E-invoicing Benefits and Advantages
Electronic invoicing is a form of electronic billing used by customers and suppliers.
E-invoices contain the same data as traditional paper invoices but are issued, sent, and received in an electronic format.
This page will identify the benefits and advantages of e-invoicing for buyers and suppliers or check out this blog.
Benefits of e-invoicing at a glance
In order to get paid by customers, businesses must create and send invoices. Invoices provide proof of a product delivered or a service provided by the supplier and the payment owed by the buyer. They allow both the seller and buyer to keep track of payments and manage their finances.
E-invoicing enhances the traditional invoicing process by reducing costs, increasing accuracy, and allowing payments to be made at a faster rate. Electronic invoicing does not require any manual data entry, which eliminates the risk of human error. Invoices are also created using specialized software so they can be sent to the buyer immediately and tracked in real-time.
There are also many additional benefits of e-invoicing.
Benefits of e-invoicing for suppliers
Faster payment and improved cash flow
Electronic invoices that are created via automation software are immediately sent to the buyer to request payment. This efficient process eliminates delays as data is directly available to the buyer upon purchase.
If invoices are paid in a timely way this will improve the supplier's cash flow and allow them to accurately estimate their annual budgets. This information is particularly useful for efficient cash management and optimal predictability of working capital requirements.
Better account reconciliation
Traditionally, suppliers would have to match invoices with bank statements to ensure the books were correct. If customers combine invoice payments or make deductions, due to faulty goods, for example, this can make clarifying the details confusing.
With e-invoicing, customers can send invoices alongside their payments for account reconciliation.
Fewer disputes and rejected invoices
As e-invoicing is an automated service, the customer no longer needs to provide their invoice data manually. This reduces error and consequently reduces the number of invoice rejections and disputes.
A digital process ensures invoices are correct and authentic so buyers can make payments quickly without delay.
Improved customer satisfaction
Electronic invoicing allows customers to monitor the status of their invoices in real time for a streamlined and consumer-like shopping experience. By having access to invoice information, buyers can see if their invoice is being dealt with efficiently.
Improved customer satisfaction can also lead to stronger customer relationships, improve customer retention, and maintain a positive reputation.
Benefits of e-invoicing for buyers
On the flip side, the many benefits for buyers include:
Increased productivity and automation
Automated invoices can be easily approved and paid – enabling maximum productivity. By spending less time inputting invoice data and chasing invoices, customers can focus on higher-value activities that can directly improve the productivity of a business.
Take advantage of early payment discounts
Electronic invoicing allows for faster payments and invoice approval, allowing customers to take advantage of early payment discounts. An early payment discount is when the buyer pays the full amount of an invoice before the date is due. The prompt sending and receiving of an e-invoice make it increasingly likely that a buyer has time to receive a prompt payment discount.
Improved supplier relationship
A streamlined payment process that is easy to understand and interpret is likely to improve the relationship between a buyer and supplier. Good customer service and correct invoices can result in strong customer loyalty and retention.
E-invoicing supplies the buyer with an efficient payment system and therefore, higher levels of customer satisfaction.
Benefits of e-invoicing for both suppliers and buyers
While many of the benefits above apply to both buyers and suppliers, there are a handful of benefits that reflect equal value to both.
Reduction of invoice processing costs
Paper invoices incur high material, labor, printing, and postage costs. By automating the process and eliminating all physical aspects, you significantly reduce the cost of invoicing.
The reduction, or even total elimination, of manual invoice processing (double entry, sending of invoices, reminders for unpaid invoices, reconciliation with or without purchase orders, errors, exception management, etc.) allows accounting teams to save time and focus on more strategic tasks.