Electronic invoices, or e-invoices, aren’t necessarily new. As more and more processes become digitalised, it only makes sense for invoices to be sent and managed electronically. However, there are still a lot of businesses holding on to their current processes and sending invoices via paper or PDF. There are many advantages to switching to electronic invoices. In this article, we will go over the meaning of electronic invoices and the advantages they can bring for your business.
An invoice is a formal agreement that registers a request for payment, usually between two companies. Note that invoices are very different to receipts. Receipts are used as proof of payment, whereas invoices are simply a request for a payment to be made. Therefore, they don’t actually prove that a service or product has been paid for until they are settled/paid. Invoice must include the companies’ names, addresses and contact information, as well as a description of the service, its costs and the date when services were provided.
An electronic invoice is, essentially, a regular invoice but rather than being printed or sent via email, it is fully created and managed electronically in a fixed location. Note that invoices sent digitally in a Word or PDF format are different from e-invoices. E-invoices are settled and managed in a specific location- they aren’t digital documents that can be sent or shared around. Equally, paper invoices that are later digitalised can’t be classed as e-invoices, because they were not issued electronically.
Electronic invoices also involve the automation of processes such as accounting. Rather than having their own staff dedicated to filling in and issuing invoices, companies that use e-invoicing rely mainly on technology to automate the whole process, from issuing to delivering, managing and archiving. The most common formats for e-invoices are EDI and UBL.
Because the process is automated, e-invoices naturally save companies a lot of valuable time. The company’s own resources can be allocated to other pressing tasks. E-invoices can also be convenient when it comes to archiving. Depending on the country your business is based in, companies are required to archive all invoices and maintain them for a certain number of years. Paper or digital invoices can always be misplaced, damaged or mistakenly destroyed, so companies run the risk of missing important information and even facing legal issues. E-invoices allow companies to have all the information readily available, and easily access it whenever needed.
Electronic invoices are automated and processed faster, so payees can access it immediately online. Contrary to this, if the invoice was posted to the company’s physical address, there could be a long waiting time until it was received and approved. Because e-invoices are instantly available to the payee, companies may be able to receive the payment much faster, which also improves their cash flow balance.
Automated processes are always less prone to errors than manual processes, which improves accuracy and saves time on fixing potential mistakes. Aside from this, e-invoices are more easily accessed, managed and archived, which improves operational efficiency. Electronic invoices also allow for a higher and more creative degree of personification, as companies can use different templates for different business clients. Personification is now a focal point in every industry, and has proved to be key in establishing deeper connections with clients, ensuring their loyalty and satisfaction.
Regular invoices have a lot of costs associated to them. Aside from the obvious cost of materials, invoices require a lot of personnel to be dedicated to that one task. With electronic invoices, businesses may save a lot on unnecessary material and resources, and allocate this budget to more relevant business areas. According to recent studies, e-invoices are about 60% cheaper than paper or PDF-invoices.
Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using a variety of payment technologies and providers around the globe.
In a world where consumers payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or requirements, Imburse will connect you to your choice of technology and provider.
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