Electronic invoicing (E-Invoicing) is the automated digital exchange of invoice information between suppliers and buyers’ software through a secure network. Whilst the introduction has been around for a while now it has been drowned out by all the other noise that’s been happening this year. The idea of e-invoicing is to make the sending of invoices more secure. The invoice will arrive in the client’s software be it MYOB, Xero or QBO.
How E-Invoicing Works
When a business sends an e-invoice, it is securely transferred to their customer via an e-invoicing network. To access an e-invoicing network, both the business and the customer need an access point. Tickstar hosts access points that allow businesses like Xero to connect to e-invoicing networks around the world.
Once the e-invoice has been sent by the supplier, the customer will receive the invoice in the draft bills tab in Xero with the contact name, total and GST amount prefilled. From there the invoice can be checked and approve by the customer.
Advantages of E-Invoicing
- E-invoicing reduces errors as it uses standardised data that is validated before the e-invoice is sent through the network to your software.
- While you still need to apply your internal checks and assurance process before paying your invoices, you may see cost savings due to the automation of manual administrative tasks and faster processing. With e-invoicing you don’t need to: re-type or scan invoices, make corrections or chase missing information.
- Payments may also be made faster helping with cash flow.
- E-invoices are exchanged securely through the network by approved access points, using the buyer’s and supplier’s ABN.
- The risks of fake or compromised invoices and email scams are lower compared with posted or emailed invoices.
- There is no risk of lost invoices
Disadvantages of E-Invoicing
- Some customers may not have secure email addresses, which may lead to security issues.
- Not all your customers will want to receive electronic invoices. Some may prefer hard copies.
- There is no document attached to the invoice to check if the data is correct.
Xero has commenced E-invoicing within the software if you would like to transition. It’s in the earlier phases of development and to be honest, we are not loving the feature yet. To find out more about e-invoicing follow the link to the Australian Taxation Office article and video here.
Xero video here