What is e-invoicing?
10 July, 2021
Tracey Newman

Tracey Newman

3 minutes

E-invoicing streamlines the process of sending and syncing invoices in Xero from buyers and suppliers. This allows eCommerce businesses to improve cash flow, reduce the risk of fraud, and sync invoices to purchase orders, contracts, etc. 

In addition, it also saves time, increases your efficiency, keeps your business records organized, and helps reduce data entry errors. 

In this post, we’re taking a closer look at e-invoicing

What is e-invoicing?

Electronic invoicing, or e-invoicing, allows you to automate the process of sending invoices between the buyer and supplier’s accounting systems. 

This ensures a smooth and efficient information exchange and reduces delays and human errors. 

In several countries, like India,  e-invoicing is mandatory for large businesses. And, in many more countries, including Australia and New Zealand, it is considered a best practice. 

What’s the difference between an invoice and an electronic invoice?

The information on an electronic invoice is the same that is included on traditional paper or PDF invoices. Each contains the customer’s information, shipping or service address if needed, pricing, quantities, descriptions, invoice number, and more. 

The main difference is that e-invoices can be automated and are fully integrated with both your and your supplier’s accounting systems, saving time by allowing the information to update automatically to necessary business software. While you’ll have to spend some time initially to set up your process, you only have to do it once. 

Paper or PDF invoices require more hands-on time from you or your staff. In the case of PDF invoices, this can introduce more room for human error. And for paper invoices, well you’ll need to manually create, process, and mail the invoices. You’ll also need to spend money on the paper and ink necessary to print them and postage.

Why is e-invoicing important?

E-invoicing has multiple benefits beyond the ease of communicating between compatible vendor systems. It also solves many typical invoicing problems that can arise when manually invoicing, can increase your efficiency, and save you time. 

Speed up and secure your billing process

As a business, you want to be paid promptly to maintain your cash flow. Using e-invoicing can speed up your billing, especially if you automate the process. Therefore, you or your staff will have to spend less time on billing.

Easily identify customers with late payments

All businesses have a chance of encountering customers who pay invoices late or not at all. E-invoicing can help you identify and track outstanding payments, allowing you to communicate quickly with customers so you can solve the delay and get paid.

Once you’ve identified late payments, you can send the customers a reminder and keep those communications attached electronically to the original invoice. This process helps show you’ve tried to inform the customer and given them additional opportunities to pay their bill.

Reduce data entry errors

More traditional invoice methods require a person to manually enter the data into your accounting software or scan invoices to digitize them. These processes can lead to data entry errors, scanned invoices that are difficult to read, and additional costs since you’re paying someone to spend time entering the data. 

However, e-invoices can be automatically processed through your IT systems, reducing data errors when transferring the information into your software. It also frees up your staff’s time to work on other tasks.  

Maintain records efficiently and stay organized

It is also easier to maintain the business records you need for your accounting, filing taxes, and budgeting needs. You can automatically sync digital invoices with other accounting software you use to make processing data, calculating numbers, and searching invoices easier than when using paper invoices. 

For instance, having digital invoices can make it easier to access the information you need when creating a budget for your business or to file your taxes.  

Establish a verified list of approved suppliers

E-invoicing can provide an additional layer of protection against fraudulent invoices. When managing invoices manually, it can be challenging for staff to catch fraudulent invoices. Electronic invoicing lets you set up a verified list of approved suppliers and automatically flag anyone not on the list for additional inspection, providing an extra layer of protection.


E-invoicing helps streamline your invoicing process. This helps you receive payment faster, save time, reduce data errors, and maintain organized records. You’ll be more likely to have accurate invoices that contain all critical information and save time in the process.

Want to improve your cash flow and get more confident with your numbers? Learn how to use Xero effectively for your e-commerce business with our free Xero toolkit. This includes our step-by-step guide to getting your Xero file in order, a Cashflow Forecast Template, and a Bookkeeping timetable template to help you stay on top of your finances & get current reporting. Download now

Posted By

Tracey Newman

Tracey Newman

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