If you’re doing business in 2020, you should start transitioning towards a more digitized approach. That includes your invoicing. It’s time you learn about e-invoicing and all the benefits that it provides.
What is E-Invoicing?
Electronic invoicing or e-invoicing is transferring, receiving, and processing digital transactional documents between consumer and supplier, and seller. Genuine invoicing methods should be done electronically to data from the supplier is integrated into the consumer’s system.
A scanned invoice in either Adobe .PDF format sent via email is not considered a true e-invoice. The reason is that it will need additional data re-entries, which is both errors prone and time-consuming. An invoice created from an invoicing system like ReliaBills is considered a true e-invoice as you’re creating and sending your invoice, as well as receiving payment within the digital space.
Benefits of E-Invoicing
E-invoicing is popular because it benefits both the consumer and the supplier. At a glance, these are the areas that e-invoicing helps or improves:
- Reduce costs
- Automate the entire invoicing process
- Shorten payment cycles
- Reduce carbon footprint
- Enhance payment compliance
- Improve account reconciliation
- Prevent invoice errors, losses, and frauds.
- Improve customer/seller relationship
E-invoicing contributes to numerous areas that benefit both parties. Let’s take a look at the benefit that it offers for both the consumer and the supplier.
Advantages of E-Invoicing for Suppliers
1. Faster Payment & Better Cash Flow
When paper or .PDF invoices are received from the supplier, the consumer has to do multiple things before payment is made. Specifically, they’ll need to sort, re-key, and route the invoice before submitting it for approval. The entire process takes a lot of time. There’s also the possibility of the invoice being lost.
Fortunately, e-invoices are there to save the day. Instead of going through a long and winding process, e-invoices can be accessible to the consumer’s system. It can then be routed and approved at a much faster rate. The results are payment made on time or even earlier, which helps improve overall cash flow.
2. Improve Account Reconciliation
Invoice reconciliation is issued to customers against the payments received. It’s one of the obstacles that every supplier faces when sending out invoices. Customers can combine multiple invoices and turn it into a single lump-sum payment. Apart from that, the payment amount can differ from the original invoices due to various reasons. A good example would be customers claiming deductions due to damaged goods.
Consequently, a supplier may issue up to five invoices of $2,000 each and receive a single payment of only $9,000. Apart from that, they will have to contact the customer for their account payable and verify details about the entire payment.
With electronic invoicing, customers can send all the details of the invoice along with the payment. That way, it will simplify account reconciliation and avoid confusion.
3. Reduce Costs
A clear benefit of e-invoicing is the significant reduction of the total costs associated with invoicing. Before, creating and sending invoices is quite lengthy and can cost a hefty amount of money. You’ll have to account for the printing, storage, processing, and delivery of invoices. All of this stage will cost money.
Suppliers who transition to e-invoicing have experienced a drastic decrease in the total cost to create and send an invoice. In addition, the increased accuracy brought by e-invoicing will also result in fewer customer service calls.
4. Fewer Misunderstandings and Rejected Invoices
Manual invoices tend to result in disputes and misunderstandings that can result in the invoice getting rejected. Not only is it time-consuming, but it’s also pretty costly. On top of that, these nuisances can also lead to delayed payments.
With e-invoicing, the suppliers’ accounts receivable system is transmitted directly to the customer’s accounts payable system. This fast and consistent process reduces the risk of errors caused by data re-entry. As a result, the chances of rejected invoices will also decrease.
5. Improved Customer Satisfaction
Customer satisfaction is what will boost your business and let it reach new heights. With e-invoicing, you will certainly impress your customers with how fast and easy your invoicing and payment methods are. Thanks to faster processing and lesser payment issues, suppliers can provide a much higher customer care and service level. When you make your customers happy, you will have a higher rate of customer satisfaction and retention.
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Advantages of E-Invoicing for Consumers
1. Increased Automation and Overall Productivity
With e-invoicing, consumers won’t have to go through the gruelling process of paper or .PDF invoices. Instead of going through a long and winding payment process, data is sent directly from the seller to the consumer’s accounts payable. This process eliminates the need for manual data entry. It will also decrease workload, and the accounting staff can dedicate more of their time performing high-value activities.
Through e-invoicing, the accounts payable system will be able to automate the validations before routing them to business managers for approval. Through these validations, you can ensure that all the calculations (e.g., VAT, GST, etc.) are correct and accurate. In addition, e-invoicing also helps identify the goods purchased by a particular department.
2. Reduced Costs
Through e-invoicing, manual data re-entry is eliminated completely. It can also deliver tremendous savings of 60 to 80 %. Consumers can use the money they save on other areas.
3. Early Payment Discounts
Consumers can also take advantage of discounts when they pay early. In most cases, suppliers are willing to offer a discount in exchange for early payment. Through e-invoicing, payment processing will be faster, which will also result in shorter payment cycles. Consumers can then use the e-invoice to get access to the available discounts.
4. Improve Relationship with Supplier
Like how suppliers want to improve customer relationships, consumers also need to improve the relationship between them and a reliable supplier. A fast and efficient payment method will help boost the relationship with the supplier. In turn, it will translate to a more streamlined supply chain and improved satisfaction on the customer’s end.
5. Reduced Carbon Footprint
The reduction in carbon footprint brought by e-invoicing is a benefit for both the consumer and supplier. E-invoicing eliminates the need for any paperwork. In addition, no time or energy will be wasted in producing and transporting digitized documents.
How to Create an Invoice
If you want to transition towards e-invoicing now, you’ll need to use an online invoicing system. There’s no better option. If you want to take the burden of invoicing out of your hands, then an invoicing software is the key. Take ReliaBills as a great example. It’s free invoicing software that provides you with everything you need to get started.
ReliaBills offers full invoice customizations, with a multitude of templates available. It will also help you automate your entire invoicing process. Just schedule your invoices, set it to who you want to send it to, and you’re all set. You will receive notifications via email once your invoice has been received and payment has been made.
E-invoicing brings a lot of advantages to the table. It’s convenient and very beneficial to both the consumer and the supplier. So, if you’re running a business that still uses manual invoicing, it’s about time you transition to the bright, digital side. Try e-invoicing today. We guarantee that you’ll never go back to traditional invoicing again. You can get started by creating a ReliaBills account and start your transition to e-invoicing today.