What Differs Digital Invoices From Electronic Invoices?
Typically a PDF or Word file, a digital invoice may also be a scanned paper invoice. A digital invoice is simple to comprehend for a human.
An electronic invoice, also known as an e-invoice, is a data file that is sent back and forth between computers and is difficult for people to comprehend. XML and EDI are two popular file formats. An e-invoice has organized data, which is simpler for a computer to understand and process for automatic booking.
Two essential functions that are needed to use e-invoices:
1. The e-invoice must be made using the right structure.
2. The e-invoice must be moved from the seller's system to the purchaser's system.
Electronic vs. digital invoice
Despite the fact that the various forms of invoices are fundamentally distinct from one another, outdated sources on the internet cause a lot of misunderstanding over their precise and contemporary meaning.
The following facts are precise:
● An e-invoice system does not require manual data entry from the administrator, comprises information from the supplier in a structured format that the purchaser's financial system can automatically recognize.
● An invoice that can be viewed and handled digitally is referred to as a "digital invoice."
● Like a PDF or Word file, an electronic invoice is always in digital form.
● A digital invoice is not always an electronic invoice.
Confused? So let's get a little deeper into the specifics.
So, what is an electronic invoice or "e-invoice"?
An electronic invoice is a well-constructed digital file with information stored in a specific place with a specific purpose. There is currently no global standard for the various e-invoicing forms. The two most popular file types are EDI and UBL.
EDI has long been a widely used standard, but it is pricey for SMEs. Governments from over the world are increasingly using UBL 2.0 as their preferred format. On UBL 2.1, its replacement, the European Commission (EC) is now developing. For businesses who conduct business directly with the EC, this structure will soon become the norm.
For e-invoice systems, the following rules are applicable:
● Electronic data interchange (EDI) or XML-formatted structured invoice data;
● Structured invoice data published utilizing common web forms on the Internet.
What is a digital invoice?
An electronic invoice is one that can be viewed and handled electronically. It is simple to connect the digital invoice to accounting software and archive it. Digital invoices are semi-automatically entered into systems using optical recognition (OCR). This results in less work pressure.
Online payment options are helping digital invoices replace paper invoices as the preferred method of payment.
What a digital invoice is and what it is not:
● Data from unstructured invoices published in Word or PDF formats;
● Scanned invoices from paper
The Aim of Modern Invoicing
Electronic invoicing ultimately serves as a tool to accomplish a task rather than an end in itself. The sending party is guaranteed that the invoice will go to the intended recipient more quickly and for less money. A recipient's ultimate objective is to book a purchase invoice with the fewest number of human operations as possible. It doesn't matter how an invoice is handled or how it travels across businesses as long as it does so swiftly and without error.
Without a clever system that automates invoice processing, ebenefits invoice to the recipient are minimal or nonexistent. The true advantages of e-invoicing then become clear.
Benefits of e-invoicing:
You can save a lot of money and time by eliminating paper invoices and manual processing. The level of connection you can establish between your invoicing software and other business systems, as well as with your trading partners, is where the main advantages of e-invoicing lie.
E-invoice integration into the AP automation solution, specifically for accounts payable, further encourages touchless invoice processing, freeing up time and resources for more strategically critical and value-adding tasks.
Conclusion:
Starting to send and receive e-invoices can be a smart first step in your company's digital transformation route. An e-invoice application can also be a vital step in ensuring that your company's operational procedures are efficient and scalable to support future expansion.
