eInvoicing
eInvoicing (Electronic Invoicing) is the issuing of invoices by email or by other electronic means directly to a purchaser. The EU eInvoicing Directive (2001/115/EC) came into effect in January 2004, and introduced a set of invoicing rules that covers all EU member states, and replaces the invoicing rules for individual countries. It also allows for cross-border eInvoicing and electronic storage, and underlined the importance of eInvoicing.
Each year in the UK public sector alone, approximately half a billion paper invoices are processed manually. eInvoicing helps to cut the amount of paper used in by buyers and sellers when ordering goods. The OGC (Office of Government Commerce) calculates that the traditional ordering and supply process involves at least six pieces of A4 paper per transaction.
Taking advantage of eInvoicing allows company to get paid quicker, as time wasted is not waiting for invoices and payment to arrive by post. As a result of this, the Days Sales Outstanding (DSO) figure (the amount of time between a sale and the payment received for that sale) can be dramatically reduced. The average DSO is between 40-60 days, but using eInvoicing and eProcurement can considerably reduce this.
eInvoicing will also reduce the costs associated with invoicing. Recurring costs such as printer cartridges, paper, envelopes and postage can be cut, as these are no longer required for invoicing. In addition, employees do not have to spend time putting invoices into envelopes and franking them. The environmental impact of companies will be lessened as much less paper and other consumables are used.
There is less likelihood of an invoice not being received, or for it to get lost before it is paid. eInvoices are received straight into the recipient’s inbox rather than in a general pile of letters. There is also a much lower demand for copy invoices, and if they required, copy invoices can be sent and received immediately. This helps to reduce the DSO, as there is no delay in waiting for invoices to be sent out and received.
eInvoices are received by the right recipients immediately, which allows any problems or discrepancies with the invoice to be dealt with quickly and efficiently with the minimum of delay. This also helps to reduce the DSO time and improves efficiency. Traditional invoices need to be processed manually, which takes time, and there is a margin for error. eInvoices are processed electronically which takes a lot less time, and leads to fewer human errors.
Buyers can quickly and easily see how much they’ve spent with a supplier using Self Billing otherwise known as Online-Billing or Evaluated Receipt Settlement (ERS). Payment can be authorised and instantly paid directly to the supplier electronically, without the need for an invoice. This helps to speed up the DSO as buyers don’t need to wait until they receive an invoice before they pay. In addition, there may be an early settlement discount if the invoice is paid within a certain amount of days.
eInvoicing is now accepted and promoted throughout the European Union. Buyers and suppliers can trade in different countries, different time zones and using different currencies as if they were trading locally. In addition, the environmental benefits and costs and time saving of eliminating paper from the invoicing process should not be overlooked. Find out more about how ProcServe can help you implement eInvoicing.
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