What is E-Invoicing, and Why Is It Necessary?
With the world shifting towards an online mode in various aspects of its organizational structures, there are many changes everyone needs to be aware of. One of them is E-Invoicing, which is essential for efficiency and easier compliance. This can help make working for your organization more accessible, makes your work more transparent, and enables you to manage your taxes and finances easily.
This article will deal with understanding what e-invoicing is, its benefits of e-invoicing are, and how you can implement it in your organization. Read to know about the various processes involved in it and how it helps out any company.
What is E-Invoicing?
E-Invoicing, as the name suggests, is a method that involves the generation and exchange of an invoice in an integrated electronic format. It has now become a common B2B practice because of its efficiency. In the Indian scenario, tax evasion is a big issue for the government; the generated fake invoices can be curbed by e-invoicing. Moreover, traditional ways of manual invoicing are prone to errors, so e-invoicing is a perfect option to handle every aspect efficiently.
You can track e-invoices very quickly, and creating a fake one is nearly impossible as they are much easier to track and analyze. In addition, there is no duplication or mismatches in e-invoices; they are all computerized and have them saved in a database. It helps you manage the tax filing process much more efficiently, and the automation makes sure that every aspect of it works smoothly.
What are its benefits?
There are many benefits to e-invoicing, which are listed as follows:
● First, there are many steps involved in invoicing and creating the bills that are made in any business. These steps can be tasking and can drain the energy out of the employees of any organization. E-Invoices help your organization speed up this process and make sure that you can make the process easier.
● The cost of printing one invoice is not much. However, when you print out many invoices, the costs can be really high. These costs can be cut down to zero or marginal fees if all of it is converted to electronic invoicing.
● Third, if you have an accounts payable department, e-invoicing is a perfect way to get a leeway into automating it. Automating the organizational work causes the entire process to go smoothly due to the reduction of manual involvement. Duplication, wrong invoices, and fake invoices generated can be curbed using e-invoices.
● Finally, E-Invoicing is a good way to keep track of your invoices. Invoices generated manually once they leave your organization cannot be tracked further. However, e-invoices ensure you know when it is paid, sent, and viewed. This is one of the best reasons for going for e-invoicing.
● Fourth, it reduces the risk of fraud in invoicing because it helps people check the validity of the invoice sent to them. These invoices, once confirmed, can be used to see if the organization is committing fraud or not. If it is, they can help the authorities dole out the necessary punishment to the organization.
● Third, E-Invoices help buyers reconcile with their GST bills much more quickly. It allows them to take better care of their taxes and easily manage the organizational finances. E-Invoicing can make the processes much more efficient and ensure that the accounts payable and receivable work properly.
How to implement it?
It is shockingly easy how you can implement e-invoicing in your organization. First, you need to get your organization registered for compliance with e-invoices. Once that is done, you are pretty much set to go. You need to be careful about the things you mention on your invoice; you need to mention the date, the invoice number, the invoice type, and other details. This includes the PIN code, the GST number, and such information. The billing and shipping details are pretty important too; without them, tracking them is not possible. Finally, the GST and the tax details need to be included to keep track of your organization’s various taxes and accounts.
Conclusion
In conclusion, e-invoices are a great addition to your organization and can be easily managed. They help you keep track of your AP and AR departments, tax filings, and GST bills to ensure that nothing goes awry. You can manage, track, and pay your invoices for easier management of your entire organization. Tax fraud is also a significant issue you need to tackle in your organization which is made easy by e-invoicing. So, you should make sure that your company gets acquainted with e-invoices to make sure that you can manage everything efficiently and ideally to make the processes easier.
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Positive Changes AP Automation Brings To The Table
Digital processes are taking over industries at an alarming speed. They provide a ton of advantages over our conventional way of doing things. They make organizing everything easy, do things more efficiently than we do, and most of all, the human error is removed from any processes you adopt them for. AP automation is no different. It brings so much to the table.
Most companies are already trying to adopt these strategies into their company, and you want to be one of them. If you don’t know what AP automation is and are trying to find information about it, then you are at the right place. We’ll explain all the things that AP automation brings to the table. Before beginning, let’s briefly understand what AP or accounts payable automation is.
What is AP automation?
Accounts payable is the portion of the finance department that takes care of paying vendors and sellers. They handle everything related to payments regarding received goods and services. It takes a considerable time for the finance department to do everything manually. If you didn’t already guess, AP automation is the automation of this process.
In layman’s terms, after adopting the AP automation strategy, you will be paying your vendors electronically rather than doing everything on paper. This digital workflow allows your employees to focus on more important matters and takes a big load. However, it also streamlines processes and makes everything much more accessible.
Apart from symbolic advantages, you will also save a ton of money. When everything is done on paper, companies spend a considerable chunk of expenditure on stationery. Organizing and maintaining all this paper, in turn, requires more employees. So, you can not only save money that you spent buying a piece, but you can also decrease the task force as maintaining an automation system requires a few individuals. It increases efficiency by taking care of all the time wasters and money eaters. Workload distribution and paper problems are also taken care of.
How AP automation impacts different roles
AP automation plays a huge role in getting a useless load off employees. They can use that time to cover more work and make the company more efficient. In this section, we’ll be going through the impact of AP automation on essential roles in the company:
● Accounts payable managers
An accounts payable management covers every operation there is of funds payable processes. The managers are considered experts and govern the whole department’s work. Managers are at fault if your accounts payable department isn’t doing so well. When you adopt AP automation, the job of AP managers becomes less tedious. They can become better at what they’re already good at, i.e., managing the AP department. It gives the management staff these advantages:
1. Better visibility along with insights into every payment.
2. Reduced errors like duplicate payments or bounced payments.
3. 24/7 access to the payment portal to remotely perform any action they want.
4. They’ll save time on fielding status updates from vendors.
5. Tools that require less manual work
● IT managers
The accounts payable department receives a lot of visits from the IT department. Whether it is faulty machines or security risks, IT departments have some reason or the other that they need to dedicate their time and resources to the AP department.
Adopting automation strategies allows IT departments to relieve resources as maintenance of quality AP automation is rarely an occurrence. It also gives more control of the AP department to its managers.
Security is of great concern in almost every other industry. Digitization has allowed scams and frauds to be committed very quickly. A few slip-ups, and you could be the next victim. Security is an area that AP automation has advanced in already. It allows you to form positive relationships with your vendors. As every piece of information is available to you, it makes processes very smooth.
● CFO
CFO is the chief financial officer; they are an individual responsible for managing accounts payable strategies and every operation related to finance. It is a CFOs job to ensure that accounts payable is something that helps the company grow by organizing and keeping processes errorless. However, if the operations are kept manual, chances of error increase no matter how good of a strategy you adopt.
AP automation allows the CFO to monitor ongoing and past payments. In addition, it enables new revenue streams by converting to virtual cards. As a result, CFO becomes more and more efficient, allowing your company’s profit to increase.
Conclusion
Many AP automation solutions allow companies to track payment by type, payee, or vendor. This gives complete visibility into the accounts payable department. Another great thing is that adopting AP automation does not take too long. So don’t listen to rumors and talk to the experts before deciding.
AP Automation Becoming Easy
AP departments or accounts payable departments are a crucial part of a company. However, if they use conventional methods, they take up too many resources. In terms of both workforce and cost requirements, the AP department is up there. With other departments, this cost and workforce can’t be decreased because of the type of work. However, in AP, this amount can be cut to a minimum by adopting AP automation.
As the name suggests, AP automation is the automation of processes in AP, such as processing invoices, rendering payments, etc. The system is so revolutionary that every company is trying to adopt it. If a company doesn’t embrace the system in 5 years, it will surely be behind the competition. If your company is trying to adopt the approach and is researching the benefits and features of AP automation, then you are at the right place. Here’s how you can quickly adopt AP automation.
Automating your payments
The accounts payable department’s main job is to handle payments to vendors and sellers for procuring goods and services. Hence, most of the time, the AP department will be dealing with costs, and having a suitable payment method helps them out a lot. If you are still using conventional paper methods, you will be spending a good amount on managing this method. However, if you switch to electronic methods, you will be much better off. Some of the popular electronic payment methods are:
● Automated clearing house(ACH)
● Wire transfers
● Purchase cards/Company cards
● Real-time payments
● Virtual cards
If you have the proper accounts payable software, setting up the automation process could take less than 30 days. This means you will have a faster payment process with a reduced bottleneck in a month. Your AP department’s paper burdened days will be over. Security with digital trails for taxes and audits and digital security of the payments will also be there. Also, if you choose virtual cards as your payment method, which is highly recommended, you will have revenue on each payment as well.
Invoice automation
Electronic invoices are more than just “invoices in a pdf format” to remove any misconception from your mind. An invoice in a pdf format still needs to be downloaded and printed. Many people are misguided and believe that converting invoices into pdf is adopting the electronic invoice system. Manually scanning invoices and inputting data by hand cannot be considered part of automating invoices. This method also doesn’t remove the primary anomaly i.e. paper.
Invoice automation can be achieved by modern invoice software. They enable invoice automation by taking over manual processes such as scanning and processing invoices. This switch also saves you time and money because conventional methods are so costly and inefficient that they are not worth it today. Furthermore, if you factor in human error, it becomes a no-brainer. Modern software, on the other can do all the things mentioned below:
● Automatically inputs invoices into your workflow once they are received from vendors.
● This software comes integrated with 3-way matching OCR engines that you can use to eliminate errors from invoices.
● They can scan invoices with a whopping 99% accuracy, which conventional means cannot achieve.
● You reduce the risk of fraud by almost 85%.
● Remote access to status updates and approvals is available from a smartphone or a laptop with a stable internet connection.
Keeping your current processes
The best thing about AP automation is how you can keep the processes you work with. So you don’t have to throw all of it out the window. Instead, you should switch to automated systems while maintaining your current processes. Automation will eliminate the tedious parts of the plans, and you will be able to keep the practical aspects of your system as they were.
Most CFOs or chief finance officers have already sped up digital transformations in their companies as the pandemic has changed the world quite a lot, and the trend will only continue at this stage. The pandemic introduced us to remote work and how it can be more effective. Hence, to follow this trend, you need to automate processes, or the system won’t be viable. Along with keeping your current processes, you can also keep your existing bank with which you have good relations. You can transfer the bank from the old payment method to the new one.
Conclusion
The process doesn’t take much time to adapt fully, and now that you’ve seen how many advantages it can provide, you will most likely start adopting it. In addition, most experts have suggested AP automation will grow to be a $3 billion industry in 3 years, which means that right now is the perfect time to invest in it.