Almost every business needs to invoice someone for something. In general, an invoice is paperwork business owners use to confirm to their customers that they performed a service or delivered a product, and now the customers owe businesses money. However, more business owners have started ditching the humble paper invoice in favor of electronic invoices in the past few years.
The term “electronic invoice” or “e-invoice” is not necessarily a new trend. However, there is still some confusion surrounding its definition and how it helps businesses save time, money, and effort to achieve customer satisfaction. This article will answer some questions regarding the term and how businesses benefit from electronic invoices.
1. What is an electronic invoice?
An electronic invoice (also known as an e-invoice) is an invoice that is issued, transmitted, received, processed, and stored electronically with specific document formats. Electronic invoices are digital throughout the entire document lifecycle, from issuance to archiving.
Electronic invoices can help replace manual tasks with automated business rules and actions to increase efficiency, minimize error handling and help businesses comply with electronic invoice legislation.
However, though there are many accepted electronic invoice formats, not all digital invoices are electronic invoices. For example, let’s see why these two types of invoices are not considered electronic invoices:
- PDF invoices: PDF invoices are typically sent by email and cannot be processed automatically because they are not sent in a structured format.
- Paper invoices: Even if converted to digital format, paper invoices are not electronic invoices because they are not issued electronically.
Electronic invoicing (also known as e-invoicing or digital invoicing) is the process of billing a customer online rather than by email. The customer receives their invoice via email or a secure portal (for example: an online account). In general, businesses use e-invoicing to give customers the ability to pay their bills online.
If you are thinking about using an electronic invoice instead of a paper invoice, keep in mind that you need to include the same information you would on a paper invoice. Like traditional paper invoices, an electronic invoice includes key information about a customer’s purchase, such as:
- Customer and seller information;
- Amount due;
- Payment due date;
- Acceptable payment methods;
- Early payment discount (if any);
- Invoice number;
2. Why electronic invoice is important for your business
Digitizing invoice data helps businesses reduce the risk of invoice errors and exceptions, cutting costs and increasing profit margins that aren’t possible with PDF and paper-heavy invoicing. When electronic invoices are transmitted over a digital business network and programmed with related document data and business rules, they can be validated automatically before posting for payment. Digital information is always easier to access across systems than paper sitting on someone’s desk. The list below gives you a detailed overview of how electronic invoice contributes to better business in general:
- Time-saving with an automation process: Using electronic invoices means automating time-consuming and error-prone tasks such as data entry, matching, and approvals. You can then reallocate your staff to higher-value initiatives.
- Secure document and data exchange: Encrypted file transfer, digital signatures, and secure networks all make e-invoicing the safest way to send and receive invoices. There is also no risk of losing invoices in the delivery or the junk mailbox.
- Real-time delivery, easier traceability: You can track your documents’ delivery and processing status on a cloud-based platform or directly from your ERP. The e-invoicing also tracks the whole transaction history and entire document journey. By that, you no longer need to spend time doing it manually.
- Higher-quality data: Electronic invoice allows you to access and analyze line-level data that drives business growth through better financial and procurement decisions.
- Accurate information: Electronic invoice validation and enrichment ensure only correct transaction data enters your ERP system. Fewer discrepancies take shorter cycle times and maintain better business relations.
- Fulfilling legal requirements: Using electronic invoices with the right service provider ensures that you are always up-to-date and compliant with B2B and B2G tax and archiving legislation.
- Remote work-ready: Electronic invoice tasks can be completed from anywhere without the need for extra resources like printer, scanner, or the postal service.
- Better cash flow and lower DSO: Electronic invoice replaces paperwork and manual tasks that reduce your days sales outstanding in most cases.
- Convenience: You will no longer have to worry about things such as ink, paper, envelopes, or stamps when billing customers. Instead, you just generate and send the invoice electronically.
- Lower operating costs: As stated above, most of the operating and equipment costs will be reduced, leading to improved cash management and higher profitability.
- Environment-friendly: Printing fewer paper invoices and storing your files electronically helps you lower the paper use, electronic use and CO2 emissions, creating a transparent, trustworthy brand reputation.
If you ever considered using electronic invoices, think about taking it to a higher level! An invoice might be the end of a transaction, however, it shouldn’t be the end of your customer experience.
AccountDock is an online software application that allows Stripe-powered businesses to provide electronic invoice history for their customers. Customers may want to review their invoices countless times to ensure that their invoices have been charged successfully and correctly.
Creating an online invoicing history for your customers allows them to manage their invoices right away, generate PDFs from their receipts, or send an email directly from the website. It shows that you genuinely care about your customers’ happiness and satisfaction, even after buying your product or using your services.
How to create an electronic invoice history for your customers? It’s simple. Just connect your Stripe account, drop a few code lines, and AccountDock will take care of the rest.
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