What is an electronic invoice? E-invoicing in the UK
Times have changed and we don’t necessarily send a bill in paper form anymore from a supplier to a buyer or vendor. An electronic invoice is a document that is sent in an integrated electronic format and has allowed businesses to streamline their invoicing, reduce costs and cut down on human accounting errors.
It’s a pretty common practice now in the B2B setting but it has brought up some issues concerning when and how to best use electronic invoicing and how to stay compliant with compliance regulations. To truly define an electronic invoice, it should contain the data from the supplier necessary in a format that can be integrated into a buyer or vendors accounts payable system without the accounts payable administrator having to add any additional data. E-invoices are ususally sent using standard Internet based web forms or sometimes are sent as XML formats, electronic data interchange (EDI) or Peppol formats. Word documents, PDFs, scanned paper invoices or paper invoices sent via fax are not considered true e-invoices and are not what this article is referring to.
A quick history of electronic invoicing
E-invoicing has been around for over thirty years and stared in EDI formats. Electronic invoicing has steadily evolved since then and has gotten better over time. Over recent years the idea of e-invoicing has become more popular because businesses everywhere see how much easier it is when data can integrate almost without effort into a organizations software or accounting system. It has taken a lot of time, hassle and error out of the equation. Initially however, a lot of organizations were hesitant to integrate e-invoicing because the software (like any new technology) was expensive. It was costly and a lot of their partners weren’t investing in the technology and even if they were, the data shared was coming in formats that were specific to each organization so it did not give the ease and ability to integrate the information into the recieveing partners system.
Another hesitation quite frankly was that it was change. Sometimes it’s hard to adapt to change when you have been doing something one way for decades. But with anything, slowly but surely people realized that e-billing and electronic invoicing was the way of the future and more and more companies and organizations embraced the technology. With the evolution of the Internet it’s now made it simple to create web forms and web invoicing that allows the same format of information to be passed across businesses, locations and industries.
E-Invoicing adoption in the UK
Across Europe there has been some new series of legislations that has promoted the use and adoption of E-billing and E-invoicing across the European Union. Government bodies, private organizations, and public sectors have all adopted the practice and have been investing in e-Invoicing technologies to perform all of their billing functions for them. Denmark, Sweden, Spain, Norway and other EU countries have been enthusiastic and complied with the new legislations. Not every country has the same legislation and every country is a little bit different, but it’s clear that everyone who wants to do business either locally or internationally will all have to adopt some regulatory compliance to make sure they are playing by the rules and not leaving anything to chance.
More specifically, in the UK, legislation was passed in 2015 titled the Small Business, Enterprise and Employment Act. This legistlation specifically grants Ministers the right to regulate electronic invoicing across the public sector in England and has not made it legally madatory in the UK. Wales, Scotland and Northern Ireland all have their own regulations and this 2015 legislation does not apply to them. It’s still suggested that all public contracting authorities like local authorities, central government and like agencies use E-invoicing and many have already done so (the National Health Society started implementing some einvoicing in 2016). It’s likely that many other businesses and agencies will follow suit to keep up and be competative. This has led to several different third party providers that service different companies, organizations and agencies. It’s thought that the UK is being cautious not because they don’t plan to move in that direction and haven’t already started to, but more so because they are trying to be cautious about the cost associated with E-invoicing technology and softwares. They are trying not to unncessarily encumber companies with impractical costs or burdens that they can’t support.
The benefits of the electronic invoicing
Electronic invoicing and billing come with a ton of benefits like:
- Reduced costs.
- Faster payments.
- Time savings.
- Removal of paper and manual processing.
- Increased accuracy.
- Improved cash management.
- Improved supplier relationships.
- Improved dispute handling.
- Improved visibility
- Optimized cash management.
- Increased productivity.
- Improved compliance and that’s just a few of the benefits.
One of the best benefits of electronic billing and electronic invoicing is the level of integration you will have with partners, vendors, suppliers and other partnerships within your business. There are some great invoicing softwares and tools that many businesses are using and integrating into their business systems. One of the most popular is the platform B2Brouter which is a fantastic tool to use to send electronic invoices. It is also connected with all the organizations of the National Health Service.
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