Electronic invoicing (or e-invoicing) is the exchange of an invoice document between trading partners, such as a business and its supplier, in an integrated electronic format. Simply put, instead of posting a traditional paper invoice to a customer, an e-invoice can be sent directly from your accounts payable system electronically.
The process called e-invoicing includes many different technologies and data capture options, and is essentially referred to as a concept to describe any method by which an invoice is electronically transmitted. At its most basic form, an e-invoice could be a PDF version of an invoice document which is emailed to a client for payment, and the data is then captured by software. At more complex levels, e-invoicing is part of fully integrated invoicing software and other business systems between businesses and clients without any human intervention in an end-to-end electronic process.
Traditional invoicing, like most paper-intensive processes, it has a number of drawbacks. It is manually intensive, prone to human error, and the source of significant costs due to inefficiencies. Removing the human element of the invoicing process can lead to significant savings.
E-invoicing offers considerable cost savings, mostly due to increased efficiencies due to ridding themselves of costs inherent with manual and time-consuming tasks such as printing, filing forms, filing envelopes, mailing, scanning, data entry and archiving. This is especially true of companies with a high volume of invoicing that can be overwhelmed with paper invoices and other forms. Some research suggests companies will save up to 80 percent in invoicing costs simply from gains in efficiency.
Beyond the cost savings through improved efficiency, the other benefits of e-invoicing include reduced errors, faster dispute resolution, fewer unpaid and lost invoices, improved customer service and better customer retention. Business can also factor in the cost benefit of time, as employees will be freed up for initiatives other than producing invoices.
As businesses on both sides of the invoicing equation sign on for e-invoicing, the integration of the technology will increasingly become even more important. From a conceptual standpoint, e-invoicing is simple to implement considering the potential cost, time and customer service benefits.
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