Electronic invoicing (or e-Invoicing) is the automated digital exchange of invoice information between suppliers' and buyers' software through a secure network. An electronic invoice is a PDF or similar document that contains information about the products and services you have sold. It has all your company's contact details, including name, address, phone number and email address. Often these documents are generated automatically by accounting software on receipt of payment from your customer.
Australia has adopted the Peppol framework as the common standard for e-Invoicing.
Peppol e-Invoicing is a new channel that is a more efficient, accurate and secure way to transact with your suppliers and buyers than PDF and email.
What is not considered an e-invoice?
An electronic invoice does not include any signature or handwritten annotations that are required for certain tax purposes. For this reason, it may be necessary to issue paper invoices in some circumstances if required by law.
Comparison of invoice types:
Here’s a quick overview of the main differences between print, PDF (including other image files) and electronic invoices.
Paper invoices are most often created digitally then printed and sent by post to the counterpart. It takes time for the invoice to reach the recipient, and there is no traceability of the delivery.
No system/process changes
Slow payment cycle
Low track and traceability
Low data quality and visibility
Not accepted by many organizations
Not environmentally friendly
Invoices exchanged over email as PDF, Word or other image files are a first step away from a paper-based invoice flow. However, these are not e-invoices because data must be manually keyed in or captured using OCR.
First step towards digitalisation
Emails can get lost or sent to spam
Manual or scan and capture entry
Low data quality and visibility
Often printed for processing and filing
An e-invoice is issued, transmitted, received and processed electronically. E-invoicing is an integrated solution that enables a fully automated flow from one company’s ERP system to another.
Real-time delivery and processing
High data quality
Track and traceability
Better cash flow and lower DSO
What are the advantages of e-invoicing?
It is an easy way to save time and money. By saving paper, postage costs etc., you can reduce your company's carbon footprint as well as its general cost levels. You will also be able to view invoices in real time and process them immediately.
Touchless operations: E-invoicing enables the automation of time-consuming and error-prone tasks like data entry, matching and approvals so you can reallocate staff to higher-value initiatives.
No Errors - that there is no need to print or handle an invoice after it has been sent. This also eliminates the possibility of data entry errors.
Track and traceability - E-invoices offer a high degree of track and traceability You can follow the progress of each invoice through every stage of the process, from creation to payment.
Real-time delivery and processing: The efficiency and speed of e-invoicing can help save time in the customer payment process.
Improved cash flow: Reducing your company's reliance on paper invoices, it will reduce costs associated with sending an invoice (postage etc.) as well as clearing them after they have been received. This is because you will be able to process them immediately, rather than having to wait for payment before you can do so.
Paperless Invoicing – No printing costs, no shipping costs and filing time is eliminated because e-invoices are digitally stored on your system or the vendor’s system.
Legal Compliances: e-invoicing fulfils legal requirements like the AU regulation on invoices and payment terms, it helps to reduce fraud risk
Remote work-ready - With an e-invoice, employees don't need to be in the office to access and process invoices.
Ready to start e-invoicing?
If you are ready to move to e-invoicing, ask yourself these questions:
What are the advantages of e-invoicing for my company? Is now the right time to start e-invoicing? Who should be involved in this decision process and how can I convince them that we need to change our current way of doing things? How will it impact on other business processes, like cash flow management or supplier?
Once you have answered this then simply get an accounting software like Xero and start e-invoicing...
If you need some help in putting together a strategy for e-invoicing speak with one our experts at iKeep.