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What is E-invoicing?- Definition

Electronic invoicing (e-Invoicing) is the exchange of the invoice document between a supplier and a buyer in an integrated electronic format. Traditionally, invoicing, like any heavily paper-based process, is manually intensive and is prone to human error resulting in increased costs and processing lifecycles for companies.

Aavenir glossary e-invoicing

Understanding E- Invoicing

An electronic invoice (e-invoice) is an invoice that is issued, transmitted, received, processed and stored electronically using specific document formats. E-invoices are digital throughout the entire document life cycle, from issuance to archiving.

E-invoicing can help replace manual tasks with automated business rules and actions to increase efficiency, minimise error handling, and help businesses comply with e-invoicing legislation.

What is not considered an e-invoice?

While there are many accepted e-invoice formats, not all digital invoices are e-invoices. Here are two types of invoices that do not make the cut:

  • PDF invoices, typically sent by email, are not e-invoices. PDF invoices cannot be processed automatically because they are not sent in a structured format.
  • Paper invoices, even if they are converted to digital format, are not e-invoices because they were not issued electronically.

Advantages of E-Invoicing

The latest Billentis Report reveals that “Compared to conventional paper invoice processing, the automated e-invoicing will result in cost savings of 60-80%.” 

Where does all that savings come from? When done right, e-invoicing gives you overview and insight for cutting costs and increasing profit margins that aren’t possible with PDF and paper-heavy invoicing. Here are some of the advantages of e-invoicing that add up to high ROI, long-term savings, and better business in general:

  • Touchless operations: E-invoicing enables the automation of time-consuming and error-prone tasks like data entry, matching, and approvals so you can reallocate staff to higher-value initiatives.
  • Better cash flow and lower DSO: Removing paperwork and manual tasks can reduce your days' sales outstanding by several days in most cases.
  • 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’s also no risk of invoices being lost in the mail or sent to junk email.
  • Real-time delivery and processing: View live delivery and processing status of documents on cloud-based platforms or directly from your ERP.
  • High-quality data: E-invoicing lets you access and analyzes line-level data that drives business growth through better financial and procurement decisions.
  • Accurate invoices: Automated invoice validation and enrichment help ensure only correct transactional data enters your ERP system. Fewer discrepancies mean shorter cycle times and better business relations.
  • Track and traceability: E-invoicing automatically tracks transaction history and the entire document journey and so you don’t have to spend time doing it manually.
  • Environmentally friendly: E-invoicing not only helps you lower paper use and CO2 emissions; this sustainable effort also lowers operations costs, leads to higher profitability, and creates a transparent, trustworthy brand reputation.
  • Fulfill legal requirements: E-invoicing with the right service provider ensures you are always up to date and compliant with B2B and B2G tax and archiving legislation.
  • Remote work-ready: E-invoicing tasks can be completed from anywhere without the need for extra resources like printers, scanners, or the postal service.

Explore Additional Resources to Know More

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