Electronic invoicing (e-invoicing) is a digital invoicing system that makes managing a business’s payment processes more efficient, especially when making and receiving invoices. This electronic billing system requires no paper while providing the same details and verifications as traditional invoicing methods in less time and with unlimited accessibility. E-invoicing also offers a comprehensive overview of a company’s payment history and automates numerous tasks.
Paper invoicing remains the most popular invoicing method in the United States. For example, some sectors, such as the United States government, process over 19 million (opens in new tab) invoices per year. However, they only process 40% (opens in new tab) of these invoices electronically.
Despite the many benefits of e-invoicing to cut costs and save time, the US remains far behind in its adoption. However, e-invoicing is continuously gaining traction outside of the US, in regions such as Latin America and some Scandinavian countries where governments mandated its use years ago. Not only does it help governments track and collect sales tax but it also helps businesses streamline their payment collection processes.
As the financial technology known as e-invoicing continues to rise in popularity around the world, these five trends will revolutionize the way the world makes and receives payments in 2018 and beyond.
1. Automation Will Be an Integral Part of the Invoicing Process
Automation is a key feature of electronic invoicing. The automated features eliminate the need for businesses to track financial interactions with each client and lessen the likelihood of errors. Reminders for late payments and payment due dates can be sent out automatically, helping everyone to stay on track with payment schedules. Businesses can make payments automatically on specified dates as well.
By automating these manual responsibilities, staff can spend less time working on the invoicing process and more time focusing on other important tasks. Without the need for additional staff to focus solely on invoicing, companies will save time and money.
2. More Businesses Will Implement Blockchain Technology
Blockchain technology can allow companies to streamline the invoicing process by keeping a record of all transactions. By eliminating the need for additional resources and third-party interactions, blockchain is set to make cash flow management smoother at all phases of the invoicing process.
Companies may be able to send invoices and pay invoices that have been sent to them using both fiat and digital currencies such as Bitcoin. By verifying the details of all incoming and outgoing invoices, the risks of fraudulent activity will be mitigated. As blockchain becomes more scalable, this trend will possibly disrupt the traditional invoicing system in a number of ways.
3. Invoicing Systems Will Increasingly Run In The Cloud
Software as a service (SaaS) will undoubtedly become the norm when e-invoicing. With so many technologies operating from the cloud, invoicing systems won’t be the exception to the rule. SaaS lets companies access records and pivotal information from anywhere in the world by way of the Internet. Furthermore, invoicing using cloud services will allow users to receive real-time updates and take immediate actions.
Addressing payment issues with urgency will work in favor of companies as they work towards building strong reputations for clients and partners. Digital wallets may become part of cloud invoicing in the future as well.
Naturally, the options for cloud invoicing will cross over into mobile applications because the use of mobile apps for invoices will increase due to cellular Internet usage. This means that access to invoicing via mobile devices will become a standard requirement for customers and clients. Considering the fact that in 2016 (opens in new tab) more people were using the Internet from cell phones instead of personal computers, it's essential that invoicing systems are up-to-date with mobile technology.
43% (opens in new tab) of business professionals in America are already spending some of their time working remotely. Companies that fail to provide mobile invoicing options may lose valuable clientele as more people consciously avoid the inconveniences and delays of paper invoices.
4. The Real-Time Economy Will Rise
Timely payments help company owners and customers set clear expectations of their income and expenses. Everyone hopes to be paid in a timely manner, but late payments tend to affect business owners fairly often - especially when operating a small business. In fact, it takes an average of 72 days (opens in new tab) for most small business owners to receive payment.
E-invoicing can reduce the time of the invoicing process significantly, cutting the time frame from a week or two to a day at most. Due to the increase in speed and accuracy through e-invoicing, customer interactions and B2B payments will occur more frequently in real-time. Without losing time by using paper for printing and mailing time invoice details, everyone can instantly see details to verify information, spot errors, and get paid (or make payments as agreed).
5. Electronic Invoicing Will Be Accepted Globally
Small and large-scale businesses throughout the world can benefit from adopting e-invoicing, which can reduce 60% to 80% (opens in new tab) of costs when compared to paper invoicing. This high percentage of reduced cost without sacrificing efficiency has caught the attention of business owners and the government.
Countries in Latin America are leading the way with their use of e-invoicing systems. Instead of simply using the technology, tech enthusiasts and professionals are working to improve it to power their economy and drive revenue by countering fraud and tax evasion. Currently, Brazil (opens in new tab) is applying e-invoicing solutions across various industries, such as accounting and inventory management. Colombia is introducing a new electronic billing model (opens in new tab) that will help over 800,000 businesses adopt the technology. Mexico’s implementation of e-invoicing also involves a standardization (opens in new tab) of how businesses classify products and services for reporting, giving the government more insights into the economy as a whole.
In the United States, it's estimated that the U.S. government spends almost $300 million just for paper invoicing in the goods and services sectors. These expenses are now motivating government leaders to implement e-invoicing technologies as a cost-effective solution. In the European Union, at least 14 million (opens in new tab) companies are already using e-invoicing systems and the number is expected to rise 10 - 20% each year.
By November 2018, both the United States (opens in new tab) and the European Union will be putting initiatives in place to make electronic invoicing a standard practice from business to government transactions.
E- Invoicing Provides Competitive Advantages
Opting for electronic invoicing instead of paper methods allows companies to address payment issues immediately, which strengthens professional relationships. Workplace productivity will also be enhanced because team members won’t be spending time on repetitive invoicing tasks.
With the record-keeping and notification systems of e-invoicing, companies can position their brands as embracers of forward-thinking technology that protects their financial systems and serves their clientele with the best of services.
Diego Caicedo, CEO of Portal Finance (opens in new tab)
Image Credit: RawPixel / Pixabay