Electronic invoicing (e-Invoicing) is the exchange of the invoice document between a supplier and a buyer in an electronic format. Traditionally, invoicing, like any heavily paper-based process, is manually intensive and is prone to human error resulting in increased costs and processing lifecycles for companies.

The definition of an electronic invoice is that it should contain data from the supplier in a format that can be entered (integrated) into the buyer’s Account Payable (AP) system without requiring any data input from the buyer’s AP administrator.

As this allows for a number of formats to be employed, it is useful to apply the following guidelines:

An e-Invoice

  • Structured invoice data issued in Electronic Data Interchange (EDI) or XML formats
  • Structured invoice data issued using standard Internet-based web forms

Not a true e-Invoice

  • Unstructured invoice data issued in PDF or Word formats
  • Paper invoices sent via fax machines

E-Invoicing has been around for many years in the form of files being exchanged using a format called Electronic Data Interchange (EDI). This exchange requires both parties to agree to use the same EDI file structure and find a common way to send and receive the file. Those restrictions make this method impractical for most because if a company has hundreds of vendors they will not be willing to accept files in hundreds of formats. On the other hand, vendors are not inclined to create files in the formats required by each of their customers. Thus the status quo of using paper invoices continues.

However, e-Invoicing is recently becoming popular because of the improvements in Optical Character Recognition (OCR) technology. Using this method it is possible to quickly and easily scan a paper invoice and convert that data into a file that can be imported into the AP system. For more information about this topic, please contact us.

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