Five reasons to love e-invoicing
Electronic invoicing means you won’t have to worry about manually entering invoices, PDFs or emails, and it could also herald the end of late payments. This is the future of invoicing, and savvy SMBs are already jumping on board. Here’s why.
What is electronic invoicing?
Electronic invoicing is another exciting digital upgrade to help streamline your business back-end. It refers to the electronic exchange of invoices directly between accounting software systems and as such provides an easier and smoother way to manage invoicing and invoices.
Electronic invoices are easy to create and track, and even in large corporations and government agencies, Accounts Payable teams will receive them within minutes. Meanwhile, incoming e-invoices will automatically appear in your own accounting software as invoices awaiting approval, minimizing manual entry.
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Despite these benefits and more, Xero’s research reveals that awareness of e-invoicing remains low among Australian SMEs. In a recent survey of over 1,000 Australian small businesses and sole traders, almost half (47%) thought e-invoicing meant emailing a PDF invoice or invoice link. Only 35% knew that electronic invoices are sent directly from one accounting software to another.
What are the advantages of electronic invoicing?
How many times have your payments been delayed because your invoice was stuck in someone’s inbox? Maybe they went on vacation, left the company, or you accidentally sent it to the wrong email address?
Electronic invoicing ensures that your invoice ends up in the correct company accounting system almost instantly – and that’s just one of the many benefits:
1. Save time (and money)
The Xero survey found that managing invoices costs the average small business two business days – or 12.4 hours – per month.
With e-invoicing you can say goodbye (and good riddance) to several tedious steps during payment processing, such as manual data entry and accuracy checks. The result? Faster and easier invoice management.
Even better, Deloitte research suggests that whenever an electronic invoice replaces a PDF or paper invoice, it could save up to $20 between sender and receiver.
2. Faster payments = improved cash flow
Late payments are a real source of stress for Australian SMEs and freelancers, according to the Xero survey. Almost two-thirds (63%) of respondents said they had to deal with clients or customers who paid late and as a result almost a quarter had to delay payments to themselves and/or suppliers .
It is easier to send and receive electronic invoices because, thanks to this system-to-system exchange, they automatically appear in the correct accounting software of the company as invoices awaiting approval. They are also easier to pay for, as there is no longer a need to scan them into your system or enter data manually.
This likely means shorter turnaround times to help SMBs get paid faster, which should be good news for the 22% who spend more than five hours a month researching late payments.
3. Fewer errors
Nearly one in five (19%) of Xero’s survey respondents said they spend more than five hours a month correcting errors in invoices.
With e-invoicing, standard fields ensure that all correct information is included, reducing administration time and the risk of error.
4. More security
Unfortunately, another recent investigation by Xero revealed one in five (18%) Australian SMEs have been victims of billing fraud, at an average cost of $15,500.
Because electronic invoices are not dependent on email, they are a more secure way to send and receive bills and invoices. Exchanging through the secure Peppol network minimizes the risk of fake invoices or compromised invoices, and as stated before, there is no chance of the invoices going missing.
5. Government Supported
E-invoicing is a priority for the Australian government, which is investing $15.3 million to raise awareness of the benefits and increase adoption by businesses. In addition to educational activities and supply chain pilots, this involves working with payment providers – such as EFTPOS, Visa and Mastercard – to integrate e-invoicing into the main payment methods used by businesses.
To show it means business, the government has required federal agencies to switch to e-invoicing by July 2022. That’s good news for SMBs working with government because it means getting paid faster – Federal agencies have committed to paying electronic bills within five years. working days.
The federal government is also working with states and territories to expand the adoption of e-invoicing across the public sector. Government agencies in NSW, for example, have had to transition by January 1, 2022 and have agreed to pay eligible electronic invoices within five working days and interest on any late payment.
So there you have it: signing up for e-Invoicing offers another exciting opportunity to automate and streamline your business back-end. That means more free time and free space to do what you love – and isn’t it worth signing up for?
Looking for new ways to take your business to the next level? Xero Small Business Guides are valuable resources filled with tips and advice on how to take your small business to the next level.
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