Advantages of e-invoices

Written by: Srđan Čečarić, Financial Director at Exact Advisory

The economic benefits of e-invoices do not solely come from printing paper and paying postage. If it were just that, at first glance, most SEF (e-invoice) users would say, 'It's easier for me to print an invoice and go to the post office than to search the e-invoice portal every day.'

Digitalization has become an integral part of our daily lives, involving the use of new and existing technologies and information to enhance business processes and create an environment for digital business where information plays a central role. Although invoices account for about a quarter of accounting documentation by estimation, they are still the most common documents encountered in practice. Therefore, e-invoices deserve a brief look at their benefits.

The benefits of introducing e-invoices can be viewed from three basic aspects:

Costs: Let's consider the simplest sales process where a customer orders goods, receives them, and gets a delivery note. After that, an administrative process follows, where the same delivery note is forwarded to the billing department, which issues an invoice in three copies (for the customer, accounting, and archive) all in paper form. Problems arise here, such as how long it takes to send the invoice by mail, whether the data are legally correct, whether it will affect the payment terms, whether the postal address information is up-to-date, and more.

By implementing e-invoices, costs for printing, envelopes, postage, and handling are directly reduced. Translated into money, if a medium-sized retail chain issues approximately 2.5 million invoices annually, direct savings amount to 0.06 Euro cents per paper, totaling 150,000.00 Euros per year (according to research by NALED).

Storage costs should not be underestimated either, which is mandatory according to tax and other laws. It's clear that the cost of a server or cloud is significantly cheaper than the square footage of storage space, which can be up to 100 times more expensive.

Efficiency: Since e-invoices are digital, their processing is much simpler, provided that SEF is integrated with the company's existing ERP system. This reduces the number of iterations, as there is no manual data entry from the invoice; instead, they are automatically generated. Consequently, errors are minimized, and as a result, the accuracy and timeliness of reporting are significantly improved.

E-invoices may lead to better liquidity for companies that plan their cash flows in a timely manner. With the completion of a contracted job, there is an invoice with all the necessary elements for timely planning in a very short time in mutual records. It's essential not to overlook the most common excuse in our economy for late payments: 'The invoice hasn't arrived; it's probably lost somewhere.' This can certainly affect current liquidity.

In business, it often happens that invoices sent by mail do not reach the customer's address on time (during the tax period in which the supplier provided the service). E-invoices prevent this. The invoice is available to the customer as soon as it is placed on the e-invoice portal, and, most importantly, it is always known where they are and in what status, so you don't have to 'wander.'

Risk: If an e-invoice is defined as a document that is electronically created, verified, sent, received, and stored in electronic form, it implies two dimensions: internal (programmatic) and external (visual). This means that there is no possibility of subsequent changes, inputs, or sent elements of the e-invoice. The secure exchange of all invoices is carried out through encrypted transmission procedures, so only authorized personnel within the company can access and process them.

It is essential to emphasize that e-invoices contain all the necessary elements in accordance with the law, ensuring that they do not cause problems that were not uncommon, such as formal inaccuracies in invoices regarding the issuance date, turnover, payment currency, tax rate, etc. This allows for complete tracking of the invoice in every phase from creation, sending, to approval.

The environmental aspect was not mentioned in the previous presentation, which is not particularly significant regarding e-invoices. However, it is necessary to consider how to reduce paper consumption to perform certain tasks. This undoubtedly has a long-term impact on the protection of the environment in which we live, which we must take care of.

As we mentioned the advantages, there are still uncertainties between the invoice and the delivery of goods and services concerning accompanying documentation. This will undoubtedly be very important in the near future. Supporting documentation should be necessary and in electronic form in all cases. In connection with this, it is advisable to study this issue and implement this possibility for all companies obliged to use e-invoices in their business.

Every change has its positive and negative sides, but the transition from paper to digital data exchange using green technologies is definitely neither fast nor easy. It requires the construction of appropriate infrastructure, provision of equipment, digital literacy of users, and should be a priority for society in the coming period.