Electronic invoicing (e-invoicing) is the transmission, reception, and processing of digital transactional documents between suppliers and buyers. A genuine e-invoicing method should be totally electronic in such a way that data from the supplier can be integrated directly into the buyer’s system.
A scanned invoice in Adobe PDF format sent via email, for instance, is not really a true e-invoice since it may need additional data re-entry which is time-consuming and error-prone.
Benefits of e-invoicing at a glance
E-invoicing benefits both suppliers and buyers. It can help:
- Reduce costs
- Facilitate automation
- Shorten payment cycles
- Improve account reconciliation
- Enhance compliance
- Prevent errors, losses and frauds
- Improve supplier/customer relationship
- Reduce the carbon footprint
Benefits of e-invoicing for suppliers
- Faster payment and improved cashflow
Upon getting paper or PDF invoices from the supplier, the buyer must sort, rout, re-key and submit the invoices for approval. This technique takes time. Addititionally there is the opportunity of invoices being lost. Conversely, e-invoices are immediately accessible on the buyer’s system and can be routed and approved considerably faster. Consequently, payments are created on time, which improve cashflow. Go to الفاتورة الإلكترونية for more details.
- Better account reconciliation
The reconciliation of invoices issued to customers resistant to the payments received is one of the challenges that every supplier faces. Customers can incorporate multiple invoices into a unitary payment. On top of that, such payment amount can be different from the initial invoices due to various reasons, such as customers claim deductions due to damaged goods. Consequently, a supplier may issue 5 invoices of $2,000 each and receive a single payment of $9,000, and also have to get hold of the customer’s AP (accounts payable) department to clarify information regarding the payment. With e-invoicing, customers can send the facts of the invoices paid along with the payments to help simplify account reconciliation.
- Reduced costs
For suppliers, the adoption of e-invoicing helps significantly keep your charges down associated with printing, storage, processing, and delivery of paper invoices. E-invoicing’s increased accuracy does mean fewer customer services calls required.
- Fewer disputes and rejected invoices
Invoice disputes and rejections are costly, time-consuming to solve and can result in late payments. With e-invoicing, data from the supplier’s AR (accounts receivable) system is transmitted right to the customer’s AP system, decreasing the chance of errors caused by data re-entry. Therefore, the potential of invoices being rejected is reduced.
- Improved client satisfaction
Because of e-invoicing’s faster processing and fewer payment issues, suppliers provides a higher level of support services. The effect is a higher rate of customer retention.
Great things about e-invoicing for buyers
- Increased productivity and automation
For paper or PDF invoices, the documents must be stored, sorted, and re-entered into the AP (accounts payable) system. These steps, especially data re-entry, are inherently time-consuming and prone to error.
With e-invoicing, data is sent directly from the supplier to the buyer’s AP system, eliminating the necessity for manual data re-entry. As a result of decreased workload, accounting staff can devote more time to perform high-value activities.
E-invoicing enables AP departments to automate the validations of invoices before these are routed to occupation managers for approval. These validations ensure that all the calculations, such as VAT (GST) amounts, are correct. In addition they help identify which goods are being purchased where departments.
In addition they match the invoices with other procurement documents, such as contracts and purchase orders. For example, the costs on the invoice must match those in the contract. The goods’ descriptions must match those on the PO and goods receipt.
Such validations now can be performed automatically with e-invoicing.
Because data entry and validations are automated, you can find less need for the buyer’s staff to call the supplier to verify the reception of invoices or make inquiries about the facts.
The benefits of e-invoicing for buyers are greatly increased if the e-invoicing solution comes with a supplier portal. It enables suppliers to track the status of invoices as well as the approval and payment information. Suppliers have the ability to decide if their invoices have been received, which were approved, and which were submitted for payment. Because of this, the necessity for follow-up calls is markedly reduced.
- Reduced costs
Because of the reduction, or even complete elimination, of manual data re-entry, sorting, validation, and registering of invoices, e-invoicing can deliver substantial cost benefits of 60 to 80 %.
- Take good thing about early payment discounts
Suppliers tend to be willing to offer a discount in trade for an early payment. E-voicing permits faster processing and therefore shorter payment cycles. Because of this, buyers who use e-invoices have significantly more usage of discount opportunities.
- Improved supplier relationship
An easy, efficient payment method will definitely help strengthen the relationship with suppliers. This will translate into a more streamlined supply chain and improved customer satisfaction.
Great things about e-invoicing for both suppliers and buyers
E-invoicing practically eliminates the need for paper. Additionally, no energy is wasted in producing and transporting those documents.