What should you know about e-invoicing prior to using it?admin_logicfusion
What is an electronic invoice or e-invoice?
An electronic invoice or e-invoice is a means of generating electronic format of invoice in a digital format that is in the following manner:
- EDI, XML that falls in the structured data category
- unstructured data invoices in PDF/TIF JPEG/Word format or e-mail text that represent the unstructured data invoices or e-invoice
- Hybrid data
It is to be understood that the transmission channels available for receipt of digital format of invoice are fax server e-mail, web service and other such means that are digitally available for the purpose. However, it is equally important to understand that electronic invoice is not to be confused with the paper form converted to electronic format as that is completely different.
Why opt for e-invoice?
The foremost reason is that printing, stamping, using manual means of generating an invoice is not efficient, not always viable especially when the volume increases.
Manual means of generating invoice is also cumbersome and a lot of paper, time and money are consumed along with man-hours that can be utilized for better.
The process with which a manual invoice is developed, processed and then paid for is complex and for this reason digitization is essential for any business that requires creation and handling of invoice in large volume for better efficiency and for saving a lot of time.
The government of India has already deemed digitization of invoice as legal means as it is quite understandable that is in line with taxation purpose with the inclusion of GST e-invoice.
What are the advantages of E-Invoicing?
As it is already stated above that the biggest advantage is that of not putting in manual work and creating manual invoice, other than that the biggest task of fully booking invoice is an automated process. It saves a lot of time, order reference to incoming invoice is automatically generated, and invoicing payments are handled in an efficient manner.
The liquidity of handling invoices is a great advantage to the supplier by increasing the chances of seamless workflow with regard to payments.
Other advantages of e-invoice are:
- Businesses will be able to save up to 60-80% of their processing costs when they switch to digital invoice.
- Efficiency and transparency in the process is seen with regard to digital invoicing that are as per the legal requirements of processing invoices.
- Invoices that are digitally exchanged between the businesses are encrypted that makes it absolutely safe and secure for those involved in sending and receiving sensitive financial data.
- Work flow becomes smooth and faster bookings of invoices are seen saving a lot of time.
- Legal requirements are fulfilled by the businesses by generating e-invoice and GST e-invoice at the time of taxation.
Advantages of GST e-invoice
GST e-invoice facilitates the user in automatically handling invoice details when it comes to GST returns including that of e-way bill. The process is automated and simplified that helps in reducing the processing costs, improving payment cycles and reduces any disputes related to billing. Thereby improving business efficiency and increasing employee productivity.
Requirements for e-invoicing
Changes in relation to e-invoicing requirement are as follows:
- Enabling reporting invoices to IRP
- Obtain IRN that will be generated by ERP or the software provider who will provide the upgraded version facility
- The client can choose the mode as per their need that can be an offline based tool, mobile app or an API based app