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E-Invoicing — Everything You Should Know
E-invoicing changes the way payments and billings in procurement are done. It has been around for a long time and now it gets the spotlight that it deserves. However, we are sure that not all of you know about this. Do not worry, we are here for you!
In this article, we will discuss what e-invoicing is. We will check its features and benefits that will help your organization to develop further.
After reading this article, you will have an in-depth understanding of what e-invoicing is. The knowledge that you gain will enable you to know how you can use it effectively in your organization. So let’s dive into the world of e-invoicing.
What is E-Invoicing
We know that an invoice is a term used to define the expenses that are incurred while using goods or services. Like all processes in procurement, invoicing has undergone a complete digital transformation which we call e-invoicing today.
E-invoicing, also known as electronic invoicing, is a form of billing presented to an organization in electronic format through predefined structured data exchange.
The electronic exchange can be done by two main options. The first one is a point-to-point connection between an organization and the suppliers which is usually the case when using EDI invoicing.
The second option is through a network that connects multiple organizations and suppliers. The network model is typically used today where the growth of utilizing e-invoicing is expected.
E-invoicing streamlines and automates invoices and compliance documentation. An e-invoice is coded according to data from the document and business rules.
E-invoice is a type of solution that is commonly applied in B2B transactions. It is delivered in standard formats via digital channels from the time they are issued to the time the information is stored.
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What is the Difference Between E-Invoice and Traditional Invoice?
The core difference between an e-invoice and a traditional invoice is its format. A traditional invoice is a paper-based document to process the costs incurred and their payment.
Additionally, traditional invoices are generated manually and run through a lot of potential risks of inaccuracies and human errors. It is a slow method that makes invoicing a labor-intensive task.
These factors greatly contribute to payment delays and a decrease in cash flows for sellers, especially for small business owners.
On the other hand, e-invoices are done via a digital format. With e-invoices, errors and manual interventions are eliminated. Commonly, there is minimal to zero paperwork involved in most situations.
E-invoices are more efficient than traditional invoicing as payments are received faster compared to the traditional method of invoicing.
Through automated e-invoice generation, there is limited to zero human intervention. Thus, making it practically hard to rig the system for potential frauds.
Benefits of E-Invoicing
1. Cost reduction
Manual invoicing takes a lot of effort and paperwork before everything is validated. With e-invoicing, paperwork is reduced which brings down the cost of papers used in an organization.
In a study made by Aberdeen Strategy & research, it was discovered that invoice automation can reduce the cost of producing and processing manually printed invoices by as much as 49%.
2. Fraud prevention
When organizations use e-invoicing, invoices go directly from the issuing company to the receiving company. As it facilitates system-to-system transmissions, people who want to commit fraud will have a hard time intercepting and tampering with the e-invoices that have been generated automatically.
3. Enhanced security
Organizations can use e-invoicing to enhance security. A great e-invoicing software will have numerous levels of security measures to safeguard records and confidential information from hackers.
4. Timely payments
Using e-invoice software can minimize late payments. It provides added visibility to all transactions including upcoming due dates. Additionally, it makes processing easier by letting the organization approve and pay for products or services faster.
All key invoice data are available on an e-invoicing portal or system database. Thus, individuals across different departments can access the information they need to do their tasks quickly and with ease.
Features of E-Invoicing Software
1. Sending and receiving invoices electronically
Organizations usually take up one way of invoicing automation. It is either automating the sending of the invoice or receiving it. With automation in both processes, organizations can achieve a faster payment period, save costs, and improve scalability.
2. Multi-currency customization
Organizations can choose an e-invoicing software to pick the invoice design from the template library. Also, the software should offer an option that can help organizations to create their own customized e-invoice design.
Nonetheless, the software must handle taxation and compliance with international laws without hassle and delays when dealing with international clients.
3. Integration with other existing procurement systems
Having an e-invoice that can be integrated with existing invoicing systems is important. There are various electronic invoice solutions that offer seamless integration with your existing system.
4. Able to archive invoices
Managing old invoices is difficult. When you are looking for a new e-invoicing application, try to look for software that has the capability to archive old invoices.
An e-invoicing software encrypts the data to add an extra layer of security. Also, it enables you to set a date to automatically delete invoices that you no longer use.
5. Support all types of invoice formats
Usually, invoices must be converted into multiple types of e-invoice formats. Organizations should find e-invoicing software that can work with all formats without storing numerous versions of the same invoice.
6. Multiple options for payment
Many customers nowadays need a software solution that allows all kinds of payment options. Thus, an e-invoicing tool should allow you to accept all forms of payment including credit cards or even a third-party payment tool.
7. Secure and safe
Security and safety are of utmost importance when dealing with payments and invoices from domestic and international clients. It is crucial to purchase e-invoicing software from a seller that understands the value of security and safety.
E-Invoicing Software Tools in 2023
1. SAP Ariba
SAP Ariba is a cloud-based procurement software that helps organizations to improve finance, sales, management, and collaborative spending.
It works on a web browser and offers a user-friendly interface. It is available by subscription or on-demand service. Thus, there is no hassle with installation and software updates.
Zycus is known to guide users toward the correct buying journey using a self-learning engine called MerlinAI. It is a platform that claims to enhance procurement by optimizing efforts, lowering the turnaround time, and improving efficiency.
You can start using this software with a basic free plan and then upgrade according to the features you want to acquire.
Coupa is known for managing any type of goods and services in the supply chain and procurement. It offers a great experience for organizations and suppliers to digitize guided buying, contract management, inventory management, budget approval, and fraud prevention.
+ What is e-invoicing?
It is a form of billing presented to an organization in electronic format through predefined structured data exchange.
+ What is traditional invoicing?
A traditional invoice is a paper-based document to process the costs incurred and their payment.
+ How does it differ from traditional invoicing?
The main difference is that traditional invoicing is a paper-based document process while e-invoicing is done electronically.
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