E-invoicing is becoming ever more commonplace, offering a host of benefits in comparison to traditional, paper-based billing methods. In addition to the savings on printing and posting costs, the advantages gained by moving toward full process automation are dramatic.
What do we mean by e-invoicing?
Electronic invoices are a digital version of the same information displayed on a traditional paper document. They need to apply to the same legal standards, with the mandatory information (company details, VAT numbers etc.) clearly displayed to meet the requirements of the both the recipient, and any subsequent investigation from the tax authority. In most cases, they involve a PDF version of a traditional invoice document, accompanied by an XML file containing the information in a form that can be imported directly into a business software system.
Despite the fact that it is merely an alternative way of sending the same information, it’s important to note that the customer needs to agree to receive the invoice in that format. If they do not wish to receive the e-format, they are entitled to refuse the document and await a hard copy. A full, detailed outline of any specific requirements will be available directly from your local tax authority.
Speeding the flow of information
Put simply, e-invoicing allows fuller integration of the various elements of the supply chain. This better interconnectivity makes it easier to manage and administer the streams of order to payment data flowing between trading partners. However, despite the benefits offered by the system, electronic invoicing’s potential is going largely unrealized across Europe.
A significant migration to e-invoicing could have a dramatic impact on the financial execution power of businesses throughout the SMB segment. In recognition of this, the European Commission wants e-invoicing to be the conventional method of sending invoices in the EU by the year 2020. As such, a broad ranging effort is underway across Europe to create the right environment in which to realize this ambition. In some cases, this investment involves new legislation enabling government tax authorities to accept e-documentation in place of traditional paperwork.
This move to embrace e-invoicing is merely part of a bigger picture, one where all business eventually realize full digital adoption for all administrative processes. The financial administrations of all kinds of organizations have now been digitalized, ERP systems managing a broad range of financial activities and company information electronically.
However, in many cases, the printing of this information to manually update other systems is still a common occurrence – leading to mistakes, misunderstanding and significant unnecessary costs. Enabling more businesses to process invoices electronically, linking the information directly to the rest of their financial administration, will allow monetary and human capital to be redeployed into more value-adding activities.
Including paperwork in a digital system
For businesses wanting to digitalize, but afraid too many parts of their network will not be open to the technology, there are options available to allow paperwork to be digitally integrated.
To avoid scenarios where paperwork information has to be typed into an otherwise digital system, scan and identify software is available for integration with many business software solutions. Paper documents can be scanned, the software recognizing the relevant information and creating a digital version that can automatically create entries in the financial ERP system.
And of course, if you want to enrich the data at any point with information on a cost center or a project, you have the flexibility to do so. The source document can also be easily coupled to the financial transaction in the ERP system, making follow up and checking procedures simple, accurate and free of hard-copy archiving.
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