Electronic invoicing, or e-invoicing, like the name implies, is the electronic exchange of invoice documents between a supplier and the customer. Electronic invoicing goes beyond merely sending a PDF receipt to a customer via email. A true e-invoicing solution is an integrated solution where an electronic invoice is transmitted and received seamlessly between the supplier’s accounts receivable system and the customer’s accounts payable system. E-invoicing documents are typically exchanged in EDI or XML formats. (Source: E-Invoicing Basics)
Why switch from a manual, paper-based system to an electronic invoicing system? Paper-based system is notoriously time-consuming and prone to errors. As such, paper invoicing tends to have higher costs and longer processing lifecycles.
Despite the widespread adoption of automation for many business processes, accounts payable and accounts receivable processes remain largely manual (Source: Dolphin Corp).
Benefits of E-Invoicing for Suppliers
Switching to e-invoicing solves these problems, resulting in faster processing, lower transaction costs, greater visibility, and significant savings. From a business perspective, e-invoicing delivers many benefits throughout the AR / AP process.
For starters, there’s no mail to sort, distribute, or open. Not only that, e-invoicing eliminates costs associated with paper bills, envelopes, and postage. Plus, it takes much less time to process generate bill payment. With the new system, you can create and distribute an entire batch of invoices with just a few clicks. (Source: Pay Simple)
Next, there’s no data entry required. Since the payment arrives in the buyer’s accounts payable system automatically, the accounts payable clerk does not need to enter the data by hand. E-invoicing eliminates the potential for mistakes and ensures accuracy. Likewise, there’s no need to scan paper bills, another manual process that takes time and can be prone to errors such as illegible scans.
Meanwhile, all invoices are delivered instantly and securely. By eliminating mail from the equation, you are also eliminating several days from receipt to payment. Similarly, electronic payments speed up the process and mean you don’t have to wait in line at the bank to deposit your money.
Electronic invoices are easy to store and reference, with no physical file cabinets required. As you follow up with customers, you can easily include a link or attachment to the original payment receipt, purchase order, or related documentation.
Benefits of E-Invoicing for Buyers
E-invoices offer benefits for your customers as well. For example, you can offer a variety of payment options such as debit, credit, and ACH. Paperless system also opens the door to automated reminders complete with integrated “pay now” buttons that link to the bill. Your customers’ accounts payable team will appreciate not having to manually enter data or scan paper bills, too.
Switching to e-invoicing saves time and money, a win-win for both sides.
1. Pay Simple, “Advantages of Electronic Invoicing and Billing,” – http://paysimple.com/blog/2011/07/13/advantages-of-electronic-invoicing-and-billing/
2. Dolphin Corp, “E-Invoicing for Accounts Payable,” – http://www.dolphin-corp.com/business-process-management/e-invoicing-for-accounts-payable/
3. E-Invoicing Basics, “What is E-Invoicing,” – http://www.einvoicingbasics.co.uk/what-is-e-invoicing/