Electronic invoicing, or e-invoicing, has increased in the last few years, with both companies and governments around the world catching on to the many benefits.
Although it may seem as one particular form of invoicing, e-invoicing is a process that incorporates proforma, commercial and many other types of invoices—but better.
In fact, in the Global E-Invoicing Study of 2012, 73% of businesses reported having used e-invoicing in some form—a 14% increase over the last year.
In America, the federal government uses e-invoicing for 40% of its invoices out of a total 19 million invoices each year. The federal government is also the largest purchaser of goods and services in the country.
The benefits of e-invoicing are undeniable—it offers the ability to cut costs by both expediting the invoicing processes as well as cutting down on the number of staff hours needed for invoices.
The US treasury has even estimated that using e-invoicing in all federal government departments would allow them to cut down costs by 50% for an annual savings of $450 million.
For businesses, the savings could be just as impactful. Because of the adoption of the process, e-invoicing trends for 2017 could impact your business in important ways.
Although most small businesses have some familiarity with e-invoicing, they are still mostly dependent on the standard forms of invoices.
However, this is beginning to change across the world. According to Billentis, countries in Scandinavia, South America and especially Mexico have taken the lead in e-invoicing.
They have adopted the new process and regulations surrounding it in much more advanced ways than most western nations. European nations, the US, Canada and other western countries are working to catch up, while Asia, Africa and Russia are far behind.
Most of these countries catching up are being pushed by their governments in order to more fully adopt e-invoicing.
In fact, the EU has mandated that member states’ Public Administrators will be required to adopt e-invoicing by November 2018. The US Office of Management and Budget has also recommended that all government agencies adopt e-invoicing by the end of 2018.
In South America, Brazil has become a leader in e-invoice adoption. Mexico, Ecuador and Peru, besides others, are actively working on improving e-invoicing adoption in their economies.
As it stands, although small to large business are independently and inconsistently adopting e-invoicing, it is the governments in each country working towards making e-invoicing the standard.
As mentioned above, one of the major benefits of e-invoicing is the faster, more accurate data communication between the vendor and buyer. This feature is what has led governments and businesses to move steadily towards a type of economy known as the “real-time economy.”
The real-time economy allows for the buyer to efficiently check the accuracy of the data the vendor submits. If the invoices are sent traditionally, printed and mailed, there may be significant delays in the process and payment.
With the real-time economy, buyers can quickly check and immediately inform vendors of errors in their invoices. These errors could include incomplete or inaccurate data or rejections for other reasons.
This can all take place within a few hours or even a day, and the vendor can submit the new invoice with corrections. Alternatively, the paper-based invoicing can take weeks at a time, meaning the vendor will be paid quite late.
This can help in those situations when small businesses are paid 72 days late on average, and freelancers even worse. With invoices being paid faster, businesses will have more cash flow to help them provide payment to their monthly financial obligations.
Although there are many benefits of e-invoicing for large businesses and governments, there are also many benefits that will extend to small and medium-sized businesses as well.
In fact, e-invoicing has lots of benefits for these businesses. They include:
These are of course only 5 of the biggest reasons that e-invoicing will benefit business of all sizes.
These e-invoicing benefits in many ways do not just cover businesses and governments. In fact, they extend to the average customer and the economy overall as well.
As these trends continue to move upwards, the real-time economy will become more impactful and this will lead to faster payment, resolution of disputes and of course much greater investment with the time and money saved.
With these great benefits and upwards-moving trends, e-invoicing will have a great, positive impact on all parts of businesses in the future.
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