The new technology is already making inroads into the business world, and companies adopting e-invoicing are reaping big. Ditching paper invoices for e-invoices will offer even more value as the technology continues to mature.
At Unimaze, we’re proud to have delivered e-invoicing solutions to leading brands worldwide for over 10 years.
We’re quick to adapt to trends, as the electronic invoicing market continues to evolve, enabling us to provide solutions that meet today’s needs for businesses to exchange documents electronically.
In this post, we explore e-invoicing and what it means for businesses to adopt this emerging trend. Later we’ll talk about e-document compliance.
Let’s dive right in.
Who Needs e-Invoicing?
Over the last couple of years, we’ve witnessed the rising adoption of electronic invoicing in segments such as business-to-business invoicing (B2B e-invoicing), business-to-government (B2G e-invoicing), and business-to-customer (B2C e-invoicing).
While various countries define e-invoicing differently depending on regulations and nature of specific business, your organisation is ready for electronic invoicing if:
- Your Accounts Payable (AP) department is becoming too large.
- Over 10% of your AP staff’s time is spent communicating with suppliers
- Your finance and procurement departments have to deal with mountains of paperwork
- Over 10% of your AP staff’s time is spent keying in invoice details manually into your organisation’s ERP system
- Errors by your AP create a separate work-stream
How Do Organisations Exchange e-Invoices?
The exchange of electronic invoices takes place under various models, including:
- Supplier direct model
- Buyer direct model
- SaaS/PaaS model
- Four corner model
- Buyer direct model
- Hybrid cloud model
- Multi-cloud model
Businesses across the world exchange e-invoices directly with customers or through third-party services providers like Unimaze.
Advantages of Using an e-Invoicing Solution Provider
While you can exchange invoices directly with customers, utilising an e-invoicing service provider offers several advantages, including:
- A reputable provider can offer e-invoice solutions for ALL of your e-business needs as they evolve. While invoicing may pass for a small process, it is a critical part of your overall procure-to-pay cash process.
Therefore, you want to ensure that your e-invoicing set-up can handle all of your organisation’s B2B e-commerce needs.
- B2B e-invoicing integration is complex, costly, and continuous. Also, standards, processes, protocols, and backend systems change constantly.
An experienced eInvoicing service brings in the solid B2B-to-ERP integration skills required to ensure your ERP system is fed with accurate information.
- Working with an eInvoicing service that connects your organisation to networks like PEPPOL giving your business global electronic invoicing capabilities.
Connecting to a global community also gives your organisation the flexibility it needs to shift supply chain strategies in line with changing market dynamics.
- Partnering with an eInvoice solution can be cost-saving. A service provider can model the costs for electronic invoicing software and integration as per your organization’s needs.
- You can leverage analysts’ knowledge on country-specific eInvoicing requirements. As electronic invoicing continues to become mandatory globally, working with an experienced eInvoice service can help your organisation navigate the complex maze of regulatory frameworks.
Why Should You Shun Paper Invoicing and Adopt eInvoicing?
First, paper invoices wreak havoc on the environment. Despite the growing eInvoicing trends, 70 to 80% of businesses still rely on paper invoices.
What’s more, the amount of energy used to create these invoices can power 20 million households per year! Indeed, adopting e-invoices is good for business and the environment. The question then becomes;
How Damaging is the Use of Paper Invoices to the Environment?
To understand the effect of paper invoices on the environment, all you have to do is assess the situation in your office or workplace.
If you use paper invoices, there’s every probability that those invoices will eventually end up being shredded and thrown into a bin somewhere long after they’ve been paid. And we’re not even talking paper lying around in your office.
Even more disturbing, paper invoices account for 10% of deforestation globally. On top of that, paper invoices contribute to 3X more carbon dioxide emission than electronic invoices. Let’s break it down a little bit more. One paper invoice has an average of 2 to 5 pages. And then there are the stamps, envelopes, shipping costs, and energy needed to create paper invoices out of trees.
Numbers don’t lie. Here’s what having all these papers means for the environment:
- 1 tree = 8,500 pieces of paper
- 1 million invoices = 118 trees
- 1 million invoices = 36 tons of carbon dioxide (CO2) footprint
- 1 billion invoices = 118,000 trees
Sure, these figures are discouraging. However, eInvoicing can help minimise the negative impact paper has on the environment. By adopting eInvoices, businesses can play an integral role in cutting down fossil fuel pollution caused by mailing and shipping.
The picture isn’t all that gloomy, though. According to a Billentis report, 55 billion electronic invoices are exchanged annually, and the number is expected to rise by 10 to 20% annually.
Other Benefits of eInvoicing
Adopting electronic invoicing improves your AP process. That way, your AP team doesn’t have to waste time on manual, draining, repetitive, costly procedures such as invoice scanning and processing. How much can you save with e-invoicing?
Quite a lot. According to a Sterling Commerce study, implementing electronic invoicing can enable you to roll out AP automation and save up to 90% on invoice processing. The details of this study reveal that processing a paper invoice costs about $30. Automated invoices, on the other hand, cost about $3.50 to process. Further, correcting errors on a single paper invoice can cost your business as much as $53.50!
Digitizing and automating your entire e-invoice offers several benefits including:
- Increasing transparency in your AP department and better control over your organization’s budget.
- Making it easier for your organization to comply with your country’s tax laws and regulations.
- Enabling digital invoicing archiving, saving your organization up to 67% to archive supplier invoices over 10 years.
Electronic Invoices and Electronic Document Compliance
E-invoicing goes hand in hand with e-document compliance. In fact, an e-invoice, at its core, is a type of e-document. By definition, an e document is any document created, transmitted, processed, and archived electronically.
Importance of eInvoice and eDocument Compliance
E-invoice and e-document compliance vary depending on whether you’re talking to tax authorities or business owners.
For government tax authorities, compliance means a regular, predictable collection of indirect and direct tax. In many countries, governments are working to ensure e-invoice and e-document compliance to help them close the VAT gap. That way, authorities can make sure there’s enough money to fund public and government projects.
For businesses, e-invoicing and e-document compliance involve submitting VAT and other taxes correctly to avoid fines and penalties. Compliance also enables companies to submit correct VAT returns and receive refunds promptly.
What Does e-document Compliance Entail?
Electronic document compliance combines several conditions that businesses must adhere to. While these conditions vary from country to country, they typically include the following:
- Document formats as required by your trading partners and government regulations.
- Content requirements as stipulated by your trading partners or government regulations.
- Integrity and authenticity of exchanged documents. These can include the following:
- Electronic data interchange (EDI)
- Business controls that enable a reliable audit trail (BCAT)
- Electronic signatures and validations
- Mandatory connections by governmental infrastructures. These could include local frameworks or international networks such as PEPPOL.
- Consent from people receiving the document to use electronic documents.
- Your local tax authority accreditation and approval to show that you’ve fulfilled all the technical requirements for receipt, issuance, acceptance, and exchange of e-documents.
- Ability to archive e-documents as per country-specific requirements.
- Data security and protection implication of exchanging documents electronically.
As stated, compliance requirements vary from country to country. Some have strict requirements, while others are flexible.
Also, e-invoicing schemas or invoicing regimes may differ from country to country depending on the type of transaction or business.
Note – Some nations don’t recognise e-documents as valid documents for tax purposes. Be sure to check with authorities about e-documents compliance requirements and validity in your country.
How Can You Meet e-document Compliance Requirements?
Standardised e-document is not a reality, yet, giving rise to a lot of compliance challenges. What’s more, regulations regarding e-document change regularly domestically and internationally.
That said, how can organisations ensure compliance amid the frequent changes?
First, it is important to mention that many services involving the exchange of electronic documents consider the compliance aspect.
Further, most compliance-only companies do not offer the technical support required to exchange, format, and store electronic documents.
Therefore, to ensure compliance, you need to look for a solution that offers the following services:
- An open, cloud-based portal that offers connections to government authorities, private businesses, and other related networks.
- Regulatory compliance expertise to ensure you maintain e-document compliance even with regular changes happening.
- Integration services into your ERP or accounting system without changing the system.
- Round the clock support
- Onboarding support to notify your trading partners about your intention of adopting e-documents and help them transition too.
Incorporating eInvoicing into your Business
It’s only a matter of time before electronic invoicing becomes the preferred billing option for businesses globally.
The time to join the bandwagon is now. Incorporating eInvoicing into your business will, among other things, resolve the inadequacies of paper invoicing and streamline your AP processes.
While you’re at it, check the e-document compliance requirement in the country you do business in to start leveraging the benefits of exchanging business documents electronically.
At Unimaze we can help digitize your business, allowing you to automate the exchange of invoices, payments, orders, and delivery documents irrespective of where or how you do business.