Did your client ask you to send them their invoice electronically, an e-invoice? The letter e doesn’t need to complicate matters. If anything, it makes them easier, more efficient and even cheaper for you, too.
What is an e-invoice?
An e-invoice (also known as an e-bill), includes all the same information as a regular invoice, printed on paper and sent in the post, or sent as a PDF attachment in an email.
However, an e-invoice is not the same thing as sending a scanned invoice or a PDF file to your client. In the case of email invoices, you do send the invoice electronically, but your client still needs to handle it manually.
When sending invoices using an e-invoicing service, it travels directly to your client’s automatic invoice processing system and is paid with just a click of a button. An e-invoice has many different technical formats, such as PEPPOL, TEAPPS, SAP iDoc, EDIFACT, to name a few.
Who is using e-invoicing?
Many corporations and government organisations are using e-invoicing (also known as e-billing), due to it’s obvious benefits. E-invoicing significantly saves both time and money, because no manual work is required to process and store the invoices.
Hence, many companies are already expecting their suppliers to be able to send their invoices electronically, because receiving and processing traditional invoices would cost them more. With e-invoicing they are able to process incoming invoices faster, avoiding late payment fees.
Although currently e-invoicing is mainly prevalent in big organisations, it is likely to become the norm in all enterprises in the very near future.
What’s in it for you as an entrepreneur?
E-invoicing simplifies your workflow
In addition to the competitive advantage you get by providing e-invoices, the combination of an invoicing software and sending of e-invoices boasts plentiful benefits for individual entrepreneurs as well. Your workflow is remarkably simplified: you can create a database of both your customers and products or services and simply choose them with one click when creating an invoice. This saves time and reduces the risk of errors.
E-invoicing helps you save up to 60% in costs
According to an example in Billentis’ report, you as an invoice issuer, can save about 60% per invoice when you automate and send it electronically.
This way if the total cost of your invoice is £10: including printing, postage, possible payment reminders, remittance and cash management as well as archiving, e-invoicing can help you save £6 per invoice!
You eliminate manual steps completely
Remember that your invoicing costs aren’t only the direct expenses of you buying paper for example. You could spend the time of creating and sending invoices instead on billable activities.
E-invoicing helps you forget about:
- Sending payment reminders
Prevent fraud prevention and shorten DSO
On top of this, you are much more likely to receive your payments promptly, accurately and on time. As the processing system is fully automated, no one can alter your invoice. The e-invoicing address ensures your invoice reaches the right client (and even client department), and you can be certain that the money will appear on your account as agreed. This means that DSO (days sales outstanding) can, in most cases, be shortened by several days.
The benefits of e-invoicing for entrepreneurs
In comparison to paper or PDF invoices, e-invoicing is cheaper, faster, more reliable, more resource-efficient, and much more sustainable, because there is no printing, posting, downloading, typing, or archiving. All of this happens automatically in a heartbeat, when you use an e-invoicing solution. This also means you can get paid faster and make your bookkeeping a breeze.
Who made e-invoicing happen?
The EU members and European Commission introduced Directive 2014/55/EU, a European standard for e-invoicing to combat the large variety of e-invoicing formats. Because not having a common standard complicated matters, and increased costs.
Under the EU norm, all contracting authorities will have to accept electronic invoices. The EU predicts that e-invoicing could bring up to 40 billion Euros in annual savings of across the union, in B2B alone!
Different countries are at different stages of how deeply e-invoicing is embedded in their business culture. However, the European Union requires its member states to use e-invoicing in public procurement processes as of November 2018.
E-invoicing in England
In England, the Small Business, Enterprise and Employment act enables the government to regulate the use of e-invoicing in public procurement. Wales, Scotland and Northern Ireland have set their own regulations.
Currently, it is recommended that public contracting authorities use e-invoicing, and particularly the NHS has gained significant savings by automating its invoicing processes.