What is e-Invoicing? How Electronic Invoicing Works

By The oboloo Team

What is e-Invoicing? How Electronic Invoicing Works

Are you familiar with the term ‘e-invoicing’? Also referred to as “electronic invoicing”, this relatively new concept has revolutionised how businesses transact and manage their finances. The process involves an invoice being sent electronically, from one business to another, to facilitate quicker payments and easier reconciliation of business accounts.

E-invoicing is becoming increasingly popular due to its cost efficiency and time saving benefits. It eliminates manual data entry, eliminates the need for physical paperwork, reduces transaction costs and provides real-time visibility into the accounts. In order to understand how electronic invoicing works – including what it is and the advantages of using e-invoices – let’s take a closer look at this innovative technology.

What is E-invoicing?

E-Invoicing, or electronic invoicing, is the process of issuing, receiving, and processing invoices electronically between a supplier and a buyer. Instead of sending paper invoices via mail, e-invoicing relies on digital documents that streamline the payment process.

E-invoicing works by creating a structured XML file that replaces the traditional invoice, containing all the relevant information needed to process payment electronically. This file is sent to the buyer or a third-party service provider for processing. With electronic invoicing, businesses can save time, reduce paper usage, and streamline their payment process.

Benefits of E-Invoicing include the reduction of manual labor involved in creating, handling, and processing invoices. It also eliminates the need for manual data entry, reducing the risk of errors and fraud. By automating the payment process, businesses can improve productivity while reducing their carbon footprint.

E-invoicing standards have been developed to establish a common language between buyers and suppliers. For example, the European Union has established an e-invoicing standard, which requires suppliers to follow a specific set of guidelines for electronic invoicing. This ensures that information is consistent and easily understood, enabling improved communication between businesses.

💡 key Takeaway: E-Invoicing is the process of issuing, receiving, and processing invoices electronically. It streamlines the payment process, saving time and reducing manual labor. By using common e-invoicing standards, businesses can improve communication between buyers and suppliers.

What is an e-invoice?

An e-invoice is a paperless invoice that is processed electronically between a supplier and a buyer. This process is designed to streamline business operations and reduce the costs associated with paper-based invoicing. E-invoicing enables the automated exchange, processing and payment of invoices in digital format. A key benefit of e-invoicing is that it provides real-time updates and increased transparency for both suppliers and buyers.

There are various technological solutions available for e-invoicing, each with their own benefits and drawbacks. One solution is integrated e-invoicing where the invoice is automatically generated from a purchase order or a contract in the supplier’s accounting system. Another solution is web forms where the supplier completes the necessary fields on a web-based form and submits the invoice electronically to the buyer.

E-invoicing is becoming increasingly popular worldwide, with many countries including the European Union, Singapore, and Australia mandating it. In fact, according to a recent report by Billentis, e-invoicing will increase from 550 billion in 2020 to 6.8 trillion invoices annually by 2030.

💡 key Takeaway: E-invoicing is a digital process that enables the automated exchange, processing, and payment of invoices between suppliers and buyers. It reduces the costs associated with paper-based invoicing and improves transparency. With various technological solutions available, e-invoicing is quickly becoming the norm worldwide.

What are the benefits of e-invoicing?

When it comes to the invoicing process, businesses find themselves dealing with various challenges like invoice errors, delays and costs that come with manual processing. However, with the rise of e-invoicing, businesses can overcome these challenges and reap tremendous benefits.

Streamlined processes, reduced error rates, and faster processing are among the most significant benefits of e-invoicing. Subsequently, e-invoicing ensures quicker payments, reduced processing costs and optimized cash management. Furthermore, as e-invoicing is a paperless process, it is also environmentally friendly, contributing to a more sustainable future.

According to a report by Billentis, there is immense potential for businesses to adopt e-invoicing, estimating that the market will grow to almost $20 billion globally by 2025. As experts predict the growth of the e-invoicing market, businesses can ensure they are not left behind in the digital transformation of invoicing.

💡 key Takeaway: E-invoicing is a game-changer for businesses looking to streamline their invoicing process. The benefits of e-invoicing include faster processing, reduced error rates, paperless processing and optimized cash management. As the market for e-invoicing continues to grow, it is essential for businesses to adopt this digital solution to stay ahead of the curve.

What technology is used to issue an e-invoice?

When it comes to e-invoicing, technology plays a vital role in issuing electronic invoices. Electronic invoicing involves the use of specialized software solutions that allow suppliers and buyers to issue and process invoices electronically. The technology used to issue an e-invoice can vary depending on the supplier and buyer’s preferences, but most commonly, e-invoicing solutions utilize cloud-based platforms or integrated software systems to handle the electronic invoices. These solutions streamline the invoicing process, eliminating the need for manual invoicing, reducing errors, and increasing the speed of payments. Many e-invoicing solutions also incorporate advanced security measures to ensure the authenticity of the invoices and safeguard sensitive data. Overall, technology plays a significant role in the functioning of e-invoicing.

Some common technology used for e-invoicing includes:

Cloud-based platforms

– Integrated software systems

Electronic Data Interchange (EDI)

– XML or HTML formats

💡 key Takeaway: Technology solutions such as cloud-based platforms, integrated software systems, EDI, and XML or HTML formats play an essential role in issuing e-invoices. These solutions streamline the invoicing process, reduce errors, increase payment speed, and incorporate advanced security measures.

How Electronic Invoicing Works

When we talk about electronic invoicing or e-invoicing, we are referring to a paperless way of handling invoices that enhances accuracy, speed, and cost-effectiveness. This method of interacting with invoices benefits both the buyer and the seller. But how does it work?

Creating an e-Invoice

The first step in e-invoicing is creating an electronic invoice typically done by the seller. At this point, the seller generates an invoice digitally using an accounting software or an e-invoicing solution that generates e-invoices based on the correct format, standard and regulatory compliance required for electronic invoicing. This eliminates possible errors in manual data entry, and the format for the invoice can be based on the regulations and specifications required.

Transmitting e-Invoices

Next, the automated system sends the electronic invoice directly to the recipient or buyer via a secure and safe medium determined and agreed upon by the parties involved. The e-invoice can be sent through various electronic mediums such as email, EDI (Electronic Data Interchange), API (Application Programming Interface), XML, or even mobile messaging services.

Receiving and Processing e-Invoices

Once the buyer has received the e-invoice, they can either accept or decline the e-invoice. If the invoice is accepted, the details are automatically processed by the accounting department/invoicing software of the buyer organisation. The invoicing software then uses the contained transaction data, populated with relevant fields, to generate a remittance advice or verified payment approval.

What processes are involved in e-invoicing?

E-invoicing is a process of invoicing where the entire billing process is carried out between two parties electronically; it is faster, cheaper, and more environmentally friendly than physical invoicing. An e-invoice is issued, received, and processed electronically between a supplier and a buyer. The process of e-invoicing involves several steps, including:

1. Creation of electronic invoice: The supplier creates an invoice in a specific file format agreed upon by both parties. The file format is standardised to ensure interoperability between systems.

2. Electronic delivery of the invoice: The supplier sends the electronic invoice to the buyer via a secure channel.

3. Receipt and processing: The buyer’s system receives the invoice and performs validation checks on it. Once it is validated, the invoice data is automatically entered into the buyer’s accounting system.

4. Payment: The invoice is then paid by the buyer according to the agreed payment terms.

By using e-invoicing, businesses can reduce the amount of manual data entry required, speed up the processing time, and reduce errors.

💡 key Takeaway: E-invoicing is a process of invoicing that involves the entire billing process being carried out between two parties electronically. It involves creation of the invoice, electronic delivery of the invoice, receipt and processing, and payment. It can save businesses time, money, and reduce errors.

How is an e-invoice processed?

When it comes to e-invoicing, the process is quite straightforward. The e-invoice is transmitted from the supplier to the buyer through an electronic platform or service provider. Once the buyer receives the invoice, it is automatically processed into their accounting system, providing for efficient and streamlined bookkeeping. However, the actual process of e-invoicing involves a number of steps that are essential to ensure accuracy, security, and convenience.

The first step in the e-invoicing process is the creation of the invoice by the supplier. This can be done using an accounting or invoicing software, which allows for the accurate recording of details such as product or service, quantity, price, and taxes. The invoice is then transmitted to the buyer through an electronic platform, which may involve a variety of protocols such as EDI, XML, or PDF.

Once the e-invoice is received by the buyer, it is automatically processed using Optical Character Recognition (OCR) or similar technology. This ensures that the information is accurately recorded, while also minimizing the risk of manual errors or delays. The buyer’s accounting system then automatically matches the invoice against the purchase order and receipt of goods or services, and creates an electronic record for future reference.

Another key benefit of e-invoicing is improved visibility and transparency throughout the process. This allows both the supplier and buyer to track the status of the invoice in real-time, and to resolve any issues or disputes quickly and efficiently. In addition, electronic records can be easily accessed and archived, providing for improved compliance with regulatory requirements.

💡 key Takeaway: E-invoicing is a simple and efficient way for suppliers and buyers to process invoices electronically. By using an electronic platform or service provider, the e-invoice is transmitted, processed, and recorded automatically, providing for streamlined bookkeeping and improved visibility throughout the process.

What security measures are taken to ensure the integrity of the invoice?

When it comes to e-invoicing, ensuring the security and integrity of the invoice is critical for businesses. There are various measures taken to give confidence to the buyers that the e-invoices are trustworthy and secure. These measures are:

(1) Digital Signature – A digital signature is a method that is used to verify the signed document’s authenticity and ensure that it has not been tampered with. It is used as an equivalent of a written signature in electronic transactions.

(2) Secure Channels – E-invoicing requires a secure electronic channel to minimize the risks of unauthorized interception or editing. The invoices are transmitted over a secure network in an encrypted form to protect the information from unauthorized access.

(3) Audit Trail – The e-invoicing system retains an audit trail that chronologically captures and documents the entire invoice lifecycle to maintain transparency and accountability. The audit trail contains information such as the invoice creation date, generation date, approval date, and payment date.

(4) Compliance with Regulatory Standards – E-invoicing providers must comply with local and international regulatory standards to ensure that the invoicing operation meets legal requirements.

💡 key Takeaway: Security and integrity of the e-invoicing process are key aspects that need to be considered when implementing e-invoicing in an organization.

What are the cost savings associated with e-invoicing?

By eliminating paper-based processes, companies can reduce their environmental footprint and save money on printing, postage and processing expenses. Additionally, e-invoicing can reduce the time it takes to process invoices, leading to improved cash flow and better supplier relationships.

One major cost-saving benefit of e-invoicing is the reduction in manual data entry errors. With traditional paper-based invoicing, invoices must be manually entered into accounting systems, leaving room for errors. However, with e-invoicing, invoices are transmitted electronically and can be integrated directly into the buyer’s accounting software, greatly reducing the risk of error.

Another benefit of e-invoicing is the ability to automate payment processing. By integrating e-invoicing with payment systems, invoices can be paid automatically, resulting in faster payment processing times and potentially avoiding late payment fees.

In addition, e-invoicing can also offer improved visibility and reporting capabilities. Electronic invoices can be easily tracked and monitored, providing greater transparency and enabling businesses to gain a better understanding of their spending patterns.

Overall, the cost savings associated with e-invoicing are significant, and businesses of all sizes can benefit from implementing an electronic invoicing system. By reducing paper-based processes, automating payment processing and improving visibility and reporting capabilities, e-invoicing can help companies achieve greater efficiency and increased profitability.

💡 key Takeaway: The use of e-invoicing can lead to significant cost savings for businesses by reducing paper-based processes, automating payment processing and improving visibility and reporting capabilities.

How does e-invoicing improve efficiency?

E-invoicing can streamline the entire invoicing process, from creation to payment processing, resulting in significant time and cost savings for companies.

Benefits of e-invoicing:

One of the biggest advantages of e-invoicing is its ability to automate the invoicing process. This means that invoicing can be done quickly, efficiently, and with minimal errors compared to traditional paper-based invoicing. With the paper-based invoicing system, businesses are often slowed down by errors, such as missing information, typos, and delayed delivery, which can lead to unnecessary delays and costs.

Automated processing saves time:

E-invoicing systems automate the entire invoicing process through the use of electronic data interchange (EDI) technology. EDI removes the need for manual data entry and reduces errors, freeing up time for businesses to focus on their core activities. Additionally, e-invoicing can be integrated with other business software applications, such as accounting systems, making it easy for businesses to track their invoices, payments, and financial status all in one place.

Improved accuracy and reduced errors:

E-invoicing eliminates the possibility of errors that come with manual data entry. This is because every step of the process is fully automated, reducing the possibility of errors, such as incorrect data entry, missing information, and typos. The automation of e-invoicing helps companies to identify and resolve discrepancies in invoicing far more easily and quickly than is possible with paper-based invoicing.

Quicker payments:

E-invoicing also simplifies the payment process, ensuring suppliers are paid on time. With e-invoicing, invoices are delivered and processed more quickly, meaning payments can be made faster too. This results in savings for both suppliers and buyers, as it eliminates the need for manual entry, postage and printing costs, and reduces the time spent on chasing late payments.

💡 key Takeaway: In conclusion, e-invoicing is a highly beneficial technology that can help businesses improve their efficiency and reduce costs. By automating the invoicing process, improving accuracy, and speeding up payments, e-invoicing enables businesses to focus on their core activities and operations, saving valuable time and resources.

How does e-invoicing help with compliance?

In today’s digital age, e-invoicing has emerged as a popular tool for businesses looking for quick, efficient, and secure ways to manage their invoicing processes. It is also helping companies address compliance challenges and reduce costs. There are several benefits of e-invoicing that make it an attractive option for organizations looking to streamline their operations.

One of the biggest advantages of e-invoicing is improved compliance. With e-invoicing, businesses can ensure that their invoices are fully compliant with all applicable laws and regulations. This helps to minimize the risk of errors, disputes, and delays in payment processing. Additionally, e-invoicing provides a complete audit trail that can be used to quickly and easily verify the accuracy and authenticity of invoices.

E-invoicing also offers businesses a range of other benefits, including improved efficiency, reduced costs, and enhanced security. By automating the invoicing process, companies can save time and resources that would otherwise be spent on manual tasks. This can help to boost productivity and improve overall operational efficiency.

Moreover, e-invoicing can help organizations to cut costs by reducing the need for paper-based invoicing and associated manual workflows. This can help businesses to save money on printing, postage, storage, and other expenses. Finally, e-invoicing provides enhanced security by ensuring that invoicing data is encrypted and stored securely. This helps to protect businesses from fraud, theft, and other types of cyber threats.

💡 key Takeaway: E-invoicing is an electronic invoicing process that improves compliance, efficiency, and security in businesses. By automating the invoicing process, it saves time and reduces errors, while also providing a complete audit trail to verify the accuracy and authenticity of invoices.

How do I get started with e-invoicing?

If you’re looking to get started with e-invoicing, there are a few key things you need to know. Firstly, you’ll need to consider the technical aspects of the process. This includes the software and systems you’ll need to use in order to send and receive electronic invoices. Secure file transfer protocols (SFTP) and electronic data interchange (EDI) are commonly used technologies for this purpose. Secondly, you’ll need to ensure that your invoices comply with relevant laws and regulations. Some countries have specific requirements for electronic invoicing, so it’s important to do your research and ensure that you’re following the rules. Finally, you’ll need to work with your suppliers and buyers to establish the necessary processes and systems for e-invoicing. Communication is key to making the transition a success. By taking these steps and working closely with your stakeholders, you can successfully implement e-invoicing and benefit from the cost savings and efficiency gains it offers.

💡 key Takeaway: To get started with e-invoicing, you need to consider the technical aspects of the process, ensure legal compliance, and work closely with your stakeholders to establish the necessary processes and systems.

What resources are available to help me get started?

If you’re looking to get started with e-invoicing, there are a variety of resources available to support you. Here are a few key options to consider:

1. Government Sites: Many governments are encouraging the use of e-invoicing as a way to streamline operations and save costs. Take advantage of their resources, which may include guides, case studies and webinars. For example, in the United States, the Invoice Processing Platform (IPP) is a government-run website that provides guidance on how to get started with electronic invoicing.

2. Service Providers: There are a wide range of e-invoicing service providers available, each with their own unique offerings. Research potential vendors to find one that aligns with your business needs.

3. Industry Associations: Depending on your vertical, there may be industry associations or organizations that provide support and guidance for e-invoicing. For example, the International Association of Business Process Outsourcing Professionals (IAOP) has published a series of articles on the benefits of using e-invoicing.

4. Webinars and Seminars: Participating in e-invoicing webinars and seminars can be a great way to get hands-on guidance from experts. Check out online event directories or sign up for newsletters from relevant organizations to stay up-to-date on upcoming events.

Whatever approach you take, it’s important to do your due diligence and research the different options available to you to find the best fit for your organization.

💡 key Takeaway: When looking to get started with e-invoicing, consider government sites, service providers, industry associations and webinars/seminars as useful resources to help you get started.

What are the best practices for e-invoicing?

E-invoicing has become an increasingly popular solution for businesses looking to streamline their operations and reduce costs. To ensure the success of e-invoicing implementation, it is important to follow a set of best practices.

1. Choose an e-invoicing solution that meets your needs: Before implementing e-invoicing, you should identify the features and functionalities that are important to your organization. This will ensure that the solution fits your specific requirements and reduces the likelihood of any issues arising during implementation.

2. Collaborate with your trading partners: Ensure that your trading partners are informed about your e-invoicing plans and are willing to collaborate towards its implementation. This will help to ensure that the implementation is successful and that all parties reap the benefits.

3. Set clear goals and objectives: Setting clear goals and objectives will help you to track the success of your e-invoicing implementation. These goals could include improving cash flow, reducing errors, or streamlining invoicing processes.

4. Integrate with your existing systems: To maximize the benefits of e-invoicing, it is important to integrate it with your other business systems, such as your accounting software. This will help to speed up the invoicing process, reduce manual data entry and minimize errors.

5. Provide training and support: To ensure that all users are able to use the new e-invoicing system effectively, provide training and support. This will help to reduce any resistance to change and ensure that the implementation goes smoothly.

💡 key Takeaway: These are just a few of the many best practices that can help you to successfully implement e-invoicing in your organization. By choosing the right solution, collaborating with trading partners, and setting clear goals and objectives, you can ensure that your e-invoicing implementation is successful and provides significant benefits to your business.

What mistakes should I avoid when using e-invoicing?

E-invoicing is quickly gaining popularity due to its numerous benefits. However, there are certain mistakes one should avoid when using e-invoicing to ensure a smooth transition. One common mistake is failing to properly set up the system, which can result in delayed payments and frustrated suppliers. To avoid this, it is important to follow the correct procedures and guidelines for your particular e-invoicing system. Another mistake is failing to communicate effectively with your suppliers about the system and the changes that will take place. This can lead to confusion and misunderstandings. To avoid this, it is important to educate your suppliers about e-invoicing and how it works. Additionally, overlooking security measures is also a mistake that should be avoided. E-invoicing involves the exchange of sensitive financial information, which requires proper security measures to safeguard. To avoid security breaches and protect the confidentiality of the data, it is important to implement appropriate security measures. In summary, to successfully implement e-invoicing, one should avoid the mistakes of improper system set-up, poor communication with suppliers, and overlooking security measures.

💡 key Takeaway: Properly setting up the e-invoicing system, effective communication with suppliers, and implementing appropriate security measures are key to a smooth transition to e-invoicing.


An E-invoice is an invoice that is issued, received and processed electronically between a supplier and a buyer. It is most commonly used in business to business transactions between an organisation and its supplier. Electronic invoicing has many benefits: it is faster, more efficient, and more secure than traditional invoicing methods. There are a few things you need to take into account when issuing an e-invoice: you need to have an e-invoice system in place, you need to make sure your supplier is ready for e-invoice, and you need to make sure you have the right e-invoicing software. Once you have issued and received an e-invoice, you need to process it. This involves entering the data into your e-invoicing software and sending the invoice to your supplier.

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