Technology has changed a lot of manual processes in several sectors since it became ubiquitous in the past decade. However, it appears all we’ve seen so far is only a tip of the iceberg. More revolutions are changing the way business is done, and it is getting a bit more exciting. Like many other processes that technology has given a Midas touch, companies are now learning to automate their invoicing processes, in a way that saves up valuable resources wasted on chasing payments.
Invoicing is a very familiar term for business owners in all categories, the small, medium or large. Each day, thousands of invoices are exchanged among companies, particularly in larger companies or enterprises dealing with a large cash flow. The most common ways smaller operators currently send invoices is by paper, email or PDFs. They cost so much time in processing, require a lot of paper work and are prone to human errors. It doesn’t end there. Timely payments help company owners and customers set clear expectations of their income and expenses, but these invoices are also rarely attended to as due. Outstanding payments have driven companies into bankruptcy and forced some to shut down.
Technology is changing this narrative for good. Corporates and individuals can now conveniently say goodbye to the days when transactional documents used in interacting with vendors relied heavily on papers and follow-ups. Electronic invoicing, also known as e-invoicing is replacing this old system. Research has shown that clients are more likely to pay e-invoices on time than paper-based invoices, which often get lost.
E-invoicing is the interchange of the invoice document between the supplier and the buyer in an integrated automated format. E-invoicing holds much potentials for the growth of businesses and will help them save time and money by allowing the direct exchange of invoices between suppliers’ and buyers’ financial systems irrespective of location. It has the potential to improve payment times, and thus, cash flow in organisations.
Practical examples show that companies who process their invoices digitally save time and money. In this light, governments in some parts of the world have noticed the advantages and are pushing it in the private and public sector. In Europe, e-invoicing had already become law for businesses to government (B2G) since 2015. Portugal took it a step higher by being the first country to make electronic invoicing mandatory for private businesses. In Germany, the electronic billing for suppliers of public institutions will be mandatory from November 2020 onward, while in Australia and New Zealand, e-invoicing is being championed by government and small-business advocates to fast-track adoption. The two nations are hoping to save $30 billion over 10 years by driving e-invoicing to achieve more streamlined payments.
In Nigeria, SystemSpecs is already blazing the trail in the provision of e-invoicing solutions, however very few enterprises (public or private) and individuals are exposed to the huge gain of this technology. Most companies still rely on mailing scanned copies of invoices or originals. Digital transformation of businesses in the country seem to be happening at snail speed.
E-invoicing might be a little part of the overall digitization of businesses, but it has significant benefits when it comes to improving the bottom-line. E-invoicing will significantly improve productivity for businesses large and small, and reduce the costs of doing business for both government and industries. Tax authorities worldwide are making use of e-invoicing abilities to boost their collection rates.
It is also applicable in business to consumers (B2C) segment. For instance, with the Remita e-invoicing technology developed by SystemSpecs, individuals can exchange e-invoices and clear bills at the click of a button through their preferred channel. They can pay by cards, through their bank accounts, e-wallets, QR codes and through the Remita app, where they simply sign up.
The e-invoice already carries a payment link and interface, reducing the rigours of disclosing bank account details or accommodating excuses from payers who simply want to drag payments. It also generates receipt once payment is successful, making it extremely easy to track transactions.
Businesses in Nigeria hoping to get ahead of the game must make the switch early. “By switching to e-invoicing, organisations are future-proofing their systems. They aren’t just making the business more efficient today, but making it easier to integrate and use cloud and automated technology in the future – giving the business an edge over its competitors,” an expert opines.
E-invoicing is gaining traction and projections show it will grow exponentially in the next couple of years. No doubt, beyond the private sector, we’ll see more regulatory authorities in countries making e-invoicing mandatory, especially as they realise the advantages of e-invoicing when it comes to tax collection and overall business efficiency. It presents a major paradigm shift that will be useful in a country such as Nigeria.
Tayo Ejiofor is a Lagos-based accountant and Tax Consultant