When we hear of e-invoice, we may think of PDF invoices sent via email to customers. This is a common misconception because PDF invoices are an electronic version of the document. E-invoicing is way more than just a digital copy of an invoice.
What is e-invoice?
An E-invoice or Electronic invoice is a type of invoice created in a structured format for automation of process in between the same or different accounting software or enterprise resource planning (ERP) systems.
More and more countries implement an e-invoicing network following the International Peppol E-Delivery standards.
Singapore is the first country outside of Europe to adapt the International Peppol E-Delivery Network. It’s the country’s way to get onboard as many businesses as possible to bid on government contracts and apply government subsidy through PSG Grant.
PEPPOL eDelivery Network is an initiative of OpenPeppol Association in Europe. Their main purpose is to enable ease of electronic dealings between businesses and the government to widen scope of competition for government contracts, by then giving better value to taxes.
The Peppol network is based on a 4-corner model principle. Wherein a transaction, the supplier’s target is to create and send an invoice to the customer’s accounting system. Whichever the invoice format is, invoices that are coming from the supplier (corner 1) will be translated based on the standard at Access Point (corner 2). The network of global directory will then give information to corner 2 in order to identify the receiving Access Point (corner 3) for the invoice to go through the network system. When corner 3 receives the invoice, it will map the invoice out into the chosen format of the customer (corner 4). Thus, allowing businesses to use any accounting system they see fit, without compromising the ability to e-invoice with each other.
Today, e-invoicing provides ease of business not only between private companies and the government, but also between businesses themselves.
Getting onboard with e-invoicing can set you up to easily compete with government contracts and grants, and do business around the globe.
How does e-invoicing work?
- The supplier creates and sends an invoice using their system.
- The invoice is being processed through the Peppol E-Delivery Network.
- The customer receives the invoice in their system ready for approval and payment.
What are the benefits of e-invoicing?
- On time delivery. Fastest delivery of paper invoices is within 24 hours, give or take a few days depending on courier. Digital copies of invoices aren’t safe either, person in charge of receiving the invoice may take a day or two to get into the invoice email and encode it in their system.
E-invoicing is real-time which can cut the delivery time for paper invoices and free up the time needed to encode and counter check details of the invoice into the customer’s system.
- No more falling off the crack. Whether it’s in paper or digital copy, there are times wherein invoices can go unnoticed or even lost. A paper invoice can sometimes be sent to a different department, or unknowingly tagged along other documents, or worst grouped together with those papers in shredding queue. While a digital copy invoice can also be auto dumped in the spam box, or mistakenly opened without reading, or deleted without noticing.
With e-invoicing, there is an assurance that the invoice is in the customer’s draft bills for processing.
- Accurate data entry. E-invoicing removes the need to encode invoice details to customer’s system. Therefore reducing risk of error and a bonus of freeing up admin work time, which can then be used to more productive parts of the business.
- Quick payment turnover. With the invoice delivery, review, and encoding to customer’s system being cut, e-invoicing greatly helps in quick payment turnover. This reduces the time spent in confirming invoice details on the customer’s side and following up payment on the supplier’s side.
- Traceability. E-invoicing has a transaction history which helps to ease tracing on where the document is at the moment.
- Compliance to e-invoicing legislation. Having the right accounting software, like Moneyworks, gives an assurance that you are up to date with the required compliance needed between businesses and government taxing and archiving law. Even if your country still does not implement e-invoicing, it is only a question of when it will be a law. Thus, it’s better to be prepared ahead and be on the forerunners.
- Competitive Advantage. Multinational companies are keeping up with the benefits of e-invoicing. Adapting on it can give a great impression that your business is future ready. If you’re in a country implementing e-invoicing law, adapting to such can open opportunities to compete on government contracts and apply on grants which can upgrade your business processes.
Are you now ready to register for e-invoicing through Moneyworks?