Electronic invoicing, or e-invoicing, as its name implies, is the electronic exchange of billing documents between a supplier and the customer. Electronic invoicing goes beyond simply sending a PDF receipt to a customer via email. A true e-invoicing solution is an integrated solution where an electronic invoice is seamlessly transmitted and received between the vendor’s accounts receivable system and the customer’s accounts payable system. Electronic billing documents are typically exchanged in EDI or XML formats. (Source: Electronic Invoicing Basics)
Why go from a manual paper system to an electronic billing system? The paper-based system is time consuming and error prone. As such, paper billing tends to have higher costs and longer processing life cycles.
Despite the widespread adoption of automation for many business processes, accounts payable and accounts receivable processes remain largely manual (Source: Dolphin Corp).
Benefits of the Electronic Invoice for Suppliers
Switching to electronic invoicing solves these issues, resulting in faster processing, lower transaction costs, increased visibility, and significant savings. From a business perspective, electronic invoicing offers many benefits throughout the AR/AP process.
For starters, there’s no mail to sort, distribute, or open. Not only that, electronic billing eliminates the costs associated with paper bills, envelopes, and postage. In addition, it takes much less time to process generating bill payments. With the new system, you can create and distribute an entire batch of invoices in just a few clicks. (Source: PaySimple)
Then no data entry is required. Since the payment automatically arrives in the buyer’s accounts payable system, the accounts payable clerk does not need to enter the data by hand. Electronic invoicing eliminates the possibility of errors and ensures accuracy. Also, there is no need to scan paper invoices, another manual process that is time consuming and can be prone to errors such as garbled scans.
Meanwhile, all invoices are delivered instantly and securely. By removing mail from the equation, you also remove multiple 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 consult, without the need for physical filing cabinets. 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 electronic invoicing for buyers
Electronic invoices also offer benefits for your customers. For example, you can offer a variety of payment options like debit, credit, and ACH. The paperless system also opens the door to automatic 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 invoices as well.
Switching to electronic invoicing saves time and money, a win-win situation for both parties.
Works Cited:
1. Pay Simple, “Advantages of Electronic Invoicing and Invoicing,” – http://paysimple.com/blog/2011/07/13/advantages-of-electronic-invoicing-and-billing/
2. Dolphin Corp, “Electronic Invoicing for Accounts Payable”, – http://www.dolphin-corp.com/business-process-management/e-invoicing-for-accounts-payable/
3. Electronic billing basics, “What is electronic billing?” – http://www.einvoicingbasics.co.uk/what-is-e-invoicing/