Best e-Invoicing Software for Business

E-invoicing, an innovative solution, revolutionizes the invoicing procedure by streamlining it, minimizing human errors, and improving financial administration. Premium e-invoicing tools don't just automate invoice creation and delivery; they also incorporate various functionalities to streamline invoicing processes, maintain adherence to tax laws, and furnish immediate insights into financial dealings.

What Is E-Invoicing Software?

E-invoicing or electronic invoicing software is a system that enables businesses to create and approve invoices electronically. Introduced in the GST software regime, e-invoicing specifies the invoice schema so that it can be read and operated by all the parties involved and accounting software uniformly.

E-invoicing software helps comply with government regulations, improves transparency, and is cost-effective. They also make it easier for you to adapt to changing GST requirements.

Advanced e-invoicing tools also allow you to set your invoices on recurring mode so you can auto-charge customers and don’t miss any payments.

How Does E-Invoicing Software Work?

To understand how e-invoicing software works, let’s first look at the parties involved. The key participants of e-invoicing include:

• The business (the one creating the invoice),

• IRP (Invoice Registration Portal),

• GST/e-way bill system, and

• The buyer (the one receiving the invoice)

The e-invoice system is categorized into two parts (as depicted in the below image). The first part consists of the business and the IRP. The second part consists of the GST/e-way bill system and the buyer.

Now, let’s understand how the electronic invoicing system works.

• The company (you) generates the invoice using e-invoicing software.

• The invoice is uploaded to the IRP automatically by your e-invoicing platform.

• IRP validates the invoice generated by your e-invoicing software.

• Once the invoice is validated, a QR code and an IRN (Invoice Reference Number) are generated. It will also be digitally signed.

• The invoice data is then transmitted to the e-way bill and GST system.

• If the seller has all the details of the e-way bill (Part - A and Part - B) during the generation of the e-invoice, the e-way bill will be automatically generated. Similarly, the GST system will also auto-populate the details in GSTR-1 and GSTR-2A.

• The buyer will then get real-time visibility in GSTR-2A for confirming the ITC of the invoice uploaded by the company (you).

However, all of this happens in the background. As a business owner, you won’t have to go through these steps to generate or share the invoice.

The e-invoice process is pretty simple. You can make e-invoices in just a few steps:

• Register your business in the e-invoice portal. This will enable you to connect with the e-way bill system.

• Create API credentials for the GST portal for your e-invoice software.

• Enter your portal credentials in your e-invoice tool.

• Upload the invoices to the IRP.

• You will then get validated, digitally signed invoices with the IRN.

The customer will then receive the acknowledgment.

What are the Key Benefits of E-Invoicing Software?

E-invoicing tools offer a myriad of benefits to businesses, such as:

• Identify Fake Invoices: E-invoicing software offers benefits such as efficient invoice management and fraud prevention by helping businesses identify and prevent fake or fraudulent invoices.

• Fast and automatic process: Creating an invoice doesn’t take much time. You can even automate invoice generation for regular customers.

• Auto-population in GST return filing: You don’t have to visit the GST portal to fill in the invoice details. Your e-invoicing system will do that for you.

• Invoices can be archived so they can be used later: When conducting financial audits, invoices are a must. An e-invoicing tool allows you to store all your old invoices in one place.

• Real-time invoice tracking: E-invoicing software enables you to track invoice progress in real-time (approved, digitally signed, received by the customer, etc.). This ensures faster availability of input tax credit (ITC).

• Ensures GST compliance: E-invoicing tools get your invoices approved from the government portal (IRP) and generate a government-validated invoice number. This guarantees the authenticity and credibility of the invoice while ensuring GST compliance.

• Eliminates manual errors: Since e-invoicing systems auto-populate the GST and e-way bill portal on a real-time basis, it eliminates the need for manual entry, thereby eliminating errors.

• Reduces costs: With digital invoices, you won’t have to spend on printing or postal fees. Also, it enables you to share invoices quickly, thereby saving working time, which you can use on other value-adding tasks.

What are the Key Features of Best Electronic Invoicing Software?

The best electronic invoicing software is characterized by a range of essential features that streamline invoicing processes and enhance overall efficiency for businesses. These features include:

1. Eway Bill Generation

   E-way bills play a pivotal role in facilitating the movement of goods. A proficient e-invoicing software should seamlessly incorporate the E-way Bill system, enabling users to create E-way bills directly through their invoices. This functionality streamlines adherence to tax protocols, diminishes the need for manual input, and lowers inaccuracies, thereby enhancing logistics efficiency and simplifying tax administration.

2. Generation of QR Code

   QR codes on invoices enable quick and convenient access to invoice details for both businesses and customers. A top-notch e-invoicing software should generate QR codes that encapsulate essential invoice information, making it easier for users to scan and verify invoices or for tax authorities to perform audits efficiently.

3. Auto-Reconciliation

   Automated reconciliation stands as a vital element assisting enterprises in automatically aligning received payments with their respective invoices. Through this automated process, the software mitigates error possibilities and expedites the management of cash flow.

4. Invoice Tracking

   Efficient monitoring of invoices is critical in overseeing their progress from inception to receipt of payment. Competent software should provide live tracking functionalities enabling users to observe the status of invoices, whether sent, viewed, paid, or overdue. This level of transparency guarantees that businesses can effectively pursue payments and improve cash flow.

5. Advance Data Validation

   Advanced data validation features help in ensuring the accuracy and completeness of invoice information. The software should have built-in validation checks to verify data such as tax identification numbers, invoice amounts, and product descriptions. This minimizes errors and discrepancies, reducing the risk of non-compliance and disputes.

6. Archiving Capabilities

   To comply with tax and legal requirements, electronic invoices must be securely archived and easily accessible. The e-invoicing solution should provide archiving capabilities that store invoices for a specified retention period, ensuring they can be retrieved for auditing or reference purposes. Secure storage and retrieval of archived invoices are vital for regulatory compliance and dispute resolution.

How to Choose the Right E-Invoicing Software?

Selecting the appropriate e-invoicing software is critical for optimizing your business's invoicing processes. To make the right choice, consider the following factors:

1. Identify Your Invoicing Requirements

   Start by evaluating your individual invoicing requirements. Each business possesses distinct needs, thus, ascertain whether basic invoice creation suffices or if advanced functionalities like auto-reconciliation, multi-currency capabilities, or integration with tax compliance systems are necessary. Grasping your business's invoicing process and regulatory responsibilities is vital in choosing software that matches your specific demands.

2. Consider Scalability

   As your business expands, your invoicing requirements will probably change. Select GST e-invoicing software capable of adapting to your business growth. Verify that the software can manage a growing number of invoices and accommodate extra users or locations as needed. Scalability is crucial to avoid the inconvenience of shifting to a new system later on.

3. Generate E-Invoices Instantly

   Efficiency is a key consideration. It should provide customizable templates, support for various document formats, and the ability to add necessary details such as your business logo and payment terms. The capability to generate invoices instantly can save time and enhance your professional image.

4. Upload Bulk Invoices

   If your business frequently deals with a large number of invoices, ensure that the software offers bulk invoicing capabilities. This feature enables you to upload multiple invoices simultaneously, reducing manual data entry and streamlining the process. Bulk invoicing is particularly beneficial for businesses with high transaction volumes, as it improves productivity and reduces the risk of errors.

What are the Challenges Faced in Electronic Invoicing Software?

Electronic invoicing software offers many advantages, but it also comes with its set of challenges that businesses need to address -

1. No Compelling Use Case

   One common challenge is the lack of a compelling use case. Some businesses may struggle to see the immediate benefits of transitioning to electronic invoicing, especially if their current invoicing processes are well-established. Demonstrating the cost savings, efficiency improvements, and compliance benefits of e-invoicing can be essential to overcome this challenge and motivate adoption.

2. Complications with Onboarding

   Shifting to electronic invoicing might pose challenges, especially for businesses accustomed to manual or paper invoices. Introducing employees and suppliers to the new software and procedures can be tough, requiring training, adjustment to fresh workflows, and addressing resistance to change. Successful implementation necessitates effective change management strategies to overcome these obstacles.

3. Data Security

   Data security remains a pivotal aspect of electronic invoicing. Dealing with confidential financial details and personal information in digital formats exposes businesses to potential cyber threats. It is imperative to prioritize safeguarding data during transmission, storage, and access. Employing encryption, robust access controls, and conducting routine security audits becomes crucial to prevent data breaches and unauthorized entry.

Future Trends of E-Invoicing System

The global e-invoicing market is projected to reach $15.5 billion by 2027, up from $4.84 billion in 2019. Here are the top three trends that will boost the growth of e-invoicing systems.

1. Big Data Will Be Implemented in the E-Invoicing System

   As of October 2020, about 2.4 million e-invoices were being generated every day. That too when only businesses with a turnover of more than 500 crores were using e-invoices. The number is likely to be more than double now.

   However, most invoices are available in an unstructured format. But with better technology implementation, businesses are likely to use big data to manage their invoices better, reduce tax fraud, and get a holistic picture of their payables and receivables.

2. Real-Time Economy Will Soon Become a Reality

   Not only in India but invoicing software is used by small business, medium, and larger businesses globally. Since e-invoicing software offers real-time access to your invoices, it will help the government to get a better understanding of the economy.

   For instance, most tax agencies in Southern America are already using real-time data flows in e-invoices for business validation and reporting purposes. In the coming years, we can even expect real-time tax applications to be facilitated by tax agencies.

3. Businesses Will Leverage the Blockchain

   Blockchain technology enables businesses to record and distribute digital information. However, once recorded, it cannot be edited. Another benefit of blockchain is that it makes cash flow management smoother at all phases of the e-invoicing process.

   For instance, companies will be able to send and pay invoices using both fiat and digital currencies. Blockchain will also mitigate the risks of fraudulent activity by verifying the details of incoming and outgoing invoices.

   With e-invoice already being implemented for businesses with a turnover of $50 crores and above, it has become a necessity to have the best e-invoicing software that will help you generate electronic invoices.