In recent years, electronic invoicing, also known as e-invoicing, has gained momentum in businesses as well as governments all over the world. Consequently, not a single year in the last decade passed without being declared the year of electronic invoicing breakthrough. The technology has even been recognized as an important development in Europe.
E-invoicing is not a new concept as it has been implemented successfully in many countries. However, there is need to further develop the process to increase the volumes of electronic invoices.
European Union countries are among those seeking to drive this move. For instance, the EU has set the goal to make electronic invoicing the main method of invoicing by 2030. To achieve this, it has launched several initiatives to drive the adoption of this technology including the introduction of a European Standard for e-invoicing to eliminate the many e-invoice formats used across the European Union.
Benefits and obstacles to e-invoicing
The main benefits of switching to e-invoicing include:
- Reduced manual labour – e-invoicing fully automates the invoice capturing process eliminating handling steps such as printing, posting and sorting.
- Increased accuracy – paper invoicing has high chances of errors as it requires accountants to ensure data and calculation accuracy. E-invoicing, on the other hand, identifies potential errors to ensure better accuracy of invoices.
- Saves money – e-invoicing saves costs by eliminating manual work, reducing paper use and avoiding late deliveries. It also allows companies to take advantage of early payment discounts.
- Saves time – faster processing is an obvious incentive of using electronic invoices. E-invoices are transferred automatically into the accounting system eliminating the time needed to open them and transfer the information to an accounting system.
- Lower carbon footprint – e-invoicing significantly reduces the carbon footprint of a company as no paper is utilized in the whole process.
The challenges of adopting e-invoicing include:
- Lack of standardisation – e-invoices come in different formats and are produced according to different standards. This hinders the smooth transfer of an electronic invoice from one organisation to another. Consequently, companies do not get the opportunity to fully realize the benefits of e-invoicing.
- Security – many organisations are concerned about the security of electronic invoicing systems.