Benefits of adopting E-Invoicing

Published by Marcus Langford on

Benefits of adopting E-Invoicing

Mass adoption of e-Invoicing leads to significant economic benefits and increases business competitiveness. The benefits of replacing paper invoices with e-Invoices can be reached in two main steps.
  1. Replacing the physical paper form with a structured digital e form allows the invoice to be handled and archived more efficiently. This provides significant savings in printing, postage, intra-office routing and archiving.
  2. Making the data machine-readable removes the need for manually viewing and reading a visual form of the invoice. It also removes the manual work of entering the invoice information into an Access Point system. This provides significant savings in human resources and significantly reduces errors in data entry. This cannot be achieved with digital images of the invoice such as pdf.
The adoption of e-Invoicing can make various contributions to economic well-being: The invoice process From its creation until it is archived, an invoice must pass through several processes and steps. The procedures and the level of automation may differ significantly between entities, sectors and regions; however eight common valid steps can be identified. The overview below describes each step and explains how savings can be made by replacing a paper invoice with several types of digital Invoices In general, the digital invoices can be divided into two main categories, visual digital invoices (e.g. pdf, jpg) and structured data e-Invoices (e.g. e-invoicing standard invoices). The seller can usually achieve most of his benefits by using invoices from either category but the most significant benefits for the buyer depend on the usage of structured data e-Invoices that can be automatically processed. Invoices that comply with the European standard on e-Invoicing must be in a structured data eInvoice format. Coliance via its Agora Managed Service provides ways to handle e-invoicing and other methods of handling electronic documentation via EDI or Application Programming Interfaces (API’s). Find out more here

The Invoice process

1. The seller
prepares the invoice

This step refers to the compiling of information such as man-hours, list of items, usage of
services etc. necessary to issue an invoice. This process happens before the invoice itself is created and is not affected by the form of the invoice.

Source of savings Any automation and
improvement in preparing an invoice is
unrelated to the form of the invoice.

Visual digital invoices NO SAVINGS

Structured data e-Invoice NO SAVINGS

2. The seller issues the invoice

The invoice is created in the system and exported into the relevant format, paper, pdf, HTML, structured XML.

Source of savings
Paper and printing costs and handling of mail.

Visual digital invoices SAVINGS

Structured data e-
Invoice SAVINGS

3. The seller sends the invoice

The invoice that has been created is sent to the buyer according to a certain procedure, i.e. physically, by email or through messaging platforms.

Source of savings In most cases, there are savings in postal costs. These are replaced by electronic transmission costs, which tend to be significantly lower.

Visual digital invoices SAVINGS

Structured data eInvoice SAVINGS

4. The buyer receives the invoice

As an invoice is received by the buyer it needs to be correctly identified as an invoice and
assigned to the correct internal process.

Source of savings

The manual handling is replaced with a semi or fully automated system. Visual digital invoices received by email usually require some manual sorting (although that can be reduced, e.g. by using dedicated mailboxes). The structure of the data in a structured eInvoice allows for full automation of the reception.

Visual digital invoices LIMITED SAVINGS

Structured data eInvoice SAVINGS

5. The buyer approves the invoice

The invoice is reviewed to verify that it matches the quantities and prices ordered and received.

Source of savings

The review process consists of comparing the invoice to existing information, such as orders, or to apply decision rules. The internal routing of a visual digital invoice can be improved by using document sharing systems (scanning solutions) while the use of structured e-Invoice content enables automated invoice matching. Invoice automated approval frequently provides the buyer with significant benefits by freeing up employees’ time, who tend to be on a managerial level.

Visual digital invoices LIMITED SAVINGS

Structured data e-Invoice SAVINGS

6. The buyer books the invoice into accounts

The buyer enters the necessary information from the invoice into their accounting system(s) and assigns the relevant accounting keys.

Source of savings

Entering of information from visual digital invoices remains manual. Structured eInvoices enable automated information entry and automated assignment of accounting keys through references or rules. Automated entry of invoice information significantly reduces the risk of entry errors which often cause significant costs. This is usually a significant
source of benefits for the buyer.

Visual digital invoices NO SAVINGS

Structured data e-Invoice SAVINGS

7. The buyer schedules payment

The payment for the invoice is scheduled either according to contracted terms or based on payment information in the invoice.

Source of savings

When the time-to-payment is based on the invoice content, as opposed to contractual terms, the structured eInvoice allows for automated entry of the relevant information. This improves payment scheduling and avoids late payments.

Visual digital invoices NO SAVINGS

Structured data e-Invoice SAVINGS

8. The buyer archives the invoice

The invoice is stored for later retrieval.

Source of savings

Both visual digital invoices and structured e-Invoices significantly reduce archiving costs through both reduced handling and storage costs.

Visual digital invoices SAVINGS

Structured data e-Invoice SAVINGS

List of key e-Invoicing cost savings

The following list gives an overview of the type of cost that can be saved in different processing steps that are described above.

  1. Cost of paper
  2. Printing costs
  3. Mailing costs
  4. Manual handling when sending or receiving
  5. Review and approval of invoices
  6. Entry of data into ERP systems
  7. Accounting key assignment
  8. Balancing (reduced error in data entry)
  9. Archiving, handling and storage
Categories: E-invoicing

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