The Death of Post: Electronic Invoice, E-Invoice, E-Billing, Paperless invoice, Email invoice
1. Step by step guide on how to implement electronic invoice in EasyInvoiceDIY invoice software
The most simple and straight way of producing electronic invoice in this small business invoice software is to simply save your invoices into a .PDF file, the [Save] button is availabe in all the invoice preview screen as shown in the illustration below, then you can email your .PDF files to your customers.
Having said the above, I would like to show you more advanced usage for electronic invoice generation together with Email merge module in this invoice software, which allows you to automatically send emails to your customers with there invoices attached. For a glance view, these are the functionalities:
a). You configure your email accounts and use the internal Email module to send and receive your emails.
b). You defined your email letter templates which allows you to merge relevant data into the real email letter.
c). You simply chose which type of email you want to send to your customer, the invoice will be automatically generated and attached to your email message.
Follow the detailed steps below:
Step1. Setup email server accounts
For mail server‟s settings, you could do it here or you could do it at the time when you download or send emails. This is a mandatory setting which configures the system to be ready to send emails and receive emails, without this settings, the system will not be able to send any electronic invoice via email at all.
By default, the system has included 2 testing accounts here for you to use as a testing purpose, one is a normal server the other is the secure Gmail server.
[Last Download Time] refers to from what date you want to download your mails, system will automatically maintain this value after successfully downloaded your message.
For [Incoming Mail Server], [Outgoing Mail Server] and [Mail Account] settings, you would need to refer to your mail provider‟s website to see what your incoming and outgoing server‟s settings are. For on-line reference, you can visit this link : http://www.easybizsoftware.com/help-email-servers/ or refer to the following screen illustrations for various email settings by different email providers.
Gmail – Email Server Settings
Step1. Logon to your gmail account then click [Settings] then click [Forwarding and POP/IMAP]
Step2. Enable your POP and IMAP
Step3. Make sure you click [Save Changes] and set SSL in the application as shown below.
Yahoo - Email Server Settings
•Incoming Mail (POP3) Server: pop3.mail.yahoo.com (Use SSL, port: 995)
•Outgoing Mail (SMTP) Server: smtp.mail.yahoo.com (Use SSL, port: 465, use authentication)
•Account Name/Login Name: Your Yahoo! Mail ID (your email address without the “@yahoo.com”)
•Email Address: Your Yahoo! Mail address (e.g., firstname.lastname@example.org)
•Password: Your Yahoo! Mail password
Note that you also need to enable [Web & POP Access] on your Yahoo Mail account
•Log on to your Yahoo mail account
•If you’re using the new Yahoo Mail interface, Click “Options” in the upper-right corner of the page, then choose “Mail Options” from the pull-down menu and On the left side of the page, select the “POP & Forwarding” option.If you’re using the original Mail interface, click “Mail Options” in the upper-right corner of the page, then click the “POP Access and Forwarding” link.
•On the “Pop Access and Forwarding” page, choose the “Web & POP Access” section.
HotMail – Email Server Settings
To setup the system to access other mail server accounts, please refer to your provider’s website instructions.
Step2. Setup email templates (electronic invoice template)
As shown in above screen, you can define email templates that you constantly use, like sales confirmation letter, reminder letter or any email letter that you need to write to your customers. Take note that this system supports automatically email merge, which means you can insert varable fields as shown in the screen and the system will automatically merge those fields (in red) with the relevant real data when the email letter is to be generated.
Refer to the screen illustration above, on the [customer] screen, you can right click the mouse on any customer record and chose to write an email on the fly by selecting any pre-defined email template.
A real email with relevant data merged will be generated as shown above.
Step3. Sending electronic invoice to your customers
The the following screen will appear:
In this screen, if you chose [Yes, use this template to generate the PDF electronic invoice], then the system will automatically generate a PDF version of the invoice and automatically attached it to the email message:
Click [Save to "Outbox" folder], then go to the [Mails] screen, you will see that this email message has been saved into the outbox folder waiting to be sent out.
Now, if you click the attachment, you will see this will be the exact PDF file for the electronic invoice to be send to your customer.
Now, what you need to do is to click [Mails] -> [Send "Outbos" Folder Mails] to send the message out to your customer, when your customer receives this email message, they will receive the PDF electronic invoice file in the email attachment.
2. What is electronic invoice?
For an accurate electronic invoice definition, first of all, we want to point out that there are many synonyms for digital billing: digital invoicing, electronic billing, electronic invoicing, e-billing, e-invoicing, telematic billing, telematic invoicing, email invoice, electronic bill, etc. Take note that it is different from electronic purchase order, electronic receipt, electronic presentment, electronic payment.
Base on the authority wikipedia definition, here is a definition of the electronic invoice: “Some invoices are no longer paper-based, but rather transmitted electronically over the Internet. It is still common for electronic remittance or invoicing to be printed in order to maintain paper records. Standards for electronic invoicing varies widely from country to country. Electronic Data Interchange (EDI) electronic invoice exchange standards such as the United Nation’s EDIFACT standard include message encoding guidelines for electronic invoices.” – source from wikipedia
Electronic invoicing, also known as e-Invoicing or e-Billing, is the delivery of invoices electronically either over the Internet or via a formalized EDI electronic invoice exchange relationship between the buyer and supplier. With tools like Vendor and Supplier Portals or other types of technical EDI implementations, which offers a tremendous opportunity to reduce the flow of incoming paper, reduce cycle times, and most importantly, lower the cost of Accounts Payable (AP) transaction processing.
An electronic invoice can also be called an e-invoice or eBill, it is the result of a billing method that doesn’t require a paper copy as a backup in order to demonstrate its authenticity. For this reason, an electronic invoice functions as a software-generated file, which compiles the information related to a commercial transaction, its payment and corresponding tax obligations.
Although we know perfectly well what an invoice is, its technical definition is “a document that reflects the delivery of a product or the provision of services, along with the due date and the amount to be paid in consideration.”
All invoices, regardless of the way in which they are sent, ie. whether on paper or in electronic format, must include a series of mandatory fields.
- Invoice number
- Delivery date
- Date of service (if different from the delivery date)
- Sender’s and recipient’s legal name
- Sender’s and recipient’s Tax ID number
- Sender’s and recipient’s legal address
- Tax rate
- Tax amount
- Transaction description (tax base)
Electronic invoices provide an important means of reducing the costs of processing, sending, distributing and maintaining invoices, resulting in a simplification of administrative procedures and a considerable reduction in the amount of time and space consumed, as the invoices are transmitted through electronic means, accomplished by applying technical certification mechanisms, which guarantee the basic elements required in any invoice and allow them to be maintained in digital format, which affords immediate access to them at any given moment.
In order to comply with regulations and ensure that an electronic invoice has the same legal validity as a paper invoice, the corresponding electronic document must contain the same mandatory fields as any other invoice, must be signed with an electronic signature based on a recognized certificate and must be sent from one computer to another with the parties’ mutual consent. This combination of factors provides a Electronic Invoice with sufficient reliability so as to indisputably guarantee its integrity and the authenticity of its origin.
Electronic invoices encourage organizations to discontinue the use of paper invoices, replacing them with a digital version of an electronically-generated tax document, which has the same legal validity as the traditional version and preserves a faithful record of all commercial transactions. In this way, the entire billing process can be administered electronically. However, it is important to remember that amount of VAT must be included on every Invoice for countries which requires the VAT.
Sometimes, electronic invoices can use encryption mechanism to encrypt all of the information required in a traditional paper invoice, including data on the sender and recipient, such as their name and Tax ID number, the date of the invoice, the sender’s legal address, the amount of the invoice and the percentage and amount of VAT, among other information.
Furthermore, some countries require that the electronic invoice document must include an electronic signature, which is generated using a digital certificate that has been provided to the sender of the invoice by a Tax Agency-approved certificate company. This combination of factors provides an Electronic Invoice with sufficient reliability so as to indisputably guarantee its integrity and the authenticity of its origin.
Virtually speaking, any company can accept electronic invoices from their vendors and suppliers without having to implement costly and complicated systems. E-Invoicing provides benefits to both buying companies in paper and expense reductions and supplying companies in the elimination of mail float and lower billing costs.
Implementation of e-invoicing solution on both vendor side and supplier side is much easier than most people may think!
3. Types of Electronic Invoices
An electronic invoice is one which meets the same requirements that apply to invoices issued on paper, except that it is presented in electronic format and its authenticity and integrity are guaranteed. In order to guarantee a document’s authenticity and integrity, there are three possible methods:
- Utilization of a recognized digital signature, which is based on a recognized certificate and generated using a secure device for creating signatures.
- Remittance through an “EDI” electronic invoice exchange system, which ensures integrity and authenticity.
- Use of another system which, in the opinion of the Auditing Department of the State Tax Agency, ensures authenticity and integrity, whenever the taxpayer issuing the invoice has applied for Agency approval of the system in question.
In general, the use of a recognized electronic signature is considered to be an essential element of electronic invoices.
4. The benefits of using electronic invoice
Handling paper invoices is time consuming, labor intensive, and prone to error. In contrast, processing electronic invoices is efficient and secure, and it eliminates data entry errors while expediting the approval process. Depending on a company’s invoicing volume, the savings related to invoice management (receipt, storage, search, signing, returning, payment, shipping, etc.) can fluctuate between 40% and 80%.
Automating as many processes as possible through an integrated solution, which optimally manages these tasks, results in a directly proportionate decrease in opportunities for human error while increasing the opportunities for savings and improved efficiency. Even collections can be managed automatically, sending the corresponding overdue notices as certain pre-defined thresholds are reached.
Furthermore, when companies employ this technology, they are motivated to digitalize other documents, thus achieving efficiency and savings in additional areas of the business. Control of taxes is also increased with electronic billing because it allows for greater control over tax compliance and simplifies the auditing process.
With an electronic invoicing system you can look forward to the following benefits:
- Print and postage costs reduction. If invoices are sent electronically, money can be saved on the cost of paper, print cartridges, envelopes and postage.
- Instantaneous delivery, time is money, E-invoicing helps retrieve money more quickly from your customers, by reducing the amount of time wasted whilst your invoice is in the post. The average DSO(Days Sales Outstanding) for a business is between 40 and 60 days, but businesses which have used e-invoicing have reported a fall in their average DSO.
- Decreased possibilities for falsification
- Easy access to the information: Though many invoice solutions offer ways of keeping track of sales and payments, using electronic software allows you to put all of the information you need in one place. Being able to look up the profits and losses of your company’s finances at any time allows you to be ahead of the game in sales.
- Reduction in the space required for storing archival documents
- Increased security and document control
- Timeliness, both in receiving and sending the information: With other invoice solutions, there may be a wait for outside companies to print and mail your paperwork for you. No more having to spend valuable time wading through paper files to find specific transactions or records of bills. No more misfiling or important records getting lost in transition, creating the need to spend additional time trying to sort out the mess.
- Ease of auditing
- Quicker and more efficient administrative procedures. If you allow your customer to pay you electronically, provided you and your customers have bank accounts, it should be possible for you to arrange for payments to be made by direct credit as well, that would bring other benefits to you as well, examples:
- You should write to your customers to advise them that you wish to receive future payments in this way and provide them with your bank details.
- Of course, it may be the case that your customer would prefer to continue making payments in the way that they have done to date.
- Secure delivery (No lost in the mailroom or someone’s desk), The direct delivery of invoices to the customer’s inbox minimises the likelihood of them claiming they have not received them or that they must be lost in the post. Time delays are minimised, as copies can be resent and received by them immediately.
- Rapid retrieval of invoices and related documents to resolve disputes quickly
- Invoice processing time reduction
- Faster dispute resolution. The sooner your customer receives your invoice, the earlier they can alert you to any concerns they have about their account or the amount due. Having all of your business records at your finger tips makes it easy to look up any previous electronic invoice if a customer has questions. Spot discrepancies, outstanding accounts and overlooked transactions quickly and efficiently with electronic invoice software. Get rid of the paper trail and stop wasting valuable resources hunting down paperwork. A few keystrokes and you’ll have everything you need to settle a dispute immediately and efficiently.
- Can reduce late payment, as your customers’ payments are automatically deposited in your account on the agreed date;
- Money is delivered directly into your bank account, meaning you don’t have to wait up to a week for cheques to clear. Cleared funds are available to you straight away;
- Reduces the chance of cheques being lost or stolen in the post;
- Saves you the trouble of depositing cheques at your bank.
Emailing PDF invoices to your customers is a good starting point, offering a significant cost saving from day one with little setup cost. However, emailing electronic invoices has two draw backs:
1. There is no guarantee that an electronic invoice has been delivered
2. There is no guarantee the customer has viewed the invoice
Technology can help, implementing a document delivery portals will solve this problem – rather than send the invoice directly to the customer, the invoice is posted to an intermediate portal or web site. The customer is then sent an email prompting them to view the invoice from a web link, The customer then clicks on the link, signs in securely, and can then see the new invoice alongside an archive of older ones. The sender meanwhile gets lots of useful information – information on who has viewed what invoice, when and even if they have downloaded a local copy.
A credit controller can also now optimize their effort by only chasing overdue invoices which haven’t been viewed. It’s also really easy to resend a link to a specific invoice if the customer has lost it. If your business is still sending paper invoices we hope we’ve given you the impetus to investigate e-billing further!
5. How can you implement electronic invoicing in your business?
Electronic invoicing is increasing in adoption across the business spectrum with many large and medium size businesses jumping on the bandwagon to save money and improve efficiency.
The idea of implementing a new system to handle invoices may seem a little daunting, but, engaging a consulting company can make the transition easy and simple and begin to reap the benefits that electronic invoicing can achieve for the business. You can also try to do everything by yourself by utilizing a good software. In fact, there is a wide range of software available which also offer sophisticated means of invoicing your customers electronically. Those software packages use secure delivery of your invoices, as they use encryption which prevents the email being read by a non-intended recipient. But as a starting for a small business, you do not really need to make it that complicated.
It is advisable to state your intention to invoice customers electronically in your contract and to ensure that they are able to receive communication by this means. For existing customers, write to them informing them of the change to your terms and conditions, and seek their agreement. Also verify the correct email address for the person responsible for making payments.
It is important to protect the authenticity and integrity of the invoice when sending it electronically. Therefore, your invoice should either be written into the email itself, attached as a protected word file or sent as a pdf document. Keep the wording and lay out the same as previous paper invoices to avoid confusion and, if possible, use delivery tracking to check that your email has arrived safely. Keep a hard copy of all invoices you send electronically as a backup is always a good practice.
As discussed again later on, the technology side of e-Billing isn’t complex, and can be implemented quickly whether your business system is large scale ERP systems like SAP or Sage invoice software. Having said so, the first thing to do for you is to talk to your customers in order to find out who is willing to accept an electronic invoice and collect their email addresses. There are two considerations here, these being:
a). Implement electronic billing by default, don’t give your customers any choice. Only send paper invoices if they scream.
b). Ask if they would be happy to accept an electronic invoice. We suggest starting with your largest customers, yes as always, follow the Pareto 80/20 rule, as they are the ones you send the largest proportion of your invoices to. Once the email addresses have been collected they can be added to your business system, if it has the facility to hold email addresses, or they can be held in a separate look-up table or database. You’re now in a position to get started.
6. The death of the Post and why you should switch to paperless invoicing by using a invoice software
Paper is an integral part of our lives since its invention in the human history. We use papers for a number of reasons in our daily work routine and today it has completely transformed the way how we communicate, how we record history or how we write down literature.
Paper invoicing helps in receiving the payment for the products offered or services rendered to the clients by your company. Paper invention has led to other inventions like new cleaning products, printing and even foods and not to forget that the benefits paper provides to millions of freelancers and businesses world-wide. Paper is portable, thinner and smaller and today it has become such an inseparable part that we cannot imagine our world if it vanishes. But, it is the only way to let us know how precious paper is for us.
We are well aware of the significance of invoicing in a business enterprise. The timely delivery of documents is vital to any business, be it an invoice so you are paid on time or an urgent purchase order to buy crucial stock. How many times have you asked the question: “Am I really delivering this document in the most efficient and cost effective way?” by doing these the paper way, are you aware that not only it is not the most efficient way, but also, are you aware of the truth that how much harm paper invoices cause to the environment and the major contributors or culprits in this process are corporate businesses and freelancers.
A survey by oDesk revels that out of 70,000 plus US based contractors, 32% have opted to become freelancers after the job cut. Freelance designers are being offered plenty of job opportunities by the web and these opportunities are not limited to just one but they can come from anywhere around the world.
And the same goes for freelance writers, this is because today businesses seek for the convincing content for their websites, blogs and reviews and even twitter account. It is predicted that there will be an increase in free lancers gross revenues in the years to come, and the number of graphic design freelancers is expected to rise also.
Post is a classic example. It’s expensive, slow and sometimes very unreliable. When delivered, it’s no better – post needs opening, distributing and filing, all of which cost money. We are amazed so many companies still persist in delivering business documents like statements and invoices by post. Let’s get your attention with an example:
The fifty largest graphic design firms which only comprise less than 1% of the number of establishments but result for over 16% or $1.3 billion of the total invoicing, which is an enormous figure. This would give you an idea how much paper is being wasted in invoicing alone.
Let’s take a look at the true cost of post:
If a company delivers, just 1000 invoices and 500 statements per month, that’s a cost of: 1500 x 0.5 x 12 = $9,000 per annum *This assumes a letter costs 50 cents – this covers the stamp, envelope, printing and paper cost. But if you start to include the cost of lost post and the environmental impact, the number of paper invoices generated by corporate businesses and companies is even more alarming. About 13 billion invoices are traded annually from US alone, which implies that around 25 billion pieces of paper being used in the offices every year.
So for this purposes, there is a 10% total tree cut down globally for generating invoices and the electricity used in creating the paper invoices is equivalent to the consumption of 20 million households.
It’s really time to start implement and talk to your customers to let them accept an electronic invoice. A study has also revealed that it is possible to cut down invoicing cost by 70%. Switching merely a 50% from current paper invoice to electronic invoice would save almost one million trees and 240,000 tons of paper every year. Apart from monetary benefit, it is also in the interest of our environment. Therefore, why do not we all make a sincere effort to protect our environment and switch to online invoicing?
Given the above example most companies recognize e-Billing is worth looking at but often dismiss the idea with the old nutshell, “Our customer simply won’t accept an electronic invoice”. It’s strange that your customers won’t agree to this when we all routinely use the internet and it’s very rare we receive a paper invoice. Have you actually spoken to your customers recently?
It is time we learn a lesson from the European Union. There has been a legal obligation for businesses running in European Union to accept electronic invoices since January 1 2004.
In our experience, when companies ask the question they are surprised by the numbers agreeing to electronic invoicing; we would expect a typical uptake from 50 to 75%. Going back to our example calculation above, that equates to a cost saving of $5,400 per annum based on a 60% uptake rate. Just because you have a few die-hard customers,
Assuming you haven’t got a 100% uptake rate, you need to add some logic to the current process to decide how a specific invoice needs delivering in other words, post or electronic – this logic which may come from the host application or failing that may come from a simple lookup table or database.
Don’t hold your business back based on their reaction. Convert the proactive ones now and move the traditionalists later.
For example, a customer database can be created containing the account code and the relevant delivery method. Companies and businesses whose account code is not listed would automatically receive their invoices and statements via post. Companies and businesses whose account code does appear in the database would receive an electronic copy of their invoice. It’s also good practice to put a file copy away into a document management system, again in PDF format, to allow resends or for company records. You may even want to email a PDF copy to your Credit Controller!
In terms of electronic invoice document format, it all depends on if you are moving to a true e-commerce type scenario or simply looking to bill your customers more cost effectively. There are all sorts of management software which are ideal for document translation, they can take existing document output from your business system and seamlessly deliver to your customer in virtually any format – in other words, electronic invoices can be presented in many different electronic formats, to name a few, PDF, XML, CSV, EDI, TIFF, HTML, FAX etc. But most popular would be either Adobe PDF or XML format. PDF is an image representation of the hard copy paper invoice and is best suited to e-Billing, whereas XML is more suited to a true electronic interchange of invoice data and requires more setup. A good starting point is an electronic PDF, moving to XML if requested at a later date.
You can download your EasyInvoiceDIY software, it will only take your 5 minutes to setup everything and start sending your electronic invoices to your customers today. This system has the build-in email system which allows you to easily send email invoice to your customers.