E-Invoice VS Paper Invoice: What are the differences you should know about

For many companies, invoicing is an important yet painfully time-consuming process. In the manual invoicing process, a person needs to match and verify the invoice while another person authorises the transaction, before it gets registered into the company’s account. In small companies, this is generally done by the same person. This tedious process is prone to human error which often leads to payment delays for vendors too.

By adopting the use of e-invoices, you can easily eliminate these problems. As the name suggests, an e-invoice is a digital invoice that requires little to no manual processing. E-invoices are created digitally in a supplier’s financial system, and then transmitted electronically through the network to the recipient, where it is processed.

In 2019, The Infocomm Development Authority of Singapore (IMDA) launched the nationwide E-invoicing network. As part of the International PEPPOL (Pan European Public Procurement On-Line) network, this initiative aims to digitalise the economy, helping enterprises improve efficiency and cash flow, while reducing cost and error in faster payment cycles.

Here are three major differences between e-invoices and paper invoices that you should know about.

#1 Standardised invoice format

Currently, many businesses are issuing invoices through a PDF in email or by post. These are usually considered “single-sided”, where customers will have to re-enter the information into their system. The same goes for when the customer makes a payment for the invoice, in which the business will have to input the data into their system.

However, with e-invoicing, the same data can be used across many businesses and agencies due to the standardised invoice format. In technical terminology, this standardised invoice format provides structured data that can be used on various databases and technology across different companies.

This is where the PEPPOL network comes in. This shared network helps businesses ensure that a standardised invoice is produced and generated.

E-invoices are also typically structured, and the data comes in formats such as XML or EDL. The file formats are created using compatible invoicing software where other web-based platforms can also allow invoice issuers to create and issue structured invoice data.

#2 Entering of data

Another important thing to note is the entering of data to generate an invoice. PDF and paper invoices are generated either by inputting the data manually or via Optical Character Recognition (OCR).

However, both the manual entry of data and OCR are not 100% error free and will require additional effort to check if the data is being entered correctly. You’ll also need to understand the various formats and labels used by different companies.

By adopting e-invoices, you can minimise such human errors and manpower needed. E-invoices use a standardised format for data entry, and can be easily shared via the PEPPOL network.

#3 Transmission and storage

From the perspective of an invoice issuer, it is crucial for invoices to be sent reliably and economically in order to get payments efficiently from customers. While some companies still send out paper invoices through post, there are risks to this method of delivery. Your invoice could get lost while in transit or misplaced by the receiver.

Many companies have also adopted using PDF for their invoices in response to the inefficiency of postal mail. While this saves on costs, there are still occasions where emails get lost during transmission, or when the email address is changed.

Both options do not ensure that the invoices are received and accepted by the other party. Instead, switch to e-invoicing to enjoy a more seamless process and faster payment cycles.

More benefits of using e-invoices

While the functional differences between e-invoices and paper invoices may seem small, there are many advantages in using an e-invoicing system as compared to paper or PDF invoices.

By being digital, you’ll save on paper and postage fees, as well as reduce the manpower required to process these invoices. The system is highly automated, and data is transmitted electronically, with unnecessary steps being eliminated from the invoicing process.

The automated process will also help to reduce manual input of any information required, thus reducing mistakes. Businesses can also be assured that their invoices can be tracked easily and systematically.

An automated invoicing system will provide information on when the invoice has been sent, viewed and paid. Depending on the system, issuers can see when their customers have viewed their invoice. This enables invoices to be processed efficiently and ensures that they will be paid on time.

The adoption of the nationwide E-invoicing network will also allow businesses in Singapore to integrate with companies globally. As the e-invoicing network adopts the PEPPOL network, organisations can easily send e-invoices to businesses overseas like they do locally. Check out IMDA’s list of peppol-ready accounting softwares and increase your business e-invoicing capabilities.

Grants available for e-invoices

To help businesses adopt e-invoicing better, IMDA has launched the E-Invoicing Registration Grant, which provides a one-time payment of S$200 for every business with a Unique Entity Number (UEN). Register your business on the E-invoicing network with OCBC.

This amount will be given when you register on the E-invoicing network on or before 31 December 2020. For more details on this grant, please visit IMDA’s website.

Stay healthy, go digital

Keep your workers and business healthy during this period by going digital. As part of IMDA’s Go Digital Initiative, we have put together a list of useful digital solutions that can help your business buy, sell and operate better during this time. You can also get your business ready with OCBC’s InvoiceNow.