When it comes to payments, we are no longer limited to paper or plastic. Digitalisation has created new ways to send and receive payments with greater efficiency, accuracy and transparency.
The growing trend of faster payments with solutions – for instance, PayNow helping users instantly transfer funds – has reset consumer and business expectations. As digitalisation makes it easier and faster for people to make payments, they’re increasingly expecting to receivepayments just as quickly.
Enter e-invoicing, the next pillar in this evolution. E-invoicing, or InvoiceNow as we know it in Singapore, will be a significant enabler in improving invoice payment practices, increasing business productivity, facilitating faster payment times and accurate invoicing, and improving cash flow.
The most apparent change when moving to paperless e-invoicing is that there is no longer a need to manually input, generate and post invoices in the mail. Instead, the time previously spent on this can now be focused on delivering greater strategic value to the business and customers.
E-invoicing also does away with human error and automates the process of generating and sending invoices, as well as expediting payments.
For example, missing, misplaced and incorrect paper invoices create delays in payments. Even when invoices are correctly filed, a multitude of paper invoices can take time to input, adding delays to payment schedules. According to a 2020 study by the Singapore Business Federation, 70% of businesses reported that late payments were causing moderate to significant cash flow issues. An international study further found that 92% of e-invoices were paid on time, in comparison to just 45% of paper invoices.
An additional consequence of using paper invoices that is often overlooked is the cost to the environment. According to The World Counts, the paper industry is the fifth largest consumer of energy in the world, using vast resources in fuel to cut down trees, transport lumber and manufacture paper — a largely unnecessary cost in a growingly paperless world.
In addition to being energy efficient, e-invoicing can help businesses reduce expenses, with Deloitte estimating that replacing a single paper invoice with an e-invoice can result in a cost savings of up to SGD 22.
A Mastercard study also revealed that 58% of consumers globally are now more conscious of their impact on the environment compared to pre-pandemic views, meaning that implementing more sustainable business processes, like e-invoicing could help businesses better align with the values and priorities of their customers and attract new ones.
There is a common misperception that e-invoicing refers to traditional invoices in Microsoft Word or PDF formats sent or handled electronically. E-invoicing is, in reality, an integrated solution that automatically sends, receives, and processes digital invoices via a shared, secure network.
The result is a process that occurs seamlessly, transparently, securely, and almost instantly, giving businesses real-time visibility on their finances.
Headed by Infocomm Media Development Authority (IMDA), InvoiceNow adopts the Peppol framework, which seamlessly transmits e-invoices between independent finance systems. Therefore, as long as both the invoice issuer and recipient are on the Peppol framework, businesses no longer need to have their partners or customers share the same finance system to reap the benefits of e-invoicing.
This also allows businesses in Singapore to transact beyond borders with other companies on the Peppol framework, which include those in England, Germany, France and more.
We’ve seen an incredible surge in businesses registering to the InvoiceNow network, with over 35,000 enterprises now registered compared to only 1,000 businesses a year ago, and it is no surprise why.
From faster payment times to improved workflows, it is clear that the time to go digital is now. After all, running a business is not just about cost to the business itself, but weighing the contribution and costs involved to our people and our world.