E-invoicing or electronic invoice is the process of digitizing the supplier invoicing process.
The e-invoicing software automates the purchasing process by eliminating the paper invoices and the subsequent activities related to paper invoices.
With E-invoicing, the supplier leverage technology to automatically submit the invoice in the buyer’s purchasing system.
If you are receiving paper invoices, you need to scan and index them. With E-invoicing, you don’t need to do that.
Some vendors might be emailing the invoices to you. Though it is better than paper invoices, the AP (Accounts Payable) team still needs to enter them into the AP team.
With e-invoicing, the complete process is automated, and you don’t even need to upload the invoices to the AP system.
Whether you can implement e-invoicing for a vendor depends on the vendor’s capabilities. So it makes sense to prioritize vendors with a large volume of invoices.
Here is a brief overview of the steps you need to take to enable e-invoicing with the vendor.
The first step in enabling an e-invoicing process is to work with the vendor to understand their core capabilities around e-invoicing.
Not all vendors support e-invoicing, so it is imperative to work with vendors with many invoices.
There are primarily two standards that the suppliers use for e-invoicing.
Most large vendors support EDI and cXMl standards.
Think about this as the supplier’s language to communicate with the buyer’s AP system.
So first, identify the top 10 vendors you want to enroll in the e-invoicing program and then reach out to them to understand their preference for e-invoicing.
Once you identify the technology the vendor will use, the next step is to test the process by sending test invoices.
The vendor will send the invoice package that needs to be received by the buyers’ system.
E-invoicing should be a standard functionality if you use a procure-to-pay or AP automation system.
Your purchasing or AP system should be able to read the invoice data, process it, and create a supplier invoice in your system.
Needless to say that since this is an electronic data interchange, there is no invoice document. You can always request one from the vendor.
The last step in the process is to test the 3-way match process.
E-invoicing is common for material purchases. After entering the invoice, the AP team performs a 3-way match to ensure that the invoice matches the purchase order and receipt.
Make sure your e-invoicing process will not break your 3-way match process.
The key benefits of the electronic invoicing process are as follows:
With electronic invoicing, the supplier automatically creates the invoice in the buyer purchasing or AP system. That eliminates the need to enter invoices in the system. The more vendors enrolled in the e-invoicing process, the less overall time spent on entering invoices.
Since the supplier electronically transfers the data to the buyer, there is less chance of wrong invoice data.
With manual indexing of invoices, there is always a chance that an employee could fat-finger the wrong data.
With e-invoicing, the data entry is completed eliminated.
With AP automation, you can eliminate the need for manual matching of the invoices with purchase orders and receipts.
The 3-way match process is fully automated, and the AP team doesn’t need to spend time matching the invoices.