What is Electronic Invoicing (E-Invoicing)?

Introduction

Every day, businesses around the world, generate and share millions of invoices for the buying and selling of goods or services. Invoicing is the cornerstone of how businesses across the globe operate. Yet, this key process has traditionally been carried out manually through time and labor-intensive processes which can be heavily error-prone. With the advent of electronic invoicing (e-invoicing), this critical task can now be streamlined and automated by businesses. Businesses can now automatically generate invoices and send them to their customers for processing, and customers can automatically read these invoices and process the payment without any delays. E-invoicing leads to a reduction in errors and increased efficiency in the invoicing process and accounts payable (AP) function.

What is e-invoicing?

Electronic invoicing or E-invoicing is the generation of traditional invoices in a digital form. E-invoices contain all the relevant information that is captured in traditional manual invoices (supplier company, invoice number, order number, tax ID, billing details, payment terms, etc.) but in an electronic format. E-invoicing also helps standardize the invoice format, thus making it easier to process invoices and have faster payment cycles.

Businesses supplying the products or services can automate the generation of e-invoices which can then be forwarded to their customers without requiring a manual intervention. Businesses receiving the e-invoice can automate the e-invoicing process of invoice matching and approval through solutions such as Nanonets and streamline their accounts payable process, reducing manual errors and increasing efficiency.

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How does e-invoicing work?

Suppliers can automate the generation and forwarding of e-invoices when the e-invoicing process is integrated with their accounting or ERP solution. The ERP systems can automatically generate and send e-invoices without the need for any additional data entry using information from the customer's order.

On the other hand, since the e-invoices that are sent to the customers are digitized and in a standard format, customers can directly import them into their business software with the help of OCR solutions such as Nanonets. This can then help businesses automate key invoice processing steps such as 3-way invoice matching, invoice AP approvals, etc. For businesses wanting to achieve AP Automation, streamlining and automating their invoice processing is crucial.

Challenges of manual invoicing

Even though businesses have been manually processing invoices for a long time, this process still has multiple challenges - 

• Human error leads to incorrect data entries in the invoices
• Greater time spent by employees in creating and entering each invoice data manually
• Manual invoicing incurs higher costs since it requires greater time investment for processing each invoice and also the additional resources required for fixing the errors
• The risk of duplicate or fraudulent invoices is much higher when each invoice is to be manually verified
• All of the above challenges will inevitably lead to delays in the payment process

E-invoicing can tackle all of the above challenges by not only providing error-free electronic invoices but also helping automate invoice generation and processing thus reducing costs and risks of fraudulent invoices.

How to choose an E-invoicing solution?

Although there are many e-invoicing solution providers, it is crucial for a business to understand its own requirements and conduct thorough research. The aim should be to find an e-invoicing solution that not only solves all the business demands but also integrates with ERP and other accounting software to be able to achieve AP automation. Some things to keep in mind while researching for an e-invoicing solution:

• Technical capabilities
• E-invoice compliance with local regulations
• Integrations supported for AP automation
• Security features offered
• Customer support and reliability

Summing up

The world is moving towards the generation and integration of e-invoices and the faster businesses gear up for this change and set up their systems and processes for it the better. Achieving accounting and AP automation will be key to businesses growing and achieving success in the future. E-invoicing software that integrates and automates with other business solutions will be very important to achieve this.

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