to entirely replace the system.

When comparing software, ensure the presence of the following features:

• Support for tax and simplified invoices.
• Support for Value Added Tax (VAT).
• XML generation.
• QR Code generation according to requirements.
• Integration with the Fatoora platform.
• Clearance and reporting management.
• Issuing credit and debit notes.
• Organizing invoice sequences.
• Managing users and permissions.
• Invoices archiving and backups.
• Managing branches and issuance units.
• Linking sales to inventory.
• Preparing journal entries and reports.
• Handling connection outages.
• Providing technical support and continuous updates.
• Allowing export of establishment data.

How the DigitalPro Accounting System Integrates with E-Invoicing

DigitalPro's integration with e-invoicing relies on linking invoice issuance with sales, inventory, payments, accounts, and reports within a single ecosystem.

The Digital Business website showcases DigitalPro as a solution combining accounting, POS, and management systems, with e-invoicing support and readiness for ZATCA Phase Two requirements.

The integration process begins as soon as a sales transaction is recorded:

1. The user selects the customer or adds new customer data.
2. Selects products or services.
3. The system retrieves prices and taxes.
4. Applies discounts according to granted permissions.
5. Calculates the tax amount and total.
6. Records the payment method.
7. Generates the electronic invoice.
8. Updates the customer's balance.
9. Adjusts inventory quantity.
10. Updates reporting data.
11. Creates the accounting impact based on system settings.

Among the features displayed on the DigitalPro Accounting and POS system page:

• Customizable user interface.
• Compatibility with various POS devices and hardware.
• Support for multiple payment methods.
• Issuing invoices with saving, printing, and sharing capabilities.
• Managing returns and adjustments.
• Financial and accounting reports.
• Sales and profit analysis.
• Tracking inventory and product movement.
• Interactive dashboards.
• Managing suppliers and warehouses.
• Support for multiple item units and barcodes.

Ready to try the system?

Start your free trial or talk to the sales team to help you choose the right solution.

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This cycle helps limit a recurring problem for some establishments, which is the discrepancy between sales recorded in the POS machine and those entered by the accountant. When system components are integrated, the invoice becomes the basis for the financial and inventory transaction, rather than transferring totals manually at the end of the day.

You can also rely on the smart reporting software to track invoices, sales, returns, inventory, and customer and supplier balances through reports based on system data.

As for establishments operating from multiple locations, they can benefit from the cloud version to access accounts, invoices, and reports based on permissions, while having a plan to handle poor connection situations.

Before starting to operate DigitalPro, the following steps should be executed:

• Verify establishment data and its tax number.
• Configure branches and invoice issuance units.
• Organize the chart of accounts.
• Set up taxes and item classifications.
• Review customer and supplier data.
• Add products, units, and barcodes.
• Define employee permissions.
• Enter opening balances.
• Setup linkage according to the phase the establishment is subject to.
• Test invoices and notices.
• Review report matching before final live operation.

Advantages of Using Digital Business Software

Digital Business provides a suite of solutions covering accounting, POS, e-invoicing, cloud systems, and specialized solutions for different sectors, allowing the establishment to choose the system closest to the nature of its business cycle.

You can review Digital Business software solutions to learn about the accounting and POS system, cloud version, restaurant system, hotel management, CRM, reporting, and other solutions offered by the website.

Among the most prominent practical advantages:

Combining Accounting and POS

Integration between both sides helps record sales, payments, returns, and inventory within a single database, instead of running an independent system for each branch.

Cloud Solutions

Cloud systems allow data access from multiple devices and locations, fitting companies managing several branches or those whose accountants work remotely.

Specialized Systems

Business mechanisms vary from one activity to another; therefore, Digital Business offers systems tailored for restaurants, cafes, hotels, and other activities, rather than imposing a uniform accounting operational mechanism across different sectors.

Inventory Management

Inventory management tools help track quantities, prices, costs, suppliers, warehouses, and returns, along with handling data like barcodes, units, and expiration dates in the presented system.

Financial and Operational Reports

Reports enable tracking of sales, profits, product movement, inventory, customers, and suppliers, rather than just monitoring the total cash register amount.

E-Invoicing Support

The website presents its systems as ZATCA-compliant and ready to comply with Phase Two requirements, while the responsibility for data accuracy, configuring all issuance units, and testing the actual deployed system remains on the establishment.

Scaling with the Business

You can choose a basic accounting and POS system, opt for a cloud solution, or use a specialized system depending on the number of branches, users, and the operational requirements of the establishment.

No single system can be determined as the best for all companies without studying each establishment's needs. Thus, the demonstration should include operations simulating daily work, such as:

• Creating a simplified invoice.
• Issuing a tax invoice for a company.
• Recording a partial payment.
• Processing a return transaction.
• Generating a credit note.
• Closing a cashier shift.
• Reviewing inventory data.
• Issuing a customer account statement.
• Extracting a sales and tax report.
• Testing operations between branches.

Explore the services and products, then book your consultation to test DigitalPro on a real business cycle within your establishment. You can register and get a free trial or contact us to clarify the number of branches, POS terminals, and types of invoices and reports required.

Frequently Asked Questions

What is the best software for creating an electronic invoice?

The best software is the one that fits the types of invoices issued by the establishment, fulfills e-invoicing requirements, and links invoices to accounts, inventory, and VAT.

It should ideally provide:

• Tax and simplified invoices.
• XML and QR Code.
• Credit and debit notes.
• Branch and issuance unit management.
• Tax reports.
• Permissions and transaction logs.
• Continuous updates and technical support.

Ready to try the system?

Start your free trial or talk to the sales team to help you choose the right solution.

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DigitalPro can be evaluated through an actual trial involving issuing invoices, executing returns, and reviewing the impact of these transactions on accounts and inventory.

What is the best app for managing electronic invoices?

The best app for managing electronic invoices goes beyond creating the invoice layout to managing the entire process cycle, from the quotation down to collection, returns, and reports.

It is preferable that the app supports:

• Customers and products.
• Prices and discounts.
• Payment methods.
• Credit sales.
• Collection processes.
• Electronic invoicing.
• Reports.
• Backups.
• Access via mobile and PC.
• Integration with the accounting system.

What are the best electronic accounting applications?

The best accounting app is determined by the nature of the business. A service company needs to manage accounts, invoices, and clients, whereas a store requires inventory and POS, and a restaurant needs to manage orders, kitchen, and recipes.

When making a comparison, review the following aspects:

• Ease of use.
• Accounting functions.
• E-invoicing.
• Tax management.
• Inventory.
• Branches.
• Reports.
• Permissions.
• Security.
• Integration.
• Total cost.
• Possibility of a trial.

What are e-invoicing codes?

E-invoicing codes are identifiers, symbols, and data used to help identify, verify, and electronically process the document.

Examples include:

• Invoice serial number.
• UUID or Universally Unique Identifier.
• Invoice type code.
• Tax Identification Number (TIN).
• Currency code.
• Unit and tax codes.
• QR Code.
• Invoice cryptographic hash.
• Cryptographic stamp data.
• Link to the original invoice in notes.

The user does not need to create these codes manually; rather, the system generates them according to the required technical specifications.

What is the E-Invoicing Portal?

The e-invoicing portal is the "Fatoora" portal affiliated with the Zakat, Tax and Customs Authority, used within the integration and linkage procedures in Phase Two.

The portal is linked to the procedures for configuring invoice issuance units and tracking the linkage process, while the accounting software sends or reports the invoices and processes technical responses based on the document type.

The portal does not replace accounting software; the establishment needs a technical solution that issues, stores, and links invoices to its various operations.

What is the first step in the e-invoicing process?

The start is verifying the establishment's tax status and the e-invoicing phase applied to it, then selecting a compliant system and properly setting up the establishment's data.

Then:

1. Setting up the TIN and addresses.
2. Identifying branches and issuance units.
3. Adding customers and products.
4. Configuring tax rates.
5. Choosing the invoice type.
6. Testing the system before going live.

What are the procedures for issuing an electronic invoice?

The invoice issuance process goes through the following stages:

1. Logging into the invoicing system.
2. Selecting the document type.
3. Selecting the customer.
4. Adding goods or services.
5. Entering quantities and prices.
6. Applying a discount, if any.
7. Reviewing the Value Added Tax.
8. Selecting the payment method.
9. Reviewing invoice data and its total.
10. Issuing the invoice from the system.
11. Executing clearance or reporting based on the invoice type.
12. Sharing the human-readable copy with the customer.
13. Storing the invoice and the response log.
14. Posting its impact to accounts, inventory, and reports.

In conclusion: Choosing an e-invoicing compatible accounting software helps the establishment treat the invoice as part of an interconnected financial cycle, not just an isolated document. A suitable system links the sales process with tax, customer account, inventory, payment method, and reports, supporting the technical requirements of the phase that applies to the establishment.