E-invoicing is one of many ways businesses can take advantage of digital solutions for running core activities. But what is the difference between traditional and digital invoicing, and what are the benefits of doing the latter?
Although most business operations now must be done remotely, the need to send and receive payment from a distance has never been more important. The solution: Digital invoicing.
What is the difference between traditional invoicing and digital invoicing?
Imagine it is 2006, and you are billing a customer for some completed work. You have 10 minutes free and go into your billing software to set up the invoice. The software is not smart enough to have captured all details of the completed work, so you go back and forth between applications on your computer to enter the data as best you can. You save and print the invoice, put it in an envelope, and send it to your customer.
Three business days later your customer receives the invoice but discovers an error that requires a new invoice to be printed. You go into your application to make the update and then mail the customer a new copy of the invoice.
You have already spent valuable time and money on a task that could have taken minutes without errors—and now you must wait even longer to receive payment.
Does this sound outdated and unnecessary? Surprisingly enough, there are many organisations still doing this today. The more business you do, the more time consuming and expensive the process becomes.
Digital invoicing, on the other hand, is a modernised flow of payment that reduces the time and costs associated with sending and receiving invoices. Simply put, it is a way to digitise, automate, and simplify the invoicing process.
Also read: Work smarter with digital solutions.
What happens when you send a digital invoice?
The digital invoicing tool will create the invoice automatically by pulling in data from the correct sources, and allow you to confirm its accuracy before sending.
The invoice will then be sent electronically to the recipient, who will be notified of its arrival. Depending on whether or not the customer is set up to receive an electronic invoice directly into their online bank or financial solution, it will either be sent there, or by mail or email.
The final step is payment. The more digitally configured the customer, the faster the payment.
As almost everything happens automatically, there is no need for manually plotting in data, printing, or sending paper via the post—which saves time, money and the environment.
Another great feature is that a digital invoicing solution also works as your invoice inbox: You’ll have incoming invoices in one place, regardless of whether the invoice is originally electronic, in PDF format, or on paper.
Additional reading: Øystein Moan: – We see a new level of willingness to change and adapt.
Benefits of digital invoicing
We have already mentioned some of the benefits, but the major advantages for most businesses are the time saved and the cost reduction. With digital invoicing, the process of invoicing is simplified; there is no need to scan documents and you receive automatic suggestions for your bookkeeping.
It also makes sure that all details such as invoice number, due date, amount, and more, are always correct. As for cost and time savings, you no longer need to spend time and money on printing, packaging, and postage and you receive payment faster because the invoices often go directly into the recipient’s online bank or financial solution.