<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=565596&amp;fmt=gif">
  • Blog >
  • What is the meaning of e-Invoicing?

4 mins read

What is the meaning of e-Invoicing?

by Yooz on 03.18.2021

What is e-invoicing-1

An e-Invoice is an electronic invoice that is sent, received, processed and stored digitally — but not all invoices sent and received electronically are e-Invoices.


Real e-Invoices use “structured invoice data” and are issued using Electronic Data Interchange (EDI) or XML formats. So PDF invoices don’t count as they are unstructured.


Because these formats use structured data — such as markers and tags to separate elements — invoice processing tools can automatically validate and prepare them for posting and payment.

Compared to traditional invoicing (which is heavily paper-based, manually intensive and susceptible to human error), e-invoicing is much more reliable, scalable and sustainable. It reduces data entry errors, shortens processing times and results in far less paper — it can also be combined with automation to further improve invoice processing efficiency.


Also, because the information can be viewed across systems, wherever, whenever, it’s easier for your accounts payable team to collaborate on invoices, manage cash flow, escalate payments (or non-payments), optimise their working day, eliminate errors and tackle fraud.


How does e-Invoicing work?


Let’s say you want to send an invoice from your ERP system to the customer.


Upon receipt, the customer’s e-Invoicing system will automatically analyse and convert the e-Invoice into their preferred file type and then transfer it to both your system and the customer’s system. This also works in the opposite direction.


By having a system convert the e-Invoice, both you and your customer can adhere to your respective standards for compliance and auditing. No need to change a thing.


As e-Invoices are EDI, they can be transmitted using any method agreed to by the sender and the recipient. There are, however, standardised protocols — these include:


  • FTP, SFTP and FTPS
  • Email
  • HTTP
  • AS1, AS2 and AS4
  • OFTP
  • Mobile EDI
  • And others.


For complete control, some businesses will set up separate EDI guidelines to govern how e-Invoices are sent and/or received across the enterprise.


Why is e-Invoicing important?


Though EDI has been around since the 1970s, it’s one of the fastest-growing methods of invoicing and has quickly become the norm in many European countries.


The reason for this is threefold:


  • It removes the complexity associated with traditional invoice processing, distilling it down to just sending, converting and receiving invoices in the desired format.
  • As more and more businesses digitise their processes and regulatory bodies introduce new compliance requirements, having a system in place to capture digital records of transactions and deliver and receive them in an appropriate fashion is crucial.
  • The audit trail has become a non-negotiable, mandatory building block of any electronic process. There needs to be clear, end-to-end visibility of invoicing so that processes can be reviewed and enhanced.


What about the legal requirements?


e-Invoicing helps to satisfy the increasingly complex requirements of financial bodies.


Let’s take Making Tax Digital (MTD), for example; it requires businesses to keep digital records and keep archives for six years. As such, paper-based records and traditional processes are gradually being phased out — but rather than a compliance burden, it’s an opportunity for businesses to optimise processes.


And it’s not just MTD — across the globe, governments are implementing measures to ensure invoicing is done and recorded digitally.


That said, businesses that can demonstrate their compliance will not only stand out from the competition, they’ll also win more business as a result.


Above all, e-Invoicing provides much-needed convenience when it comes to the day-to-day management of and relationships with suppliers. Exchanges are more fluid, information is accessible directly, deadlines are shortened and verification is easier.


As long as you have a tool capable of facilitating the above.



How can AP Automation help you?


Cloud-based invoice automation softwares can capture all your invoices in one place — whether they are scanned or emailed in, imported, delivered through EDI.


On receipt, the AI and machine learning technologies embedded in these platforms will automatically analyse the invoices and extract the most pertinent information and numbers, so you don’t have to. These documents will be stored securely in the Cloud, so you always have an audit trail.


From there, intelligent workflows will automate the approvals and payment process. This includes GL coding and PO matching. There’s no need to touch a thing.


And because these solutions integrate seamlessly with more than 250 ERPs worldwide, your suppliers and customers have a completely transparent view of activity. No bottlenecks.


Want to learn more about these platforms, including how they can help you with compliance and increase your e-Invoicing efficiency?


From physical to digital invoicing: register to the webinar replay