The 2019 pandemic catalyzed a shift towards efficient back-office functions, prompting organisations of all sizes to accelerate their digital transformation. One notable advancement has been the widespread adoption of electronic invoicing, also known as e-invoicing, particularly in Accounts Payable (AP) departments.
Now, as business operations continue to evolve, electronic invoicing remains a transformative force, presenting numerous advantages for business across the world.
What is an e-invoice?
Traditional invoice processing involved labour-intensive tasks like manual data entry and extensive paperwork. Electronic invoicing (e-invoicing) transformed the process by enabling electronic interchange, eliminating the need for physical documents and mitigating the challenges resulting from remote work environments.
An e-invoice is:
An e-invoice, or electronic invoice, is a digital version of a traditional paper invoice. It is generated, sent, received, and processed all electronically, typically in a standardised format. This facilitates automated payment processing, tracking, and record-keeping for businesses.
An e-invoice is not:
One type of "not an e-invoice" is a paper invoice. This is a physical, printed document that details a transaction between a buyer and seller. It requires manual handling for payment processing and record keeping.
Another type is the PDF invoice, a digital invoice document saved in the Portable Document Format (PDF). While it is an electronic version of the traditional paper invoice, it often requires manual data entry and lacks the automation capability of an e-invoice. They are typically sent by email or can be downloaded.
What are the benefits of electronic invoicing
Companies that innovate throughout the invoice workflow process quickly unlock all that digital transformation has to offer. This is the “holy grail” of electronic invoicing: straight-through processing from purchase to payment with no human intervention required.
A cloud-based automation platform such as Yooz enables the electronic invoice to flow freely through the entire AP process as they are absorbed, coded, routed, approved, and paid in record time. Besides the improvements in processing, automation results in better customer services as well.
5 wins for business
Here are five key ways that e-invoicing benefits every business:
- Cost savings
E-invoicing significantly reduces the costs associated with paper-based invoicing, including printing, postage, paper, and manual processing. It also cuts down on human errors - see below - which can lead to costly discrepancies and disputes. - Improve efficiency
Invoices can be generated, sent, received, and processed electronically in real time. This streamlining of the entire invoicing process - from creation to payment - accelerates the payment cycle and improves forecasting and cash flow. - Increased accuracy and reduced errors
E-invoicing systems include automated data capture and validation checks, reducing the likelihood of errors. This leads to smoother transactions, fewer disputes, and more efficient use of resources. - Better cash flow management
Faster processing and approval of invoices means that suppliers receive payments faster. For businesses, this translates to improved cash flow management. This also potentially enables them to take advantage of early payment discounts or optimise cash reserves. - Increased visibility and transparency
E-invoicing platforms offer real-time tracking and reporting features. This allows both buyers and suppliers to monitor the status of invoices, providing transparency throughout the entire payment process.
These key benefits are just some of the many that make e-invoicing a crucial tool for businesses looking to streamline their operations, reduce costs, and improve financial management.
5 wins for suppliers
E-invoicing also benefits suppliers in a similar way by improving efficiency, reducing costs, ensuring compliance, and enhancing relationships. Here are 5 key ways that e-invoicing benefits suppliers:
- Accelerated payment processing
E-invoicing significantly speeds up the payment process. Invoices are delivered electronically, eliminating the need for manual intervention including data entry and postal delays. This means that suppliers receive their payment faster, improving their cash flow. - Reduced errors and disputes
E-invoicing systems often have validation checks in place which reduces the chance of errors in invoices. Fewer mistakes means smoother transactions and fewer payment disputes, strengthening the supplier's relationship with the buyer. - Cost savings
No more costly paper, printing, and postage! E-invoicing also reduces administrative tasks associated with manual processing, helping suppliers to save time and resources. - Enhanced transparency and tracking
Real-time tracking and reporting features allow suppliers to monitor the status of their invoices. This lets them know exactly when they've been received, approved, and paid. This transparency provides greater confidence in the payment process. - Access to new business opportunities
Many large organisations and government agencies worldwide require suppliers to use e-invoicing. Complying with this requirement means suppliers have access to a broader market and can complete for contracts that they would not be eligible for otherwise.
All together these benefits collectively contribute to a more efficient and profitable relationship between suppliers and businesses.
Don't forget the government
Similar to businesses and suppliers, e-invoicing offers many benefits for the government. These include:
- Increased tax compliance and revenue collection
E-invoicing provides a digital trail, listing all transactions and making it harder for businesses to evade taxes or even just make common mistakes. This transparency leads to higher tax revenues for the government. - Reduced tax evasion and fraud
Digital invoices are harder to manipulate or forge compared to paper invoices, helping to curb tax evasion and fraudulent activities while increasing government revenue. - Cost savings
Similar to businesses and suppliers, governments also save significant amounts of money by reducing the costs associated with handling and processing paper-based invoices. - Efficient auditing and reporting
The built-in reporting and analytics features of e-invoicing systems enable governments to analyse data more efficiently, identify potential areas of tax evasion, and conduct audits more efficiently. - Streamlined business process and economic growth
E-invoicing encourages businesses to adopt more streamlined and efficient financial practices. This can lead to a healthier and more competitive business environment, ultimately benefitting the company as a whole.
Do I have to use an electronic invoice?
While the use of an electronic format for invoices is not mandatory for all businesses in the UK, the UK government has been actively promoting the adoption of e-invoicing. This is part of its efforts to improve efficiency, reduce costs, and enhance tax compliance.
However, HMRC's Making Tax Digital (MTD) initiative require certain businesses to report electronically and legislation exists that grants Ministers the right to regulate electronic invoicing across the public sector.
Why automate? Seven key technologies
Simply in terms of speed and resulting productivity, the benefits of electronic invoicing processes are obvious. In fact, end-to-end AP automation has many tangible benefits that have a direct impact on the bottom line. These include the following seven key technologies:
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Document imaging and scanning
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Automated routing and approval workflow
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Electronic invoicing
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Automated data capture and extraction
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Electronic B2B payments
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Complete procure-to-pay solution
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Self-service supplier portal
Companies that can master these technologies to handle invoices will reap the biggest efficiency and productivity gains, saving space, time, and money.
Hello invoice data, goodbye paper invoices!
The benefits of electronic invoicing extend beyond tracking and payments. By transitioning to e-invoicing, companies are not only reducing environment impact but also unlocking a wealth of data benefits. This shift to e invoices is significant, transforming in the Accounts Payable (AP) function into a centralised data intelligence hub.
Through automation and data analytics, businesses gain real-time insights that enhance decision-making capabilities.
Embracing the gig economy
There’s another urgent reason why it makes sense to embrace automation to read and route invoices in record time so they can be approved, paid, and analysed for maximum productivity. It’s a massive disruptor called the gig economy, a free-market system based on temporary positions and independent, short-term workers.
Why is this increasingly important? Almost half the workforce of all companies Ardent Partners surveyed in a research study were classified as “contingent” or “non-employee” and working on-demand.
This rise of the gig economy emphasizes the need for efficient invoice processing in order to manage contingent and short-term workers effectively. Electronic invoicing, facilitated by modern cloud-based automation platforms like Yooz, plays a pivotal role in streamlining and tracking payments to gig workers. This ensures a seamless talent experience.
How do I start?
In conclusion, embracing electronic invoicing is a strategic move towards efficiency and modernisation in your business operations; one that offers numerous benefits in all areas. By taking that initial step today, you can quickly start experiencing everything from streamlined processing to enhanced financial insight.
Don't wait any longer, join the thousands of Yoozers across the world and dive into the word of electronic invoicing today.
