The transmission, receiving, and processing of digital transactional records between suppliers and customers is known as electronic invoicing (e-invoicing). True e-invoicing should be totally electronic, allowing data from the supplier to be instantly incorporated into the buyer’s system.
For example, a scanned invoice delivered through email in Adobe PDF format is not a true e-invoice because it may require further data re-entry, which is time-consuming and error-prone.
Relevance in today’s period
Although the familiarity of einvoicing is not some technology which the market isn’t aware of but the relevance of e invoicing system has grown multi-fold recently all along. In the past few years, the American and European markets were the only place where this system was adopted which has subsequently grown by now. Talking about the
- other side of the planet, the pace at which the market in the Asia Pacific is accepting
- shows a positive sign. The e-invoicing market will potentially see growth from USD
- 1240 Mn in 2019 to USD 4220 Mn by 2027.
- There are various outlined benefits involved with this invoicing system automation in
- today’s world that makes it a major adoption in the growing market. Let’s get to know
- why e-invoicing is given the upper hand preferences by organizations worldwide.
Both providers and purchasers profit from electronic invoicing. It helps to:
- Increase automation
- Cost reduction
- Shorten payment cycles
- Increase safety detected errors, losses, and frauds
- Improve supplier/customer relationships
- Reduce carbon footprint
Advantages of E-Invoicing for Suppliers
Improved Reconciliation of Accounts
One of the issues that every supplier encounters is reconciling invoices provided to customers with payments received. Customers can pay for several invoices in one transaction. Furthermore, due to a variety of factors, such as customers claiming discounts for defective items, such payments may differ from the original invoices. As a result, a supplier may issue five $2,000 invoices and receive a single $9,000 payment, and must call the customer’s AP (accounts payable) department to explain payment details. This interaction could be simplified if the AP process is automated.
Improved Cash Flow and Faster Payment
The buyer must sort, route, re-key, and submit invoices for approval after receiving paper or PDF invoices from the supplier. This is a lengthy procedure. It’s also possible that invoices will be misplaced-invoices, on the other hand, are immediately available on the buyer’s system and may be routed and approved significantly more quickly. As a result, payments are made on schedule, resulting in increased cash flow.
Suppliers can save money by using e-invoicing to eliminate the costs of printing, storing, processing, and delivering paper invoices. Because of the greater accuracy of e-invoicing, fewer customer support calls are necessary.
Fewer Invoice Disputes and Rejections
Invoice disputes and rejections are expensive, time-consuming, and can result in late payments. Data from the supplier’s AR (accounts receivable) system is sent directly to the customer’s AP system with e-invoicing, reducing the possibility of data re-entry errors. As a result, the likelihood of invoice rejection is minimized.
Advantages of E-Invoicing for Buyers
Productivity gains and automation
The papers must be kept, organized, and re-entered into the AP (accounts payable) system for paper or PDF invoices. These stages are inherently time-consuming and error-prone, especially data re-entry.
E-invoicing eliminates the need for manual data re-entry by sending data straight from the supplier to the buyer’s AP system. Accounting employees can spend more time to high-value activities as a result of the reduced workload.
AP departments can use e-invoicing to automate invoice validations before sending them to line-of-business management for approval. These checks verify that all computations, including VAT (GST invoicing) amounts, are accurate. They also assist in determining which departments purchase which commodities.
They also cross-reference invoices with other procurement documents like contracts and purchase orders. The pricing on the invoice, for example, must match those in the contract. The descriptions of the commodities must match those on the PO and the goods receipt.
With e-invoicing, such validations can now be done automatically.
Since data entry and validation are automated, the buyer’s personnel is less likely to call the supplier to confirm invoice receipt or inquire about the details.
If the e-invoicing system includes a supplier portal, the benefits of e-invoicing for buyers are considerably enhanced. It allows suppliers to keep track of invoice status, as well as approval and payment status.
Suppliers can check to see if their invoices have been received, authorised, and submitted for payment. As a result, there is a significant reduction in the need for follow-up calls.
E-invoicing can save 60 to 80 percent on costs by reducing, or even eliminating, human data re-entry, sorting, validation, and registering invoices.
Advance Payment Reductions
Suppliers are frequently prepared to offer a discount in exchange for early payment. Faster processing and, as a result, shorter payment cycles are possible with e-invoicing. As a result, consumers who use e-invoices have more discount possibilities.
Enhanced Interaction with Suppliers
A quick and effective payment mechanism will undoubtedly aid in the strengthening of supplier relationships. This will result in a more efficient supply chain and higher levels of customer satisfaction.
- In the recent period, most companies have accepted E-invoicing as their most
- strategic step while moving ahead into the digitized world of processing cycles. Even
- the governments worldwide are introducing various mandates and working on
- bringing the frameworks into the action that involves e-invoicing. If you have been
- giving it a thought then this is the right time to put forward your investment with
- e-invoicing and take your business to new heights.
Abinash Pradhan is a content creator and technology enthusiast. He has contributed to globally renowned brands like Aldar Properties and Khaitan & Co and strategies the brand identity of babycare niche e-tailer babyoye.com. He is also our in-house think tank and the creative guy. Passion for cutting-edge technology and love of content creation is his driving force apart from munching samosas occasionally. While not writing about technology and ERPs for us, he loves to read Sidney Sheldon and binge-watching Netflix or sometimes track mountains during weekends.