What is electronic invoicing? - Definition, benefits and best invoicing systems
An electronic invoice, or e-invoice, functions similarly to a traditional invoice. It holds the same power and is as legally valid as its traditional and often paper-based counterpart.
The e-invoice process happens digitally. When you use electronic invoicing for services, your invoices will be created, sent, and stored electronically.
What differentiates e-invoices from digital invoices in PDF formats is that e-invoices have structured data that can be automatically recognized by systems using Optical Character Recognition (OCR) technology without any manual data entry.
Their digital data format enables electronic recognition. Just as you would with traditional paper invoices, e-invoices should be kept for a certain period.
Importance of electronic invoicing for your business
Better visibility and transparency
The fact is paper invoices get lost. Even with the most meticulous filing system, it’s still difficult to keep track of all your invoice documents. Having an electronic invoicing system in place could be the solution to this problem.
Instead of searching through file cabinets and chasing employees in possession of your paper invoices, you can access your documents from anywhere at any time.
With e-invoicing for services, it’s easier to track and manage all your invoices. Audit trails are also easily accessible with just a few clicks.
A mobile app and a web dashboard are all you need to view everything in your electronic invoicing process from end to end. It provides improved visibility to your invoices, purchase orders, and other documents.
Strengthened invoice management will lead to better transparency within your organization.
Increased accuracy
Improving the visibility of your invoices will naturally increase accuracy. With the ability to track every activity related to invoices, you can view where your invoices are and identify any issues along the way.
Reduce errors like duplicate invoices and eliminate overpayments. Automated e-invoicing for services will help you spot inaccurate data and curb accuracy issues before they turn into huge problems.
Higher compliance
E-invoicing for services is convenient and fast. But another benefit that may not be immediately obvious is that achieving compliance with local regulations is made easier with e-invoices.
Not only are e-invoices easier to check, track, and manage, but some countries also have a regulated set of specifications for e-procurement that allows electronic invoicing higher levels of compliance.
Reduced risk
It’s no secret that every business wants as much security and as few risks as possible. However, getting to the desired security level can be a challenge for most businesses, especially when human errors aren’t the only risks out there.
You have to account for the possibility of invoice fraud. While traditional invoices can make these difficult to detect, you don’t have to spend as much time trying to cross-verify your data when you have an automated system in place.
Opting to switch to e-invoicing for services saves you time without costing you more errors. If anything, you’ll have fewer errors in no time at all.
Insights into spend and savings
Tracking your business funds is easier to do with e-invoices. Whenever you need invoicing-related data, you can simply pull up your software and view trends to gather insights.
Easily determine opportunities and threats based on your invoice trends and make better decisions using the information you have on hand. This greatly contributes to optimizing the invoice-to-pay process of a business, allowing it to make the most informed choices.
For example, you can pull up your e-invoice payment data and decide if early payments are feasible for you to get discounts from your vendors.
Green initiative
You won’t need paper to create traditional invoices anymore when you make the switch to an electronic invoicing process. It’s not only environmentally friendly, but it also saves you money when you don’t have to worry about purchasing paper.
You’ll have a streamlined process with less waste. Benefit from the convenience of going paperless with e-invoices.
How to start electronic invoicing for your business
Before you can start the electronic invoicing process, you must look into your business and assess your needs first.
Larger businesses with a large volume of business transactions will want a fully integrated electronic invoicing with the capability of keeping up with the organization.
Smaller businesses or freelancers, however, might opt for cheaper invoicing software with sufficient features.
Some features that you want to consider when picking a solution for e-invoicing for services include invoice customization, international billings, payment methods, and ease of use.
Having access to a mobile app for e-invoicing could also be useful. Ideally, you want invoicing software that helps you generate reports and make analyses simpler.
After you have an electronic invoicing solution that you can use, all you need to do to get started is input invoice data into your system. This set of data will be the same as the data that you would have in traditional invoices.
Leveraging e-invoicing for cross-border transactions
Using e-invoicing for services will make cross-border business transactions easier. For one, you can navigate around any language barriers and guarantee that invoices are understandable by all parties.
Since the template for e-invoices is universal, most vendors and customers internationally will be familiar with it.
Not only that, but with an automatically recognizable data format, all you’ll need is an e-invoicing solution that will extract the invoice data before making payments.
The elimination of traditional paper invoices also means that you can bypass any delays caused by sending invoices through the international mail system. You save money and time by processing your invoices electronically.
However, be mindful that not all systems have good solutions for e-invoicing for services internationally. You’ll want to find invoicing software that supports international payments and make cross-border transactions easier, faster, and cheaper.
Which invoice systems are good for business?
1. Tally
Amongst the many tools that you can use on Tally, invoicing is one of them. Create your e-invoices in no time at all, complete with customizable billing formats and multi-currency support.
Your accounts receivable and payable data are also automatically managed when you save your invoices with TallyPrime.
2. Zoho
The Zoho suite has an extensive set of tools that will help you in many aspects of your business. Zoho Books, for example, simplifies your accounting.
Popular amongst small and large businesses alike, Zoho Invoice will help you create and send invoices through a cloud-based platform. You can also accept and manage online payments through the software.
3. Quickbooks
Manage your money online and save time on the invoicing process with Quickbooks. With automatically scheduling recurring invoices, you’ll be able to cut back more hours otherwise spent sending invoices.
Quickbooks also enables multi-currency support, meaning that you can start e-invoicing for services in different currencies.
4. FreshBooks
Geared toward small businesses, FreshBooks allows you to accept any electronic invoice payment online through the platform.
You can customize e-invoices to include upfront deposits and time tracking. After you send your e-invoices, FreshBooks can send customers reminders so you can take a more hands-off approach.
5. KashFlow
KashFlow accounting software enables you to customize and edit e-invoices before sending them to customers.
With tracking capabilities and automatic reminders, e-invoicing for services becomes really easy on KashFlow. Chasing late payments doesn’t have to be a hassle with automated notifications for unpaid invoices.
6. Tradify
Tradify is a platform that aims to help those in the trade business. E-invoicing for services with Tradify can be done on the go, with tracking made possible from anywhere.
Tradespeople have the ability to create progress invoices for big projects, where customers can pay an upfront deposit and follow up with subsequent payments online right to their accounts.
Seamlessly handle your invoices with Volopay
Sending e-invoices to your customers and receiving e-invoices from your vendors and suppliers are two ways that you can streamline your financial processes.
When you have integrated an e-invoicing system into your day-to-day operations, you’ll be able to cut down plenty of time that would otherwise be wasted on manual work that could be automated.
Managing both your receivables and payables becomes easier, and what’s even better is that this is doubly true with cross-border business transactions.
Settling your invoices and paying them on time is equally as important as streamlining your invoice creation process by utilizing e-invoices and automated invoice management software.
Don’t waste time on invoice payment delays with Volopay. Use our Bill Pay module to stay on top of all your invoices. Track, manage, and pay through an all-in-one platform.
You’ll never have to worry about late fees from vendors when creating payments only take a few simple clicks.
Related read: Complete guide to vendor payment automation for businesses
FAQs
Yes. Considering that e-invoices involve an automated system, performing two or three-way matches and scrutinizing your invoices in greater detail is easier. Your system will be able to flag duplicate invoices or invoices with questionable and conflicting data. It makes it easier for your staff to pinpoint which invoices need further fraud investigation.
E-invoicing for services has similar processes to regular invoicing. With the help of automation, the e-invoicing process will actually be faster than creating a traditional invoice. You can save several hours a week by e-invoicing.
Yes. Most accounting software will enable you to start e-invoicing for services. If you already use one, you’d want to look into your existing accounting software and see what invoice management features it offers. Otherwise, you want to assess your business needs to find the right e-invoicing solution for your business.
It is not required that e-invoices have signatures, but some vendors may insist that your e-invoices be signed before they process the payment. If you want to use your e-invoices as legal documents, signatures will also be required for that purpose.