What is the definition of e-invoicing?

E-invoicing (also commonly known as electronic invoicing) is a form of billing that is presented to the buyer in electronic format via a predefined structured data exchange.

This electronic exchange can be enabled by two main options. The first is a point-to-point connection between the buyer and seller, which is most often the case when using EDI invoicing. The other option is through a network connecting multiple buyers and sellers. The network model is most commonly used today where the growth of e-invoicing is expected, thanks to its scalability and efficiency for all parties involved.

What is an e-invoice?

An e-invoice is an electronically delivered invoice in a specified standardized format. E-invoices contain invoice data in a structured form and can be automatically imported into the buying organization’s accounts payable system. They typically include a visual presentation of the invoice data. However, they can be temporarily rendered during processing or transposed into visual formats.

The use of e-invoices requires two key functions:

1. The e-invoice needs to be created with the correct structure. 

2. The e-invoice needs to be transferred from the seller’s system to the buyer’s system.

E-invoices are not:

  • Unstructured invoice data issued in pdf or Word formats.

  • Images of invoices such as jpg or tiff.

  • Unstructured HTML invoices on a web page or in an email.

  • OCR (Scanned paper invoices).

  • Paper invoices sent as images via fax machines.

The growth of e-invoicing 

The idea of e-invoicing is not new. Electronic invoices have been around for 30 years, using electronic data interchange (EDI) and XML formats. More recently, the main driver behind e-invoicing adoption has come from a government level.

In Europe – the world’s most active region with regard to e-invoicing – a series of legislation has been created to promote the uptake of e-invoicing across the European Union. In fact, as of April 2020, EU countries are required to transpose the European Union’s eInvoicing Directive into their national laws and comply with its associated standards.

The benefits of e-invoicing

Significant cost and time savings can be achieved by removing paper and manual processing from your invoicing. But the real benefits of e-invoicing come with the level of integration you can achieve, not only with your trading partners but also between your invoicing software and other business systems. For accounts payable in particular, integrating e-invoices directly into the AP automation solution further drives touchless invoice processing - which frees up time and resources for more value-adding and strategic tasks.

Starting to send and receive e-invoices can be an excellent first step of your organization’s digital transformation journey, and a critical step in ensuring that your business operations are efficient and scalable to support future growth.

Learn more about e-invoicing and accounts payable automation

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