Do you really know what true e-invoicing is?
When you ditch the paper invoice by going electronic, you can achieve some fundamental improvements to your business.
Faster payments, lighter costs, greater buying power – all of these are uplifts that can be achieved with the proper implementation of an e-invoicing system. The trouble is, many businesses stumble on their way to reaping such rewards by getting the wrong answer to one basic question. What is ‘true’ electronic invoicing and what is not?
Do you think you know? Many people presume they do – and it could be costing them a fortune.
The simple definition of e-invoicing
There’s a remarkable amount of confusion around the definition of true electronic invoicing and it stems, I think, from how invoices are delivered nowadays.
Comparatively few invoices are printed out and sent through the post. Most will arrive electronically, via email into the finance department’s inbox. And so people assume this electronically delivered version of invoicing is, by definition, true electronic invoicing.
“When using PDF to send invoices, human interaction is required – both on the side of the recipient and the sender.”
More than just getting rid of paper
In the UK, a vast number of invoices are sent as PDFs. Now, PDF is of course an electronic format, but that doesn’t make it ‘true’ electronic invoicing. In fact, even though PDF takes paper out of the equation, it’s still more directly comparable to paper-based invoicing than electronic. Here’s why.
When using PDF to send invoices, human interaction is required – both on the side of the recipient and the sender. In some cases, this might mean printing out the PDF so the data can be manually input into the customer’s systems. In other cases, it might be a case of using separate software to digitally read the invoice details and update them that way.
But whichever way you slice it, someone has to manually intervene in order to move the invoice onto the next step.
The electronic difference
True e-invoicing is different. In this case, an invoice is created automatically on the seller’s side in a non-human-readable format, such as an EDI or XML document. This is sent directly to the buyer, from one ERP system to another, without human interaction.
The difference between the two approaches is significant. Whereas one places a burden on the customer (the associated cost of processing that non-electronic invoice) the other – the true electronic approach – does not. In an electronic world, vendors sending non-electronic invoices become inefficient suppliers. So, by presuming the PDF = electronic invoicing, you could be costing your business custom.
You will certainly be costing it cash. True electronic invoicing brings with it a significant cost saving; with no mountains of paperwork to plough through you’re able to slash the cost associated with sending and processing invoices.
“The benefits of true e-invoicing to your business are clear, but this is something that also makes your customers’ lives easier.”
It also ends the to and fro of paper or email invoicing. With electronic invoicing, there is no question as to whether an invoice was received or whether it was processed correctly. You can guarantee each and every invoice is being received, and once you can do that, you’re able to take a huge step towards getting paid on time and shortening your days sales outstanding (DSO).
The benefits to your business are clear, but this is something that also makes your customers’ lives easier. So, as the understanding of true electronic invoicing grows, offering this service to your customers becomes a selling point. It’s something they will ask for soon, and then demand. Can you afford to lose that business?
Want to know more about the advantages of true electronic invoicing for your business? Please do not hesitate to contact me for further discussions!