An electronic invoice or e-invoice is a document with the same legal value as a paper invoice, but it is issued and received in electronic format. In other words, in a digital version. This type of digital invoice speeds up the process and guarantees validity, as it is the same as a traditional invoice. However, what are the benefits? Or is any type of format suitable? Let’s solve the most common doubts about this relatively new invoicing system.
Electronic Invoice current status
First of all, let us know a little about the current status of electronic invoicing. An element that started to be used not long ago, as it has been closely linked to the use of new technologies. The use depends on each country and the laws that regulate it.
Latin America is one of the pioneering regions, where it is already mandatory for the great majority of companies in several countries. Europe is closely behind, where it is an obligation for all B2G transactions in many countries and is becoming an obligation for B2B in some of these countries. Certainly, its introduction as a registration tool is a positive innovation that should be promoted.
What are the benefits and advantages of electronic invoicing?
We have already pointed out some advantages: speed, security, etc. However, paper consumption is also reduced and, of course, it facilitates the management and automation of data. It can be easily integrated into a computer-based system of administration, which facilitates the accounting and the reduction of mistakes. In addition, there are no costs and due to the easy storage, the physical space is also reduced. To all this must be added that improves customer service and facilitates the fight against fraud. All these are advantages for every company.
What is the format of the e-invoice?
An electronic invoice must fulfil some legal standards, because as we have already mentioned, it is regulated. Normally, if it is an SME or private person, the most commonly used format is PDF. This format is easily accessible to everyone. However, if the recipient is a company and the sending is from computer to computer, the usual format is XML. This format is a United Nations standard for Electronic Data Interchange around the world, which guarantees data security, privacy and accuracy. It is encoded and can be read by any computer with the appropriate program. Another commonly used format is EDIFACT, which is used in certain sectors such as the automotive or food distribution although it is becoming disused. The Public Administration and an increasing number of private entities use the XML language as it is easily processed by any system and is the one chosen by the European Commission when defining the EN 16931 electronic invoice standard.
Types of electronic invoices
There are two types of e-invoices. On the one hand, invoices in a structured format are easily read by computer systems. In other words, they are encoded to automatize the management of data by the computer. For this reason, they are often produced in XML. On the other hand, invoices in non-structured format are those that need to be typed by the recipient. For example, a PDF document. In the case of invoices in structured format, as soon as they are received by the computer, they are automatically encoded, registered and stored. In the case of non-structured invoices, it has to be a person who, once they are received, encodes them, registers them and stores them. If we are looking to accelerate procedures and time, the first type of invoices is certainly more appropriate.
How to create an electronic invoice
How we create an electronic invoice will depend on the system used. If it is a PDF, its creation will require to be formatted, to dump data, and a previous task of organizing the information that needs to be dumped in it. However, if we use specific programs, the new invoice will be easily created, as the system itself will provide us with the necessary form to create the invoice. This speed up the creation and registration of new invoices considerably.
Example of an e-invoice
As any paper invoice, the e-invoice must contain certain data. For example, it has to include an invoice number and the date of issue. It must also include the name or company name of the person issuing and receiving the invoice, the address, tax or organisation identifier, what type of transaction is being invoiced and its date, taxes and, of course, the amount to be paid.
Can I turn my paper invoices into electronic format?
Of course, using any digitizing software, such as a scanner. However, this system will require later encoding. The best thing is to be able to use a digitization software that facilitates the data transfer from paper to a computer system.
When is an electronic invoice required?
As mentioned above, this depends on the regulations of each country. Generally speaking, it is a requirement for all public administrations in the European Union to be ready to receive electronic invoices. In countries such as Spain, Italy, Switzerland, Holland, Belgium, Denmark and Sweden, electronic invoicing is mandatory for all suppliers of public administration. In the case of Italy, it is also the same for transactions between private companies.
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