In 2014, the EU passed a directive that standardised electronic invoicing in public procurement across the EU Member States. Adopting a single European Standard on E-Invoicing brings considerable advantages for public and private organisations, but is your business ready to embrace the change? And how can you maximize the benefits on offer?
The switch to digitisation and away from the paper-heavy processes is already a popular move for companies, but it remains a voluntary transformation. E-invoicing (or electronic invoicing) is a critical part of the transformation that public bodies have been obliged to adhere to.
The Directive did not make e-invoicing mandatory for suppliers and SMEs, with the EU agreeing that enterprises would have faced considerable additional costs and a severe administrative burden. But this has effectively undermined the plan, with e-invoices representing a very low percentage of invoices they receive.
In response, the EU will require private enterprises to adhere to the same structures and format and have been organising e-invoicing onboarding sessions to raise awareness of preparative steps SMEs and private sector suppliers will have to take.
The question is how prepared businesses are to adapt to the new system? And can automated invoicing systems help to maximise the benefits e-invoicing will bring?
Most businesses are already sending their invoices electronically, mainly via email but including other office equipment like fax machines. E-invoicing is an automated process that generates and delivers invoices electronically in a standard format, meaning common modes of invoicing, like pdf or Word format documentation, HTML invoices on a web page, and scanned paper invoices are no longer needed.
Significantly, it works with a business’s invoice automation system, integrated with ERP or accounting software – which is good news for SMEs who use automated invoice solutions. But there are still aspects that SMEs and private enterprises will need to address if they are to successfully transition to e-invoicing such as:
There are some clear benefits to the adoption of e-invoicing. Research suggests that digitized invoicing processes can deliver cost savings of 60-80% over traditional paper-based invoice processes. But this kind of benefit can be maximised when the whole invoicing process is fully automated.
This is due to the reduction of manual tasks including manually keying in invoice data. Invoice details are automatically validated and then imported into an existing AP automation solution, touch-free.
Cash flow is a critical part of business operations. E-invoicing helps to achieve greater control over cash flow with real-time data for analysis.
Paper-based invoicing brings with it a plethora of supply and service costs. This includes paper and ink supplies, postal charges and storage costs like archiving labour, processing and attaining payment approvals. AP automation solutions already remove these costs, ensuring e-invoicing need not worry about them either.
For public bodies, public procurement processes traditionally involve a variety of regulations. The process is made even more complex in cross-border transactions between the EU Member States where laws differ. This scenario ensures risks for errors, mislaying and corruption were high.
Because it sets a single standard, e-invoicing negates this risk, providing a reliable single process that ensures invoice and procedural details are transparent and trackable. It also means less time is spent on managing inquiries.
With manual invoicing processing, the risk of human error is well-documented. Because it is supported by automated AP systems, manual entry is unnecessary, and with it the time spent balancing accounts and searching for discrepancies is removed.
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