eInvoicing – The Key to Improving your AP/AR Operations

The “electronic invoice” or “e-invoice” is not necessarily a new concept, but there is still some confusion surrounding what exactly falls into this definition. Here we answer some questions regarding the term and look at the benefits of genuine e-invoicing compared to other commonly used invoice types.

What is an e-invoice?

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 solutions 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.

Comparison of invoice types

Here’s a quick overview of the most common types of invoices and how they compare.

 Paper or printed invoice

Paper invoices are most often created digitally then printed and sent by post to the counterpart. It takes time for the invoice to reach the recipient, and there is no traceability of the delivery.

 PDF (and other image files) invoice

Invoices exchanged over email as PDF, Word, or other image files are a first step away from a paper-based invoice flow. However, these are not e-invoices because data must be manually keyed in or captured using OCR. In addition, emailed invoices are often printed out in paper form for matching and archiving purposes.

 E-invoice

An e-invoice is issued, transmitted, received, and processed electronically. E-invoicing is an integrated solution that enables a fully automated flow from one company’s ERP system to another.

What are the 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% in most cases,” (Bruno Koch, “The E-invoicing Journey 2019-2025,” 4.1.5).

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