How e-invoicing can help your business

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Electronic invoicing (E-invoicing or online invoicing)is a system in which B2B invoices are authenticated electronically by GSTN (Goods and Services Tax Network) for further use on the common GST portal between suppliers and buyers. A true method of e-invoicing should be entirely electronic in such a way that supplier data can be directly integrated into the buyer’s system, GST portal and e-way bill portal in real time.

A digital invoice is usually confused with an electronic invoice or an e-invoice. Both can be processed electronically from creation to payment, but there is a considerable difference between these two. An e-invoice is basically created in the invoicing system of the seller, online bank or in a web-based form. The e-invoice file can be downloaded from here or sent directly to the buyer’s software.

“The digital transformation will have an impact on businesses that do not choose to adopt the up and coming technology. In fact, these businesses may suffer the consequences and be left behind.” Daniel Newman, Forbes

Unnecessary steps like manual data entry, accuracy checking, and software swapping are eliminated with the help of e-invoicing. Therefore, the invoice must be in a format that can be processed by the buyer’s system. The files on the e-invoice come as structured data and some of the XML and EDI formats are some commonly used.

Benefits of e-invoicing

In case you have not started using e-invoicing, here are some of the reasons to use it:

Benefits of e-invoicing for suppliers:

Quick payment and improved cash flow

On the buyer’s system, e-invoices are immediately accessible and can be routed and approved quickly. Payments are therefore made on time, which would improve cash flow.

Seamless account reconciliation

One of the common challenges faced by every supplier is the reconciliation of invoices issued to customers against mismatch errors and payments received. Customers can merge multiple invoices into one payment. On top of that, for various reasons such payment amounts may differ from the original invoices, such as customers claim deductions due to damaged goods.

Customers can send the details of the invoices paid along with the payments with e-invoicing to simplify the account reconciliation.

Easy tracking of invoices

It is easy to track where the e-invoice is sent in real time first view invoices and paid amount while using it. For sure, you’ll know the invoice is sent and received. You can also see the status of the invoice whether it has been accepted, rejected or pending by the customer.

Fewer disputes and invoice rejections

Invoice disputes and rejections could be costly, time-consuming and may result in late payments. With e-invoicing, data from the supplier’s AR (Accounts Receivables) system is transmitted directly to the client’s AP (Accounts Payable) system, which reduces the risk of data re-entry errors. Consequently, the potential for rejecting invoices is reduced.

Enhanced customer satisfaction

Suppliers can provide a higher level of customer services, thanks to the faster process of e-invoicing with fewer payment issues. The result is a higher retention rate for clients.

Benefits of e-invoicing for buyers

Higher productivity and automation

E-invoicing allows AP (Accounts Payable) departments to automate invoice validations before being routed for approval to the line of business managers. These validations ensure the correctness of all calculations, such as amounts of tax (say, GST). They also help in identifying the goods and departments from where they are buying.

Quick payments and discounts

Suppliers are usually willing to provide discounts on an early payment in exchange for that. E-voicing enables faster processing, and therefore it results in shorter payment cycles. Buyers using e-invoices will thus have more access to discount opportunities.

Better supplier relationship

A quick and efficient method of payment will help in strengthen the supplier relationship. This will translate into a more streamlined supply chain and will improve customer satisfaction.

Increased data security

E-invoices reduce the risk of fraudulent bills from a buyer’s perspective. The authenticity of the e-invoices is validated automatically.

The e-invoicing virtually eliminates paper requirements. Furthermore, no energy is wasted in the production and transportation of all those documents.

If you send a PDF to your customer, they’ll need to open it, review it, import it into their software accounts payable, and make the transaction by copying payment information from your document. Alternatively, you can send an e-invoice and it will appear payable directly in their accounts, where they can easily check, accept, pay and archive the software within.

Benefits of e-invoicing for Tax Authority

Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.
It will reduce the chances of fraud GST invoices and only genuine input tax credit (ITC) can be claimed as all invoices by buyers that are need to be generated through the GSTN portal. Since the input tax credit can be matched with output tax details of supplier, it becomes easier for GSTN to track fraud input tax credit claims by buyers.
There will be less chance for the manipulation of invoices since the invoice gets generated prior to carrying out a transaction and easily traceable by Govt. office.

Each day, electronic invoicing is increasingly being used around the globe. Services and standards are continually evolving and improving. Therefore many of the problems are likely to be solved. The benefits clearly outweigh the disadvantages of using e-invoicing.

Know why e-invoicing is a perfect fit for your business.

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