What is E-invoicing & How it is different from traditional invoice system

Previously, we had studied about invoice system thoroughly. We discussed that what actually is an invoice system??? , we also discussed that what things are mandatory to be included in an invoice, and various other interesting information regarding it.

Today we are going to discuss E-invoicing & how it is different from traditional invoice system.

Let us discuss first that what actually is an invoice system???
Actually, an invoice system is a system which tells us about a particular transaction between a purchaser and buyer by generating a bill or invoice.
          Where an invoice is actually a bill which consists of various mandatory information like name& address of buyer as well as purchaser, their contact details, tax details, terms & conditions etc.

Now let me tell you about E-invoice system

E-invoicing means electronic invoicing which enables us to exchange of invoices in between a seller & purchaser in a typically integrated format.

Electronic invoice system enables us to send structured invoice data or information in XML or EDI (Electronic data exchange) formats. It also aims to reduce not only paperwork but also manual work.

Take a look at e-invoice formats:

·         Sequential invoice number

·         Invoice date or its date of creation

·         Name & address of buyer

·         Name & address of vendor

·         VAT details

·         Date when goods are supplied

·         Quantity & type of product

·         Currency

·         Unit price

·         Any sort of discounts

·         When payments are made

·         SEPA number

·         SWIFT code

Now let us talk about traditional invoice

Traditional invoicing is that particular type of invoicing that makes use of extensive paperwork & manual work in order to create invoices or bills. The format of traditional invoices is nearly same.  Traditional invoices are actually more prone errors due to very much manual work which further increased cost.
Paper invoices are actually labour intensive

Multiple sources increase the chances of errors

These paper-based invoices are hard to monitor.

Below is a diagram which shows the difference in processing of an E-invoice system & traditional invoice system.

Above figure shows processing steps of an invoice systems. And a red line eliminates those steps that we don’t need to add in E-invoicing. This elimination of various steps makes E-invoicing more efficient & appropriate.

Benefits of E-invoicing

Reduced costs

Increased accuracy

Improved cash management

Faster payments

Better productivity and so on.

This is all regarding E-invoice system & traditional invoice system. For more information please visit www.scopidea.com