Better, faster, safer. In today’s increasingly digital world, companies are looking to technology as a way of improving their cost savings and efficiency. For a growing number this means a transformation of their financial processes, turning the Accounts Payable (AP) and invoice workflow from a series of tedious, paper-intensive, and manual tasks into an electronic, streamlined, automated operation. This is accomplished through e-invoicing (also known as electronic invoicing or einvoicing): the electronic version of a physical, paper-based invoice management process.
It is estimated that “in the UK alone, around £13bn is owed to small businesses in overdue refunds and up to 50,000 businesses are at risk of insolvency every year because they lack the reserves of larger organisations to cover such delays”.
In 2014 the European Union (EU) commissioned the development of standardized electronic invoicing throughout Europe. As a result, countries throughout the European continent – in fact, the world – have been introducing mandatory e-invoicing and e-reporting requirements. The United Kingdom is no exception.
The UK government’s “Public Procurement (Electronic Invoices etc.) Regulations 2019” make e-invoicing mandatory in the public sector. This means that any public sector company must receive and process invoices electronically, but it also means that you can now invoice the government in real-time.
This new legislation offers benefits on all sides. For suppliers, there are the obvious benefits of cost reduction, increased productivity, and reduced errors or omissions. Since digital invoice data stored in the cloud is easily accessible, suppliers can also access and keep track of orders with one click of a button. This helps improve service and strengthen communication between buyers and suppliers. In addition, faster processing times means quick payments which in turn means a better cash flow and control over finances. For the government, the mandatory e-invoicing directive offers an opportunity to regulate the use of different electronic formats and therefore, through standardization, develop more straightforward and cost-effective cross-border trade.
All sides – supplier, buyer, government, and customer – benefit from the additional security found in digital processes. No more papers lying around, no more documents needing transport back and forth, and no more searching through files. Instead, an e-invoicing solutions creates long-term digital records that can be accessed within minutes. There is less opportunity for error, fraudulent activity or manipulation, and even loss. Best of all the structured data supports accurate tax and audit reporting. No more difficulty submitting accurate VAT tax returns, now companies can quickly submit them digitally via Electronic Data Interchange (EDI) directly to Her Majesty’s Revenue and Customs (HMRC).
Did you know ?
In July 2019, Prompt Payment Code signatory British American Tobacco was one of 18 businesses removed from the list after failing to pay vendors on time. The Chartered Institute of Credit Management (CICM), which administers the Code on behalf of the UK government’s Department for Business, Energy & Industrial Strategy, also suspended BT Plc, Centrica, Screwfix, Prudential and various businesses of BAE Systems, among others, for failing to honour their commitment to the Code.
Traditional invoicing using manual, paper-based processes takes time, involves a varied (high) number of costs, and is resources intensive; all this while also being prone to human error and an increased risk of fraud.
A modern process – electronic invoicing or e-invoicing – is much more reliable, cost-effective, and scalable. Not only will digitization reduce data entry errors, shorten processing times, and use up far less paper, but it can also be combined with further automation to further improve efficiency. Best of all, e-invoicing software helps prevent errors and fraudulent activity while strengthening compliance with federal laws and global country-specific e-invoicing regulations, standards, and requirements.
These are just some of the reasons why governments are starting to mandate e-invoicing. To help accounting teams, we’ve looked at what exactly is an e-invoice, the benefits, and why businesses should look to adopt e-invoicing software to transform their accounts payable process.
Digital transformation is a long-time relevant topic. However, with the increase in remote working and greater demand for temporary short-term workers, companies of all sizes in every industry are rapidly becoming more aware of the importance – and necessity – of an efficient back-office function.
Electronic invoicing (e-invoicing) is a key component of AP departments becoming an efficient and strategic operational engine. The benefits of electronic invoicing – for everyone - go far beyond speed, productivity, cost savings, and even deep financial intelligence that can be leveraged across the entire organization