What is e-invoicing?
Electronic invoicing or e-invoicing in India is a process through which B2B invoices are digitally uploaded to a portal where authentication occurs by the GSTN or the Goods and Services Tax Network. For every e-invoice generated, an IRN or Invoice Reference Number is generated along with a unique QR code. The reason behind the introduction of e-invoicing is to ensure a common format is used across all Indian businesses across different industries so that interoperability becomes simpler. It also ensures compliance from all businesses.
The government of India first shared an e-invoice in August 2019. It was then changed eventually as per the GST Council regulations. Rather than introduce e-invoicing across all businesses, the GST Council of India introduced e-invoicing in three phases. First, e-invoice was introduced and applicable to businesses with a turnover of Rs. 500 crores or more from 1st October 2020. Second, e-invoicing was introduced to businesses with a turnover of Rs. 100 crores or more from 1st January 2021. In the third phase, e-invoicing was introduced to businesses with a turnover of Rs. 50 crores and more from 1st April 2021.
7 benefits of e-invoicing
The post-pandemic business world is different from what it was pre-pandemic. With a higher adoption of digital methods, e-invoicing is proving to be highly beneficial for everyone involved. The benefits of e-invoicing are as follows.
Saves time
e-Invoicing saves time which is a major benefit for all businesses. e-Invoicing is a completely digital process and it takes only some minutes to generate an e-invoice. Earlier, traditional invoices required a lot of time to generate and upload the invoice details to the government portal for return filing purposes. e-Invoicing has reduced the time required to process, track, send, and approve invoices. It has thereby improved productivity because employees can spend their time focusing on other aspects of the business that require attention. With e-invoicing, payments are made at a faster rate and information aggregation can be done without any problems.
Higher accuracy
Better accuracy and reduction of human errors are some of the benefits of e-invoicing. As you are not required to enter any data manually, there is little room for error. The information is taken from the e-invoices directly and as the billing systems also maintain the information, it further ensures no errors are made during e-invoicing. This will allow for better transparency which is another benefit due to the high accuracy of e-invoicing. The communication between buyers and vendors will also be better and time will be saved in the process as a result because of no errors in the e-invoices.
Cost-effective
e-Invoicing is more cost-effective for businesses when compared to the traditional form of invoicing and reporting. Everything takes place digitally which allows for higher cost-saving for every business. This is also beneficial from an energy point of view as e-invoicing is energy-efficient compared to the paper invoicing process.
Ease of financial operation
Ease of financial operation is one of the benefits of e-invoicing. Prior to the introduction of e-invoicing, the financial operation wasn’t as simple or straightforward as it has become now specifically for MSMEs. As these businesses often have a higher workload and they need to balance multiple business components, e-invoicing gives relief as it ensures the admin work doesn’t take as much time. Traditional invoicing required a lot of work and effort but e-invoicing isn’t as complicated. A good software solution such as TallyPrime has made it easier for businesses to generate e-invoices in minutes.
Data security
e-Invoicing ensures data security which is one of the main reasons why it is a boon to businesses. Earlier, invoices were not secure and there was a higher chance of tax leakage as well as fraud taking place. Some businesses were involved in malpractices whereby they used fake invoices. Thanks to the introduction of e-invoicing, the probability of fraud has decreased drastically because there is no way that a fake invoice can be generated and submitted. All invoices that are electronically generated are authenticated which ensures data security and credibility of those invoices.
Increases productivity
e-Invoicing can enhance productivity in MSMEs. Invoicing used to be a time-consuming and tedious task that required hours of time and attention. Additionally, if an error was found or if there was a discrepancy due to human error, the problem had to be rectified and the invoice had to be printed once again. With the introduction of e-invoicing, there is no need for such effort because e-invoicing takes less time and it allows employees to focus on other things. They now have more time at hand which will allow them to spend it on more productive ventures.
Tracking
e-Invoicing is beneficial for the post-pandemic business world because it makes tracking much simpler and convenient. It also gives you more control because all the details entered in the e-invoice are automatically saved and you get access to it all whenever the need arises. E-invoicing makes it efficient for businesses to understand whether their business is going in the direction they want it to go on. With the help of good e-invoicing software such as TallyPrime, you know in detail whether your business is doing well or not.