E-invoicing: the essence and benefits unraveled

Why invest in e-invoicing when the current billing process works well? Isn't an invoice about the mail also electronic? The reluctance of companies to make the move to e-invoicing usually has to do with the initial investment and a new process. By better understanding e-invoicing, you will see that it is possible for any company to optimize the billing process with e-invoicing. That's why in this blog, we'll cover the essence of e-invoicing, the benefits it offers and the different ways to exchange e-invoices.

E-invoicing: the essence and benefits unraveled

This blog is based on the first part of our webinar on e-invoicing. Curious about what else we have to say about this topic? Watch here return the webinar when it suits you.

What are e-invoices?

E-invoicing is the sending and receiving of invoices between your organization's accounting programs, your customers, and suppliers. Through a data standard, such as XML, the data from an e-invoice can be processed directly in the recipient's systems and vice versa.

What are the benefits of e-invoicing?

E-invoicing is simply the most efficient way of invoicing. Nevertheless, many companies in the Netherlands send their invoices via email in PDF format. As a supplier, you must first convert data from the accounting system into a PDF in order to send the invoice. Next, the customer must decipher the PDF invoice (with OCR, for example) to process it in their accounts.

E-invoicing bypasses these process steps and makes OCR obsolete. As a result, the risk of errors in the billing process is much smaller and invoices are processed faster. Finally, e-invoicing increases the reliability of invoices. Among other things, because of the use of electronic signatures and transmission over a secure network.

How do you send e-invoices?

You can send and receive e-invoices via various network models and channels. A network model is how client and supplier exchange e-invoices. The channel determines the platform and format that is used.

Network models

Within the network models, we distinguish between a 2, 3 and 4 corner model. The 2-corner model is the simplest connection. Here, e-invoices are exchanged directly between the suppliers' and the client's accounting systems, usually via XML or EDI. In practice, this is only useful if a client has a small number of permanent suppliers, because each link is a separate investment.

With a 3-corner model, the initial investment is already more attractive. This model means that the client and supplier both link to a service provider, for example a supplier network. This increases the scalability of the investment, because you can now exchange e-invoices with any supplier that is connected to this network.

It is now possible that the supplier and client are not on the same network, and it is therefore not yet possible to exchange e-invoices. To get around this, we come to the 4-corner model. The client and supplier are both affiliated with a service provider and these service providers are linked to each other. The best-known example of this is the Peppol network.

Channels

As a client, you can choose which channels you want to use to make e-invoicing with suppliers possible, which is why it is good to understand the different options. In the previous section, you may have noticed that the channels used to exchange e-invoices are linked to a network model.

Here are the options:

  • You can give suppliers the option to send an invoice as XML or UBL via email.
  • With EDI, e-invoices can be sent directly from one automated system to another.
  • Suppliers can log in to an invoice portal and create and send an invoice online.
  • You can also make a link between your accounting systems and a Peppol network. This is advantageous if multiple suppliers are present on this network, or if the supplier network is connected to other service providers.

E-invoicing for your company?

After reading this blog, the essence of e-invoicing has hopefully become clear. Do you still want to discuss the benefits of e-invoicing, specific to your organization? Or are you unsure which channels your organization can best use? As an independent consultancy firm, P2P & Verder is happy to think along with you. So feel free to contact with us.

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