Most businesses and customers prefer receiving electronic invoices. Let’s take a closer look at what electronic invoicing is and why you should send e-invoices.
What is an electronic invoice?
Most businesses issue invoices to their customers in order to get paid. Invoicing is usually done through invoicing software, and you can choose to send your invoices by mail, email, or electronically. An invoice sent electronically from your invoicing software is called an electronic invoice or e-invoice. You can send electronic invoices to both individuals and businesses.
See also: E-invoicing: What it is, and how it works
What should be included in an e-invoice?
Invoicing software like Conta, will help you include all the necessary details on your invoices.
All e-invoices must contain:
- A sequential invoice number
- The invoice date
- The date the goods or services were made or completed
- The name and address of your business and the recipient
- The tax number of your business and of the recipient, if applicable
- The quantity and type of product/service delivered
- The currency
- The unit price excluding tax
- Any discounts (if not included in the unit price)
- The tax rate
- The tax amount payable, unless exempt
If you are exempt from tax, you’ve got to refer to the applicable directive or other directive stating that the supply is exempt or subject to reverse charge.
For international deliveries, IBAN/SEPA number and BIC/SWIFT code have to be provided.
Related: Invoice vs. receipt: What is the difference?
Why should you use electronic invoicing?
Efficiency and accuracy in financial transactions are more important than ever. From reducing errors to saving both time and money, e-invoicing provides benefits for businesses of all sizes. Here is why you should consider switching to e-invoicing:
Reduce mistakes
E-invoicing reduces human errors since it automates the invoicing process. Manual invoicing is subject to common mistakes like spelling errors or incorrect numbers. If you use an e-invoicing system, data is often captured directly from accounting software or ERP-systems. This makes sure that all relevant information is correct and up-to-date and reduces the margin of error.
Keep track of invoices
It can be challenging to keep track of your paper invoices as your business grows. E-invoicing platforms make it easier to monitor the status of each invoice in real-time. In a system like this, you can easily see which invoices have been sent, viewed and paid, and which ones are overdue. It is also helpful for managing cash flow and financial planning.
Related: The ultimate guide to liquidity and cash flow
Get paid faster
E-invoicing instantly delivers invoices to recipients, reducing lag time. Automated reminders and payments integrated in the systems will also make it easier for customers to pay on time. Many platforms are providing multiple payment options like credit cards, e-checks and direct bank transfers, which makes the payment process more convenient.
Reduce costs
E-invoicing helps to cut costs in several ways. It eliminates the need for paper, printing supplies and postage. It also reduces the time spent on resolving errors and disputes, which is an additional cost for your business. With fewer paper-based processes, storage and archiving costs are also lowered. Over time, these cost-savings methods add up, and contribute to your bottom line.
Save time
Time is valuable, and e-invoicing helps you save time by automating routine tasks associated with billing. Instead of manually creating, sending and following up on invoices, automated systems can handle these activities seamlessly. Faster processing means quicker turnover, which can lead to more efficient business operations overall.
Security for customer and seller
Electronic invoicing provides peace of mind for both the customer and the seller. As a seller, you know that the customer receives the invoice, and avoid instances of invoices getting lost in the mail. Additionally, statistics show a higher likelihood of getting paid on time with electronic invoices compared to email and postal invoices.
When you send an e-invoice, you’re assured that it’s being sent to a legitimate person or company. This is because e-invoices can only be sent to an account identified by a personal number or organization number, reducing the risk of fraud. Moreover, your business appears more professional and trustworthy to your customer.
Read also: How to write an invoice in 5 simple steps
How does electronic invoicing work?
An invoice must go through some steps before the customer receives it. Which steps will depend on the different entities, sectors and regions, but they have some of the same characteristics.
Here is an example of an electronic invoicing process:
1. You generate an electronic invoice
The seller makes an electronic invoice using an ERP-system, a manual online form or through an e-invoicing provider. Which method you choose usually depends on how many invoices you want to make.
2. You add information
Generally, you fill in the same information in the invoice as you would when making a normal paper invoice. You should be aware that a supplier or a tax authority may need more information or more tailored information than the standards.
3. The invoice is converted
Your invoice will be converted to the format your buyer requires. Make sure that you use a system that fits the information and format that the tax authorities need. The recipient will receive the invoice in their channel of choice, for example straight into their ERP-system, by post or in a government portal.
Read also: 5 invoicing tips for beginners
Where can I make an electronic invoice?
As a business owner, you want to save money where you can. The best way to make an e-invoice is by using affordable invoicing software. Running a business can be hard enough as it is. Therefore we have made our invoicing software completely free of charge.
In Conta, you can create invoices in no-time. The invoices can be customized with your logo, personal notes, thank-you messages, payment terms and so on.
In the future, you can also use Conta to automate your workflows. For instance, you will have the ability to set up recurring invoices and automated payment reminders when customers fail to pay on time.
Conta supports the most common invoicing formats, such as PDF and email.
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