The new Labour government is currently looking at options for a full or partial move towards making E-invoicing mandatory for all business transactions.
HMRC and the Department for Business and Trade are seeking views on standardising electronic invoicing and increasing its adoption across UK businesses and the public sector.
In this article, we cover what E-invoicing is, the key benefits to your business, potential challenges and the next steps your business can take.
What is E-invoicing?
Using paper and pdf billing is deemed as the “old-fashioned” way of doing things. Today, businesses are using software to automatically create and send invoices, reducing the need for manual data-entry. E-invoicing is set to take over quickly for many UK business transactions, and it’s a good idea to start preparing your business now. But what really is it?
An e-invoice is a document that uses specialist software to create structured data files that allow the recipient’s software to read and process them automatically. This could make the process of sending and receiving invoices smoother and more efficient for businesses across all industries.
The e-invoicing process typically begins with a supplier creating an invoice using specialist software (e.g Sage) to generate the structured data. They transmit that to their customer’s system, which automatically receives and processes the data, and integrates it into the customer’s accounting system without manual intervention.
The benefits of E-invoicing
Reduced administration: E-invoicing automates many manual tasks associated with invoicing, such as data entry and document processing, which significantly reduces the administrative workload.
Fewer manual errors: By eliminating manual data entry and relying on automated systems, e-invoicing minimisers the risk of human errors such as incorrect calculations or missing information.
Faster payments: The invoices are processed in real-time and can be immediately transmitted to the recipient, leading to quicker approval and payment cycles.
Greater Security: Software often uses encryption and digital signatures to ensure that invoices are tamper-proof and delivered safely.
Higher Productivity: By automating the invoicing process, employees spend less time on manual tasks such as data entry, filing, and chasing paper invoices. This efficiency boosts overall productivity as employees can focus on more valuable activities.
Reduced carbon footprint: The need for printing is eliminated, which reduces paper consumption and waste. Additionally, by decreasing the reliance on physical mail, businesses cut down on transportation emissions, contributing to a greener and more sustainable way of doing business.
The challenges
Businesses may face some challenges in implementing e-invoicing. The biggest issue for those who trade internationally is interoperability of transmission and governance, as local rules and standards differ.
Small businesses also may face difficulties due to the closed nature of e-invoicing networks amongst larger customers. However, you can overcome this by agreeing common transmission methods and protocols. Despite these challenges, e-invoicing is successfully working in more than 80 countries world-wide and the size of the global e-invoicing market is set to grow around three times by 2028.
Your next steps
To get started with e-invoicing, make sure your current provider is compliant or make the move to a reputable system to ensure a smooth transition. Furthermore, work with suppliers who use the widely adopted global Peppol standard. This helps transactions flow across borders and with more trading partners.
An example of a reputable software provider is Sage. Both Sage 200 and Sage Intacct can be e-invoice compliant, depending on your set up, with the help of the Sage Network.
If you would like to discuss our Sage solutions in more detail, get in touch and our friendly team will be happy to discuss what we offer!
To discuss our Sage software solutions, call us on 01332 588446 or email [email protected]
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