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The Invoicing process

The invoice process

1) The seller prepares the invoice

This step refers to the compiling of information such as man-hours, list of items, usage of services etc. necessary to issue an invoice. This process happens before the invoice itself is created and is not affected by the form of the invoice.

Source of savings

Any automation and improvement in the preparation of an invoice for payment is not related to its form.

  • Visual digital invoices
  • Structured data eInvoice

2) The seller issues the invoice

The invoice is created in the system and exported into the relevant format, paper, pdf, HTML, structured XML.

Source of savings

Paper and printing costs and handling of mail.

3) The seller sends the invoice

The invoice that has been created is sent to the buyer according to a certain procedure, i.e. physically, by email or through messaging platforms.

Source of savings

In most cases, there are savings in postal costs. These are replaced by electronic transmission costs, which tend to be significantly lower.

4) The buyer receives the invoice

Since the invoice is received by the customer, it must be correctly identified as an invoice and assigned to the correct internal process.

Source of savings

Manual processing is being replaced by a semi-automated or fully automated system. Visual digital invoices received by email usually require some manual sorting (although that can be reduced, e.g. by using dedicated mailboxes). The structure of the data in a structured eInvoice allows for full automation of the reception.

5) The buyer approves the invoice

The invoice is reviewed to verify that it matches the quantities and prices ordered and received.

Source of savings

The review process consists of comparing the invoice to existing information, such as orders, or to apply decision rules. The internal routing of a visual digital invoice can be improved by the use of document sharing systems (scanning solutions) while the use of structured eInvoice content enables automated invoice matching. Invoice automated approval frequently provides the buyer with significant benefits by freeing up employees' time, who tend to be on a managerial level.

6) The buyer books the invoice into accounts

The buyer enters the necessary information from the invoice into their accounting system(s) and assigns the relevant accounting keys.

Source of savings

Entering of information from visual digital invoices remains manual. Structured eInvoices enable automated information entry and automated assignment of accounting keys through references or rules. Automated entry of invoice information significantly reduces the risk of entry errors which often cause significant costs. This is usually a significant source of benefits for the buyer.

7) The buyer schedules payment

The payment for the invoice is scheduled either according to contracted terms or based on payment information in the invoice.

Source of savings

When the time-to-payment is based on the invoice content, as opposed to contractual terms, the structured eInvoice allows for automated entry of the relevant information. This improves payment scheduling and avoids late payments.

8) The buyer archives the invoice

The invoice is stored for later retrieval.

Source of savings

Both visual digital invoices and structured eInvoices significantly reduce archiving costs through both reduced handling and storage costs.

List of key e-Invoicing cost savings

The following list provides an overview of the types of costs that can be reduced through the various processing steps described above.

  • Cost of paper
  • Printing costs
  • Mailing costs
  • Manual handling when sending or receiving
  • Review and approval of invoices
  • Entry of data into ERP systems
  • Accounting key assignment
  • Balancing (reduced error in data entry)
  • Archiving, handling and storage