Electronic invoicing is the better way to do business; it’s cheaper, faster, less erroneous, streamlines directly into your accounting process, and is more environmentally friendly than paper and digital invoicing.
Electronic devices that are connected to the internet are in abundance. With that being said, it is more than likely that some operations and processes that are typically done manually are going to become computerized. Computerization of manual processes usually allows you to optimize your business and enables it to run closer to maximum efficiency - and sending invoices is no exception to this idea.
- Finance Digital Transformation – why businesses should go through it
- Cloud-based adoption and collaboration is key to business success
- Here's our list of the best tax software around
What is an electronic invoice?
An electronic invoice is electronic in throughout its entire life cycle; this means that the creation, sending, payment, and financial book-keeping takes place via a computer-system from start to finish.
However, this is not to be confused with a digital invoice, which is merely a paper invoice that has been digitized--most likely in a .PDF format. Electronic invoices differ from digital invoices because digital invoices require human workers to record the information from the invoice into the books--and that’s a manual process, not an entirely electronic/computerized process.
Although the umbrella term is ‘invoice’ an electronic invoice, or E-invoice, refers to purchase orders, debit notes, credit notes, payment terms and instructions, and remittance slips that are entirely electronic--in addition to invoices.
Typically, an electronic invoice is sent in the form of a .XML or .CSV file, however, e-invoices can come in many different file formats or web-based forms. For instance, CurrencyPay offers an electronic invoice portal where users send invoices via emails that include embedded payment links. These links allow for invoices to be paid in just one click.
Advantages of E-Invoicing
When you compare electronic invoicing to traditional paper or digital invoicing--which is really just paper invoicing on a computer--you find that E-invoicing beats out traditional invoicing methods in several performance areas:
Using an E-Invoice saves you a significant amount of money compared to paper and digital invoices. By using a digital invoice, you will no longer need to pay for the paper that your invoices are printed on, or the postage required for you to send out your invoices to your customers. In regards to a digital invoice, an electronic invoice saves you money in the grand scheme of things because it will take less time for your data to be entered into accounting books. A digital invoice still requires data entry from a staff member--a time-consuming feat that an employee must be paid for (time is money!).
For instance, in 2013, the United States treasury estimated that if e-invoicing was implemented across federal government offices, that it could reduce costs by 50% and save $450 million annually--and it is likely that those statistics have grown since the report was released (2013).
Electronic invoice users typically find that E-invoicing makes their businesses--and customers--lives more efficient and easier. E-invoices can be automated to send out recurring bills, can be paid by your customer with just a click of their mouse, and typically, E-invoices stream directly into your accounting books, cutting out the time consuming and (sometimes) pricey data entry process.
When Vantage Finance CEO Kevin Halverson started using electronic invoicing within his company, he saw that his invoicing process had become more efficient.
“The goal has always been to make financing and the movement of money easy for businesses and consumers,” said Halverson. “ And Currency’s electronic invoicing features allowed Vantage to accomplish this, “ Instead of calling each of my customers and collecting card information, I am now able to send an invoice that can be paid and processed by my customer directly through their email.”
According to Halverson, electronic invoicing optimized his invoicing processes because it removed steps and leveraged everyday communication methods (email) to make the invoicing process more user-friendly.
Electronic invoices can be sent, received, paid, and settled several times faster than paper and digital invoice methods; the speed at which these processes occur can drastically reduce the amount of time it takes for your invoice information to be put into your accounting system. Often, the information from the electronic invoice format is simply uploaded--or automatically synced--into your accounting systems; this removes the time (and price) it takes for an employee to do the data entry manually.
Electronic invoices are more likely to be accurate than paper and digital invoices. When you use an electronic invoice, there are fewer steps, and therefore less friction, in the invoice process. When an employee is responsible for data entry and transmission--like in paper and digital invoice methods--there are several steps in which error can take place, like during invoice creation, customer payment, and data entry. But when you use an electronic invoice, there is only one point at which error can be made--when initially creating the invoice. All in all, using an e-invoice mitigates the chance of error in your invoicing process and accounting books.
Using electronic invoices is better for the environment than using paper invoices. The manufacturing of paper products has been known to significantly contribute to deforestation, so using an invoicing method that does not involve paper will show that your company has taken social responsibility when it comes to preserving the environment.
The better way to do business
Due to the number of benefits E-invoicing provides, more and more companies are switching to, or building, electronic invoicing systems. Using electronic invoices is cheaper, more efficient, faster, more accurate, and better for the environment than paper and digital invoicing methods. Beyond that, Electronic invoices streamline directly into your accounting books, saving you a lot of time and money when it comes to keeping your financial records in order and up to date.
E-invoice users like Halverson’s Vantage finance have seen the positive impact that electronic invoicing can have on a business thanks to platforms like CurrencyPay which offer companies an electronic invoicing portal. Computerizing processes like invoicing optimize the movement of money. It makes moving money easier, faster, and more user--and accounting--friendly.
Considering how much business is conducted through the internet, it would not be surprising to see more and more manually processes become computerized in the future. And when it comes to invoicing, computerized invoicing is simply the more efficient way to send invoices; using electronic invoices is one of the easiest ways to optimize a typically manual process. So if you aren’t using E-invoices already, then you will probably want to look into it--especially if you are looking to be a leader if your industry.
Charles Anderson, Chief Executive Officer at Currency
- We've also highlighted the best billing and invoicing software