Generally, an invoice is a formal document issued to the buyer by the seller or supplier. That document requires payment for the sale of goods or the provision of services. Therefore, the invoice is a document essential for trading partners, the supply chain, accounting, and tax authorities. Sending invoices is essential, but technology has helped us a lot in this area of business as well. Therefore, today we send e-invoices, which greatly improves our business. Here’s how.
What Is A Digital Invoice?
A digital invoice is an electronic document that is an “official” payment request for goods sold or services provided. It is an intangible, paperless version of the billing or invoicing process – that represents the electronic transfer of billing and payment information between business partners.
Similar to a paper invoice – a digital invoice is an essential part of an efficient financial supply chain and connects the internal processes of business with payment systems. In the case of an e-invoice, all the procedures covered by the long-established invoicing are followed as well.
Yet, today the invoice is issued mostly by using electronic devices such as PCs, smartphones, tablets, etc. Because invoicing is a core element of a business transaction – by analogy, “e-invoicing” should be seen as an essential part of e-commerce and e-business.
Why Use E-Invoices?
Invoices are the right solution if you have a hard time printing, piling up paper, manually typing, mailing, etc. Not to mention what a cost it is on an annual basis for any firm. Paying through electronic invoices accelerates and facilitates business operations. It also reduces costs, increases efficiency and systematically incorporates better controls. For these and many other reasons – invoices could make a significant contribution to the future improvement of working efficiency!
Implementation of e-invoices reduces the cost of invoice distribution, business expenses related to manual invoice entries into the internal information system – as well as their payment and correction costs errors related to incorrect entries. Also, the percentage of billing is improving.
There are several models and ways to apply electronic invoices. We will mention the most commonly used models here. In this light, we distinguish essentially two electronic invoice models:
- Direct – Exchange of electronic invoices without intermediaries
- Indirect – Exchange of electronic invoices with an intermediary
Technology Enables Billing Assistance
There are various very useful software available online today. Many of them can help us with billing. This particularly refers to online invoice generators – apps that can make your business much easier. Software like this is very useful and practical – especially if you are busy running your business.
Such software automatically keeps track of the details of your invoice – so you can handle your business without worrying about making a mistake. Online apps such as Billdu are free, very easy to use and make accurate and professional invoices. At the start, you get a blank template that you can customize to your requirements.
That means you can add your brand name, etc. When you finish adjusting your invoice to suit your needs – this software automatically generates it and you receive a ready invoice with calculated taxes. Very practical, isn’t it?
Why Are Invoices Important For Your Business?
1. Material and transportation cost savings
For invoices, postage costs can be significant, especially if invoices are sent to customers by registered mail with a return receipt. It is a similar story in this case and naturally builds on the story of postal costs.
No one sends an invoice without an envelope, stamps, paper on which the invoice is printed, inks which are spent on printing, etc. If one considers that electronic invoice eliminates all of these things, very precisely – each company can calculate for itself as much as in this section on a monthly or annual basis to make savings.
2. Invoice Allows Customer Payments On Time
If the customer is also in the e-invoice system and given that the e-invoice also contains a digital maturity date (payment deadline) – then it is clear that this payment process can also be fully automated.
That is allowing the company to pay its bills automatically by setting a simple rule without having to create payment orders manually. Of course, the only condition for this automated process to be implemented – is that the company has enough money, that is, that customers pay it on time, too.
3. Easier overview of invoices directly from the information system
As electronic invoices are already digital, it is clear that search, review, and analysis are available directly from the information system because e-invoices contain all the necessary elements. This is especially true for an integrated information system with an exchange system.
4. The risk of misinterpretation of the invoice date is reduced
The key issue comes down to the issue of accuracy. Since e-invoices contain all the necessary elements, including the date of payment – it is practically impossible to make a mistake – which is often the case with traditional invoices.
5. It is almost impossible for a particular invoice to be lost
Quite simply, it’s the security aspect of the whole story of electronic invoices. Larger e-invoice service providers use the same or similar infrastructure used by banks for financial transactions. Additionally, these providers regularly run a series of reality tests and simulations to keep their infrastructure at the safest possible level.
By implementing all technical, procedural, security and other mechanisms – e-invoice service providers ensure that the system operates under virtually any circumstances. This, of course, eliminates the very popular excuse for late payment ( like “lost invoices”). Therefore, this method is again increasing the efficiency of day-to-day business.
6. Guaranteed authenticity and integrity
Last but not least is the fact that, by using invoices, virtually every company ensures authenticity and integrity. This is done primarily through the use of electronic signatures and other elements. It should be recalled that all invoice elements are present in digital format – without being able to be modified in any way.
This practically means that once an invoice is issued, it can only be changed by canceling and issuing a new one. That fact allows complete invoice traceability at every stage of its life cycle.