This post talks about B2B invoicing and everything that comes with it. For starters, B2B refers to Business-to-Business. Put differently, B2B involves one business selling to another business, mainly in an online setting. While B2B can refer to transactions between any two trading partners, such as a business and supplier, it typically applies in the e-commerce business.
B2B sales an essential element of the business supply chain. These sales involve a business buying materials from suppliers and selling them to another business that creates the final product and sells it to the final consumer.
So, what is B2B invoicing?
B2B invoicing is the process of demanding due payments between B2B businesses. It happens when a supplier sends invoices to a buyer to enable them to collect payment.
A B2B invoice indicates the cost of products or services rendered to the buyer. Apart from demanding payments, an invoice can double up as legal records if it includes the following:
- The names of the seller and buyers
- Description and price of goods or services
- The terms of payment
While you can issue paper-based B2B invoices, it is essential to note that this post focuses on electronic B2B invoices. Put differently, the term B2B invoice in this entire piece refers to the electronic B2B invoice.
With that out of the way, let’s get cracking.
Benefits of Electronic B2B Invoicing
There’s every reason to adopt e-invoicing when demanding payments from your buyers or trading partners, including:
1. You Can Collect your Payments Faster
As a B2B supplier, you want to get your payments as soon as possible. And, if you’re sending paper invoices, you’ll have to deal with lengthy payment processes.
You see, sending paper-based B2B invoices means that you have to generate the invoices manually, send them out and wait for at least 30 days to receive the check. Plus, you’ll have to deposit the check and wait for a day or two for the money to reflect in your account. Now, that’s a slow cycle payments cycle right there!
Do you know what happens when you have to wait for payments for a month? Well, your cash flow declines, and this may translate into your ability to stay in business or not. Further, it can harm your capacity to make future business payments.
However, you don’t have to go through the inconvenience of waiting for your payments if you go the B2B e-invoicing route.
With e-invoices, you can use your ERP system to generate invoices automatically and send them to your trading partners in a click. You can even use a free e-invoice generator to create invoices in a few seconds. That way, the buyer can receive the payment request in minutes, allowing you to get your funds quickly.
What if the customers take up to 30 days to pay your invoice? Even then, you’ll have skipped the long process of raising the invoice. Besides, e-invoices, unlike their paper counterparts, are not prone to human errors.
2. You’ll Reduce the Likelihood of Unsuccessful Payments
There’s always the probability that your buyers may not send checks until a few days, sometimes hours, before the deadline. Worse still, a customer can send the check late, knowing that they have insufficient funds in their account.
The ripple effect is that you have to chase down the customer, causing even more delays. With B2B electronic invoicing, a buyer gets your invoice in real-time and can pay on the spot if they have the funds.
On top of that, e-invoicing allows your customer to pay using their credit cards. In essence, this means that the buyer will know if they have insufficient funds when they run their card, enabling them to resolve the issue right there and then.
The point is, apart from allowing faster payments, B2B e-invoicing increases the rate of successful settlements, so you don’t have to go back and forth with your client over unpaid invoices.
3. You’ll Enjoy Operational Efficiencies
Electronic B2B invoicing reduces the amount of work your accounting or finance department has to create invoices.
Paper B2B invoices involve manual work, taking away the time your accounts team would have spent doing other productive tasks.
With the help of a B2B invoicing solution such as Unimaze, you can set up a billing system that generates and sends electronic invoices. Moreover, your ERP can include a payment processor that handles payments received electronically.
4. B2B e-Invoicing is More Convenient to Customers
Here’s the thing.
Some of your customers may prefer to pay you with their corporate or credit cards. The idea is to enable them to earn rewards or simply keep their spending in order.
At times, a buyer may opt to pay you with their corporate card since they don’t have the authority to write a check on their company’s behalf. Plus, some small business owners who want to separate business and personal funds find it convenient to pay with a credit card.
B2B e-invoicing gives your customer the freedom to pay using their most convenient method. In other words, sending supplier e-invoices gives your trading partner more control over how they can pay you.
B2B e-invoices favor a buyer’s internal process and offer them excellent advantages such as:
- The ability to streamline e-invoice documents and transactions from the buyer’s ERP system.
- An increase in productivity and profitability since the electronic exchange of documents guarantees the traceability of transactions.
- Simplification of paperwork and increased cost saving.
Unimaze- Helping you Getting Started with B2B Invoicing
Electronic invoicing with transform how you do business.
But, you have to partner with the right e-invoice solution provider to help you enjoy the benefits of e-invoicing.
Unimaze is a Peppol certified e-invoicing provider and can help you get connected to the e-invoice network. With us by your side, you can be sure to start sending and receiving e-invoices in no time.
Our team of experts is waiting to help you with any question you may have regarding B2B e-invoicing. Contact us now, and we’ll be happy to discuss with you the way forward.
Frequently Asked Questions (FAQs)
- What is B2B invoicing?
B2B invoicing refers to the request of payment by a supplier to another business. For instance, when a supplier seller raw materials to a manufacturer and later sends an invoice to demand payment for goods delivered.
- What is the difference between billing and invoicing?
Sure, an invoice and a bill are business documents with more or less the same information regarding the amount owing after a sale of goods or services.
However, an invoice refers to a document used by a business looking to collect money from its trading partners. On the other hand, a bill is a business document given to customers by suppliers demanding goods or services.
- What is the difference between B2B and B2C in GST?
The total number of transactions in B2B is significantly higher than B2C transactions. This because a typical supply chain involves several B2B transactions while B2C involves a single transaction, in this case, the sale of the finished product to the end consumer.
- Is e-Invoicing mandatory for B2B?
Well, this depends on your country. In some nations such as the United Kingdom and Australia, e-invoicing is mandatory for private and public institutions. The authorities in these countries are encouraging businesses to digitize their processes to streamlining operations and cutting costs.
Even in countries where B2B invoicing isn’t mandatory, there’s a need to sensitive businesses about the benefits of using e-invoices.
After all, according to the global e-invoicing projection, the adoption of e-invoices is increasing, and it’s only a matter of time before electronic invoicing becomes a standard business practice.
- Can anyone create an invoice?
Yes, as long as you’re the owner of a business or mandate by the owner(s) of the business to create invoices on their behalf.