Benefits of E Invoice – A Business Perspective

E-invoice would bring in a practice which would benefit various stakeholders in the long run. Some of the key stake holders other than government in this new direction are Suppliers, Customers, Business, Employees, Financial institutions. Any Business Transaction has touch points with one or several of the above stakeholders. With multiple business transactions performed in a single day these touch points are visited several times in a day. Employees of any organization would be benefitted most by the introduction of E Invoicing. Just imagine the hours saved on data Entry, account reconciliation, e-filling, reporting etc.

There are numerous benefits to be gained by shifting away from paper and manual based invoice processing to more digitised approaches. Proper electronic invoicing is considered by most to be the transmission of a structured EDI or XML document from the supplier into the buyer’s Accounts Payable (AP) system. Depending upon the location of the buyer or supplier, regulations also may require a government issued identification number, qualified electronic signatures, specific content fields and long-term archival of the invoice.

1. Digital Invoice Capture— Data re-entry is the most problematic of the processes as it is time-consuming and error-prone. E-invoicing fully automates the invoice capture process with data being routed straight from the supplier into the buyer’s AP system.
2. Automated Invoice Validation Most AP organizations perform validations of line items on the invoice before routing the invoice to Line of Business managers for approval. In addition to capturing the data electronically, most e-invoicing solutions will also perform field-level validations of the content as well.
3. Automated Matching – One of the more complex validations performed is the matching between an invoice and the related documents in the procure to-pay lifecycle. However, the costs, accuracy and time required for the validations can be significantly reduced through automation. A key component of an e-invoicing solution should be matching process between the contracts, PO, invoice and goods receipt notice.
4. Vendor Self-Service A key element of e-invoicing program is that it will offer vendors the ability to check the status of the invoice submission and acceptance by Customers. This is also going to help MSME business for working capital.
5. Enhanced Cash Management – Paper or e-mail based invoices take longer to become visible in AP systems. Paper and e-mail based documents also have a higher probability of being lost in the approval process. Without visibility to invoices in the approval process, cash managers lack the comprehensive data necessary for forecasting. A large invoice, which is not discovered by the treasury organization until shortly before payment, could result in a significant cash deficit relative to forecast. As a result, a business may need to borrow funds at the last minute at a relatively expensive premium. By processing invoices electronically, all upcoming payments become visible to the treasury organization in the accounting system improving forecast accuracy.
6. Enhanced Account Reconciliation – To simplify GST account reconciliation for suppliers and customers since the Invoice details provide is automatically passed to GSTN for returns. The issues of ICD , Debit / credit note matching , Reverse charge etc will be much simplified.
7. Lower Carbon Footprint – Proponents of e-invoicing also promote the lower carbon footprint of electronic transactions. In theory no paper is consumed. Nor is there any transportation of the paper from supplier to the buyer. Although the digitization of a single invoice does not lower greenhouse gas emissions significantly, the cumulative effect of removing millions of paper invoices from the financial supply chain is impactful. The impact of removing tens of billions of paper invoices from the financial supply chain would be significant.
8. Global Acceptance – There are several International E-Invoicing Framework’s / platforms like PEPPOL which facilitate seamless connectivity between global buyers and sellers. Most of this platform will open up Trade Promotion for business.