Electronic invoices (e-invoice) save time and effort in the sending and sharing of invoice data between buyers and suppliers. The systems employ standard electronic format to create, send, and receive invoices. As a result, both buyers and sellers can automate the e-invoicing process for most business transactions.
First and most importantly, invoicing is an unavoidable part of running your business. Through invoices, you establish an obligation to pay for goods and services. Organizations create invoices through accounting software and outline payment instructions.
Typically you can manage this process by creating an invoice in accounting software then either printing the invoice and posting it or sending it to your customer via email as a PDF. This makes the e-invoicing process for business transactions easy and effective to use.
Table of Content
- 1 What Does E-invoice Mean?
- 2 Is E-Invoicing the best option for businesses?
- 3 Transforming Traditional Invoicing To Online E-Invoicing
- 4 E-Invoicing – What Are the Benefits?
- 5 Why e-Invoicing?
- 6 Wrapping Up
What Does E-invoice Mean?
When a bill is received, processed, and stored electronically directly from one system to another without any manual intervention, this would be classified as an electronic invoice (e-invoice). The complete lifecycle of an e-invoice is digital, from issuance to archiving.
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Businesses can increase productivity and mitigate the risk of any human errors by using e-invoicing to replace manual tasks and automate business rules. Additionally, there are a number of government initiatives across the globe to increase the adoption of e-invoicing. This means businesses will want to get ahead of the curve in their readiness to send and receive e-invoices.
Is E-Invoicing the best option for businesses?
When you send invoices electronically, it prevents human errors. Common human errors include sending the wrong amount or entering the wrong bank account number. These types of errors are far too common in accounts payable processing leading to invoice payment delays and in some cases paying fraudulent invoices.
With modern technology like e-invoicing, you can avoid these risks completely.
Both senders and receivers can save considerable money by adopting e-invoicing by reducing costs spent processing invoices. Sellers who use e-invoicing networks can be certain that their customer has received the invoice.
Customers can be certain that the invoice is from who it says it’s from, has gone through a level of validation, and that the data has been captured accurately off the invoice. The time saving involved on both sides of the fence creates a compelling business case to adopt e-invoicing.
Transforming Traditional Invoicing To Online E-Invoicing
For any business, an invoice is an essential document to be able to conduct business. Of course, we know that you can’t pay a supplier or service company without them. Which in turn means that they are unable to pay their bills. Invoices also serve an important role in adherence to tax compliance.
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Each year, customers and suppliers exchange millions of invoices. Several businesses still print and mail invoices to their customers the old-fashioned way or at best send them via email as a PDF document.
Businesses have seen the inadequacies of this process and shifted to electronic invoicing which is far more efficient than paper or PDF invoices. e-invoicing process makes the business transactions future-proof.
E-Invoicing – What Are the Benefits?
How does e-invoicing really drive business benefits and lower your costs? E-invoicing creates opportunities to reduce your costs, improve efficiency and grow profits in a way that isn’t possible with PDF or paper invoices:
- Easy operations: E-invoicing reduces time spent on repetitive tasks, such as data entry and validation. This enables your staff to focus on higher-value initiatives. Thus, your employees will like e-invoicing for making business transactions easier.
- Better cash flow and reduced DSO: Removing the need for manual data entry with your customers of your invoices results in faster invoice processing times and likely on time payments.
- Sending and receiving invoices using e-invoicing is very secure. Invoice data sent via the Peppol network is extremely secure and used by over 200,000 business across 34 countries.
- Instant invoice delivery and receipt: invoices are sent instantly via the Peppol network. Thus, you can be sure that your customer has received your invoice and has started to process it. Moreover, you can request a confirmation of invoice receipt.
- Access to line level invoice data – invoices received via e-invoicing contain rich, line level data. This enables businesses to conduct line-level data spend data analysis to identify cost savings opportunities.
- Good for business and the environment: E-invoicing reduces paper waste and CO2 emissions while lowering operational costs, increasing profitability, and establishing brand transparency and reliability.
- Working remotely: You can conduct E-invoicing tasks from wherever you are, be it in an office or at home. This works in increasing efficiency and also reduces time wastage.
e-invoicing reduces the costs
E-invoicing has the big advantage of being much cheaper to process per invoice. Studies show that E-invoicing reduces invoice processing costs by more than half when compared to paper and PDF invoices.
The process drives the savings by removing the manual data entry and validation effort on both the sender and receiver. The receiver especially no longer has to manually validate the invoice is from the correct supplier nor manually enter the data into their system.
Thus, this helps in removing the risk of human errors in the process. A digital archive of invoices also costs much lower than paper archives because you do not require physical storage.
The future is e-invoicing.
The latest generation of invoicing is E-invoicing through secure government-endorsed networks. Given the business benefits involved, there are multiple initiatives that both national governments and platform providers are undertaking.
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These initiatives will increase the adoption of electronic invoicing across the globe. It is important to note that companies such as Peppol are leading the way in the adoption of e-invoicing networks by countries across the globe.
It will be mandatory to use e-invoicing.
Many countries are adopting e-invoicing and starting to roll out mandates across both business and government agencies to enforce the use of e-invoicing.
In Australia and New Zealand especially, there has been a range of mandates pushing State and Federal government agencies to adopt e-invoicing as a standard.
There has been some consistency across the countries with the network to facilitate e-invoicing – the Peppol network which is used in a number of countries across the globe.
Mitigate the risk of data inaccuracies
Manually entered and validated Paper and PDF invoices that contain errors can cause delays in payments, incorrect and sometimes fraudulent payments all of which are really bad for business.
This is all completely avoidable.
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Utilizing e-invoicing, the data is transferred directly from your supplier’s system to yours – no manual intervention required. This also creates an exciting opportunity to redeploy staff that is currently manually entering data to more value-adding activities for your business.
Reduction of carbon footprint
Approximately 90 percent of all waste generated by American offices is caused by print mistakes, mixed paper, junk mail, presentations, and billing mistakes. According to estimates, UK offices waste around 30 pieces every day.
A lot of paper usage can be avoided.
Electronic invoicing provides a smart, safe and affordable way to reduce your carbon footprint and get rid of paper completely from your accounts payable process.
Secure business transaction invoicing
As long as you have a secure internet connection, you are sure that e-invoicing is secure. This is quite easy for corporations and small businesses.
With the availability of VPN routers for small businesses, you can be sure that your e-invoicing for business transactions is secure and private. This makes the service agreeable by both the supplier and the company ordering the service or goods.
Moreover, the invoice arrives very fast and in a trusted way to your company.
E-invoicing adoption will continue to grow significantly across the globe. e-invoicing service is an area of investment that businesses should consider carefully. This is because we have raised several reasons for using e-invoicing for business transactions.