Did a client ask you to send an invoice electronically – an e-invoice? The letter e in front of an invoice doesn’t need to complicate matters. If anything, it makes them easier, more efficient and even cheaper for you, too.
An e-invoice (also known as e-bill) is a regular invoice, including all the same information as an invoice printed on paper and sent in the post, or a PDF sent as an email attachment. However, it’s not the same thing as sending a scanned invoice or a PDF file to your client; in the case of email, you send the invoice electronically, but your client still needs to handle it manually. When you send an invoice using an e-invoicing service, it travels directly to your client’s automatic invoice processing system and is paid with just one click of a button.
In addition to the competitive advantage you get by providing e-invoices, the combination of an invoicing software and sending of e-invoices boasts plentiful benefits for individual entrepreneurs as well. Your workflow is remarkably simplified: you can create a database of both your customers and products or services and simply choose them with one click when creating an invoice. This saves time and reduces the risk of errors.
Up to 60% cost savings
According to an example in the Billentis report, an invoice issuer can save about 60 per cent per invoice by sending it in an electronic and automated way. This means that if the total cost of an invoice, comprising printing and postage expenses, possible payment reminders, remittance and cash management as well as archiving, is £10, e-invoicing can help save £6 per invoice!
Manual steps completely removed for the sender
Bear in mind that your invoicing costs aren’t only the direct expenses of buying e.g. paper; the time you spend creating and sending invoices could be spent on your billable activities, too. E-invoicing enables you to forget about:
• Sending reminders
Fraud prevention and short DSO
On top of this, you are much more likely to receive your payments promptly, accurately and on time. As the processing system is fully automated, no one can alter your invoice. The e-invoicing address ensures your invoice reaches the right client (and even client department), and you can be certain that the money will appear on your account as agreed. This means that DSO (days sales outstanding) can, in most cases, be shortened by several days.
EU members and the European Commission introduced Directive 2014/55/EU, a European Standard for e-invoicing to combat the large variety of e-invoicing formats. Not having a common standard complicated matters and increased costs. Under the EU norm, all contracting authorities will have to accept electronic invoices. The EU predicts that e-invoicing could bring about annual savings of up to 40 billion Euros across the union in B2B alone.
Different countries are at different stages of how deeply embedded e-invoicing is in their business culture. However, the European Union requires its member states to use e-invoicing in public procurement processes as of November 2018.
In England, the Small Business, Enterprise and Employment act enables the government to regulate the use of e-invoicing in public procurement. Wales, Scotland and Northern Ireland set their own regulations. Currently, it is recommended that public contracting authorities use e-invoicing, and particularly the NHS has gained significant savings by automating its invoicing processes.