By Archit Gupta, Founder and CEO, Clear
It’s almost three years since the government implemented e-invoicing in India. The e-invoicing applicability threshold limit was recently lowered and will include businesses with more than Rs 5 crore turnover in this initiative. This move mandated most of the MSMEs to alter the way they do invoicing and begin to issue e-invoices.
Over the past few years, many businesses have gone through e-invoicing implementation and understood that it impacts critical processes such as invoicing, Input Tax Credit (ITC) claims, reconciliations, and return filing. More than all these changes, e-invoicing delivers immense value to businesses.
Single source of truth
e-Invoicing provides the critical aspect of a single source of truth, revolutionizing the invoice data flow across crucial functions. Businesses can seamlessly use the same invoice data across multiple functions: accounts payable, tax & compliance, treasury, vendor management, etc. This move enhances data sharing among different teams or departments and is bound to mitigate errors.
Better vendor relations
First, e-invoicing brought in a standard format for generating e-invoices and interoperability across different ERPs. This move erased boundaries between businesses, big or small, and led to an efficient business ecosystem where any size of business can communicate with others seamlessly. Also, they can easily share invoices, track payment statuses, and ultimately develop robust relationships through transparency and trust.
Ease of credit access
The e-invoices go through government systems and each invoice uploaded by the businesses meet the pre-set criteria. This move eliminates the risk of fraudulent invoices, ensuring smooth ITC flow across the supply chain. More than this, verified e-invoices provide a reliable source of documentation, easing credit access from financial institutions, such as invoice discounting. The lenders can assess the creditworthiness more accurately based on the authenticated e-invoices.
Improved working capital
e-Invoicing enhances the invoice processing cycle and processes payments more efficiently. This results in faster receipt of payments and improved working capital management. Further, a business can analyze the humongous e-invoice data to get insights into business operations, customer preferences, and market trends. This data can help make strategic decisions and lead to better business outcomes.
Aids in digital transformation
Businesses shall start digitizing their process amid the global digital transformation and Finance 4.0 trends. Accordingly, they can consider e-invoicing as a starting point for digitisation as invoices are the primary source of financial statements. Moreover, e-invoicing nudges to embrace digital technologies, leads to efficient business processes and improved customer experiences.
Enhanced demand and supply prediction
Fintechs use data reported in e-invoices and the latest technologies to create B2B platforms where a purchaser can directly reach out to a seller. Further, they can also meticulously estimate the demand and supply of a product or service. This move helps businesses build an accurate and dependable ecosystem and tackle the demand-supply crisis.
Overall, technology-driven GST e-invoicing is reshaping the business landscape by digitizing and optimizing the invoicing process. It fosters innovation, improves compliance, and drives efficiency gains across industries, ultimately contributing to a more transparent and digitally connected business ecosystem.