E-Invoicing - how it works
In our previous blog we outlined the Basics of Electronic Invoicing (e-invoicing). Here we look at the overall process.
Structured vs unstructured e-Invoices
‘Digital invoices’ simply consist of invoices that exist in a digital format as opposed to physical format. These invoices may be ‘structured’ or ‘unstructured’.
In accordance with the EU Directive (2014/55) on e-invoicing, the main objective of e-invoicing is that the invoice data can be structured in such a format that allows for automatic processing and reading by computer systems.
However digital invoices can also be monitored visually and processed manually. ‘Unstructured’ digital invoices mainly encompass simple PDF/JPG/PNG invoices sent by email. While these documents also remove paper from the process, they do not provide full integration – they rely on visual formats that require human processing.
‘Structured’ e-invoices fully automate the invoice capture and receipt process, so the buyer does not need to perform any manual intervention. The buyer receives the invoice from their supplier(s) using a format that ensures the invoice can be received by the buyer and easily integrated into their back office systems. E-Invoices may include structures, such as Electronic Data Interchange (EDI) and XML, to ensure integrity. E-Invoices allows a computer to process the information, which frees up time for accounts teams and small business owners to dedicate elsewhere. The benefits of structured invoices to suppliers are a more predictable cash flow as they remove dependence on timely and accurate data entry within customer’s accounts payable process.
How e-invoices are sent
E-Invoices can be sent via a Suppliers’ Accounts receivable Systems or a web-based form. The typical document formats range from unstructured formats (e.g. PDF, JPG, Spreadsheet, Word) to structured formats (e.g. XML, EDI, HTML).
The format of the e-Invoice data is very often determined by specific regulations of the countries in which both parties are trading. Complying with these regulation ensures that VAT obligations are facilitated. Standards vary from country to country – some with little to no restrictions.
For trading with public sector buyers in the EU, e-invoices must comply with the European e-invoicing standard and must be presented in standardized structured data format.
The buyer receives the electronic invoice in a format ready to be processed by their Accounts Payable system. The data will be correctly structured (X12, Edifact, XML) using technology such as EDI or simple web forms for web invoicing.
Using Celtrino as an e-invoicing partner ensures that regardless of the method used to digitally create and send the invoice, it can be easily converted into an e-invoice structure, and imported in to the buyer’s AP application. All invoices are presented in electronic format and processed within a secure online account.
Celtrino e-invoicing eases the burden on finance teams by removing the need to manually approve, track and store paper invoices. Celtrino provide instant visibility of all transactions, and enable you to react quickly to customer demands and access real-time data for better decision making.
Celtrino have 30 years’ experience in e-invoicing solutions.
Contact us to learn more about how Celtrino can get you paperless today