Electronic billing, or e-billing for short, is the general term for the process, act, and infrastructure associated with paying, processing, and receiving payments online. In electronic billing, as much as the entire billing process is hired digitally—from generating bills and invoices to allowing these bills to be paid electronically. Computers and software handle the generation of these bills and payments with human direction.
An electronic bill or e-bill is a bill generated online, usually created through the use of an accounting or finance platform or software solution. This usually allows the individual or business making a payment to login to a system or platform and access a record of previously paid bills and other information.
Once a futuristic option only available in a few cases, e-billing has now become the norm thanks to its ease, convenience, security, and speed. Modern finance is now largely centered on e-billing, and important elements of accounting such as accounts payable and accounts receivable are dependent on processing e-bills.
Many businesses love the use of e-billing because it streamlines their accounting process. Quality accounting software allows businesses to eliminate manual entry of paid bills into a digital accounting system. When it’s all handled through the finance and accounting software, that software can automatically receive an e-bill, process it, add it to accounts payable, then pay it without the need for much manual work.
An electronic billing system is a software solution or online platform, like BILL, that allows for the sending, receiving, and payment of bills online as well as a range of other features and reporting solutions. Electronic billing systems give flexibility and convenience to businesses when it comes to their accounting and billing, and the more user-friendly the platform, the less time-consuming the process of billing becomes.
Traditional billing requires paper, checks, and hard copies. Even in the early days of digital accounting, paper billing had to then be manually transferred into digital form. With a robust electronic billing system, this entire process is handled digitally and largely automatically— freeing up accounting professionals and businesses to focus on other tasks and increasing their efficiency.
Not all electronic billing systems are the same, and not all offer the same level of features. It’s up to businesses to determine which features matter most to them and will best suit their billing and accounts receivable/accounts payable processes.
While electronic billing and electronic invoicing are closely related, they’re technically not the same thing. While real electronic billing may be defined in such a way that it includes invoicing, electronic invoicing doesn’t include all facets of electronic billing.
E-billing includes the entire process of managing bills online— generating a bill, submitting the payment, receiving the payment, and more. Invoicing, on the other hand, is often directly tied to the accounts payable department. Accounts payable is the department within a company that’s responsible for receiving, processing, and approving payments from suppliers and vendors. They’ll use e-invoicing in order to process invoices and submit them for the company’s books or official record.
That said, quality electronic billing systems (like BILL) feature a built-in invoicing feature that makes this entire process as streamlined and simple as possible.
Generally, electronic bills look like a digitized version of classic, paper bills. They feature many of the same elements; date, amount of payment, date the payment is due, payment terms, and any other relevant details. Because these bills are created and viewed digitally, they’re capable of displaying functional hyperlinks that can send payers to a payment portal where payment can be made.
In cases where companies still use and process paper bills, an ‘e-bill’ might simply be a scanned and digitized version of the paper bill in a PDF format.
All that said, what appears on an e-bill depends largely on the company, billing situation, and electronic billing system through which the bill was generated.
To help with the standardization and security of electronic billing, there is a general set of industry standards for coding electronic bills. These standards are set by the National Electronic Payments Association, or NACHA. NACHA determines the accepted format in which electronic bills can be generated and transmitted.
Everyone involved in the process of electronic billing must follow the standards set forward by NACHA, from the bill payment provider and bill service provider to the consolidator and customer service provider.
There are many benefits associated with e-billing. One of the most widely known is that electronic billing improves the efficiency of bill processing, helping make the tasks associated with it simpler and faster.
Meanwhile, electronic billing also reduces the rate of errors. In electronic bill processing systems like BILL, bill processing is automated— which means that there’s no manual data entry required to match the requested amount and payment terms of bills. Bills that are received can be automatically paid with a few touches of buttons, reducing the chance for human error.
This speaks to the overall reduction in manual processes that occurs thanks to electronic billing; everything from generating invoices, manually entering data, packing paper invoices and sending them, then waiting for them to be received, processed, and paid, then waiting for payment to arrive—this is all reduced or eliminated entirely.
Having an automatically generated record is also one of the most powerful benefits of electronic billing. There’s no need to manually ensure there are cleanly recorded and organized records, the electronic billing system manages all of that for you. The best systems are also capable of integrating fully with existing accounting software systems to make the process even more streamlined.
The only potential drawback of electronic billing comes in the process of transferring from paper to electronic. This process isn’t always smooth, especially when dealing with a deeply established organization that is entrenched in its current systems. But the best e-billing systems make this transition as smooth and streamlined as possible.
The content found here is for informational purposes only, and not for the purpose of providing advice, including but not limited to, financial, legal, or tax advice. Any opinion found here does not necessarily represent those of BILL.
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