Invoices have always been the lifeblood of people and businesses wishing to exchange various payment types. Whether paying for a service or a product, you need an invoice to ensure accuracy and timely payment.
Thanks to digitalization, the cumbersome and time-consuming traditional invoices are no longer in use. Electronic invoices, which are secure, convenient, and fast have taken over the market. E-invoices now enable businesses to streamline their functions and ensure efficient invoicing.
If your business is ready to ditch the time-consuming traditional invoicing methods to the electronic ones, this guide is for you.
What Is E-Invoicing?
An E-invoice is a short form of an electronic invoice. It is a digital invoice from the supplier to the customer with information formatted in a structured way and submitted electronically.
The structured formatting makes it easy for the accounts payable (AP) receiving system to understand every invoice field and begin the processing.
The invoice contains all the details a traditional invoice will have, such as supplier details, invoice number, order reference, etc. The only difference is that this information is submitted electronically and in a digital format.
An electronic invoice allows businesses to automatically generate invoices for their products and services without printing them manually.
Both the sending and receiving systems of e-invoices use the same standard format, making it easy to transfer and share data. This allows for easy processing and automation of invoices.
How E-Invoicing Works
To understand how e-invoicing works, it’s critical to understand the entire invoicing process. Invoicing starts when a customer receives a purchase order. Depending on the terms of purchase, an invoice follows the purchase order at a later date.
The purchase order outlines all the details required in the invoice. It includes things such as the purchase, date of the purchase, delivery method, costs, and payment methods.
Once the business delivers the services or products ordered, they can now follow up with an invoice depending on the agreement.
Depending on the type of business, most invoices are sent within 30 days. This gives both parties ample time to prepare and process the payment.
Once the period (mostly 30 days) has elapsed, the supplier digitally creates an e-invoice and delivers it electronically to the customer. The customer receives this invoice in a structured format that their AP automation software can easily recognize.
Once the system receives and recognizes the data in the invoice, it automatically sends it to the payment stage. With all the relevant information confirmed, the invoice is then imported into the accounts payable system.
This process doesn’t require any human intervention and saves a lot of time. Everything is done online and streamlined to make the entire process smoother.
Benefits of E-Invoicing
E-invoicing eliminates the need for customers to enter information manually. The manual invoicing process was not only time-consuming but also had a lot of errors.
E-invoicing now removes the paper and manual processing resulting in more cost-cost savings and time-efficient invoicing.
Processing and receiving invoices electronically are some of the ways your business can start its transformation to digital space. Your business needs efficient operations and scalability for its future growth.
So, if your business is yet to embrace e-invoicing, here is what you’re missing out on:
1. Fast Processing Time
According to a study by International Data Corporation (IDC), businesses that adopt e-invoicing save time by up to 50%. Electronic invoices allow your business to save time through their fast-processing time.
E-invoices are directly integrated into the accounts payable solution. This process eliminates human intervention and frees up time and resources.
For a business that hasn’t embraced e-invoicing, the traditional method seems to be the easiest. However, you realize how much you can save once you eliminate the manual processing methods and all the paperwork. Using the electronic way to process your invoice will save you a lot of money in the long run.
3. Increased Transparency
The information in e-invoices is easily shared between parties involved eliminating data silos. When the data is held electronically, it’s easy to integrate it into other company systems. With this, organizations can easily make informed decisions regarding their finances.
4. Efficient Record-Keeping
It’s easy to keep and track records when stored in an electronic system. E-invoices allow for easy record keeping thanks to the improved filing system. The staff will also save time as they won’t have to go through piles of paper to retrieve information on past payments.
5. Improved Accuracy
The data in e-invoices is entered electronically and generated automatically. The information in the invoices is matched and validated against purchase orders, invoices, and receipts. The entire process doesn’t involve human intervention, which highly increases accuracy.
6. Easy Compliance
With e-invoicing, it’s easy to ensure compliance, as your business can easily share information with auditors. They can go through every detail and retrieve all the data with ease. E-invoicing also eliminates fraud since the information can’t be changed or altered once delivered.
7. Improved Relationship with the Supplier
E-invoicing eliminates errors and ensures faster processing of payment. Suppliers are always looking forward to working with businesses that pay on time. They also don’t want to go back and forth on payments due to errors.
When your suppliers are happy doing business with you, you’ll likely receive their products on time and might get a discount on various occasions. There’s no denying that businesses that use e-invoicing achieve the highest level of supplier satisfaction.
Embrace E-Invoicing Today
E-invoicing is the future of invoicing for any business, thanks to the plenty of benefits it offers. Businesses that use e-invoicing have an edge over their competitors as they save time and generate invoices on time.
Customers are more than willing to work with a business that has embraced e-invoicing than one still using traditional invoicing.
So, if you feel like your business should reap the benefits of e-invoicing, it’s time to implement it. There are many e-invoicing solution providers ready to take your business to the next step with this new system.
Make sure you choose a provider that meets all the invoicing demands for your business and is ready to take you to the next level.