An e-invoice is simply an electronic invoice. Like any other invoice, it's a bill for products or services. It's just sent and received electronically—usually by email.
Accounts payable (or AP) is the list of payments that a business owes other people or organizations. For example:
Costs of a service, goods, or other purchase that are now due
Money the company owes suppliers for inventory
A refund due to a customer
The term "e-invoicing in accounts payable" means that a business is receiving electronic invoices that need to be processed and paid. The active steps that a company takes in receiving invoices and paying those bills is called the AP process.
This article will explain what e-invoicing is, why businesses use it, and how to automate it to spend less time handling invoices and paying bills.
What is E-invoicing (Electronic Invoicing)?
E-invoicing is a convenient way to send billing information from one company to another.
The company that sends a digital invoice benefits by sending it quickly and easily. If the company that receives it also uses digital storage and automated invoice processing, then both companies benefit from e-invoicing.
If, on the other hand, the company being billed is not using automation systems, then most of the efficiencies are lost. To see why, let’s examine traditional AP processes.
In traditional invoice processing, invoices are stored as printed paper. They arrive by snail mail, and they're processed by hand. Someone reads them and enters the data into an accounting system manually. They circulate the paper for signatures to get payment approval. Then they write a check for payment, and the paper invoice is filed away.
If a company uses paper-based invoice processing and an invoice arrives electronically, someone simply prints out the invoice and adds it to the stack of paper invoices, treating it like every other paper transaction.
Benefits of E-invoicing
That might not sound like a terrible process, and for many companies it isn't. Sometimes, one person can operate the whole thing. A business owner might get an invoice and pay the bill herself without any trouble.
But things change as a company grows. An automated, transparent AP process becomes much more important if:
Its bills increase in volume
More people are authorized to buy things or make payments for the company
The company wants to look for investors, partners, or other funding
Processing invoices electronically with an automated solution is much faster than managing paper invoices and writing checks. If a company is paying hundreds or even thousands of bills each month, each cycle adds up to huge time savings.
True invoice automation also uses electronic invoice processes to manage invoice approval. This helps make sure all those bills are right, and that the company's money is being handled responsibly. And e-invoicing and processing significantly reduce the chance of human errors.
Should you Automate your E-invoicing?
Automated e-invoicing is faster, simpler, and easier than manual processes. As companies grow, an automated AP solution can provide more efficiencies, but even small companies can benefit from automated AP.
It saves the organization time
It helps keep the finance department lean as the company grows
It lets you handle invoice management remotely, so you’re not tied to the office
It assures compliance with approval workflows
In short, it can streamline the entire AP process and help you improve your cash flow management.
The Bill.com Difference
When you use Bill.com to automate your e-invoicing, you get a lot more than that. Here's how it works.
Step 1. Invoice arrival and automatic data entry
When an invoice arrives, the Bill.com intelligent virtual assistant (IVA) starts reading the invoice automatically and enters the data into the system for your review. This speeds up the data capture process and reduces the chance of human error. In fact, Bill.com customers reported saving on average 50% of their AP time.
Step 2. Streamlined, automated approval workflows
Once in the system, each invoice is directed to the right people for approval. You can set up as many business rules as you need. Pay some bills immediately and require several approvals for others. Your workflows are matched to each invoice and applied automatically in accordance with your preferences.
Step 3. Smart, easy handling for issues and hold-ups
Too many AP systems are built for an ideal world, as if everything will go according to plan all the time. That’s not real life. A big part of the Bill.com difference is how the system can become a resource to help you manage each challenge and keep things moving.
Paper invoices. Do you have a vendor who’s still sending paper invoices? Streamline your process by entering them into your Bill.com workflow. Just snap a photo with your phone and upload it through the app, or scan it to your computer and drag-and-drop it onto the Bill.com dashboard. Bill.com treats it just like invoices that are emailed directly from vendors.
Invoice questions. When someone has a question, you can collaborate on that invoice right inside the app. Any message is stored digitally with the invoice itself. All invoice communication is—every question and response. Bill.com uses digital, cloud-based storage to keep track of all of it in one place.
Invoice holdups. Does an invoice seem to be held up in the system? Do you need to speed things up to take advantage of discounting terms for early payment? Check its status to see where it is in the approval process and what's needed. Request the missing approval with a few clicks. The approver can even validate the invoice on their phone via the mobile app.
Step 4. Private, secure payment with a few clicks
When you’re ready to pay that invoice, Bill.com offers multiple types of payment methods: virtual card, ACH, international wire transfer, and even paper check. No matter which you choose (even a paper check), Bill.com will issue that payment from its own accounts, so your banking information isn’t exposed to the companies you’re paying. Choose from your payment options and pay with a few clicks. Bill.com will handle the rest.
Step 5. Automatic syncing with your account software
Bill.com can integrate with corporate accounting software like QuickBooks, Oracle NetSuite, Sage Intacct, and Xero. Your books stay up to date automatically, making reconciliations easier than ever, with far less chance of human error. The invoice data follows the invoice from initial entry, to payment, to updating your accounting software, all automatically.
Step 6. Time-stamped audit trail for transparency and visibility
At every step of the way, each touchpoint with an invoice is documented in a time-stamped audit trail. Auditing becomes a simple process when all events are captured permanently and available for inspection.
Step 7. Scaling up your business
Bill.com scales up just as fast as you can grow. In fact, Bill.com can help you scale up even faster by making it easy to manage incredibly complex AP systems with a lean finance team—so you can add to your revenue without an increase in your payable department headcount.
“Prior to implementing Bill.com, the AHS team spent almost a week each month processing paper, matching each of the invoices to a single check. Now the process takes just one hour in addition to dramatically reducing the time the CFO spends in the approval and signing of checks.” — Diana Westrop, Controller, Atlanta Humane Society