Some people who love modern technology would say e-invoicing is a better business practice. It is more environmentally friendly than paper and digital invoicing and is faster, cheaper, and less error-prone.
It also seamlessly integrates into accounting procedures. In recent decades, the development of business and financial transactions has undergone a digitization process because of the introduction of e-invoicing. Here’s all there is to know about this innovative system and how it may help you as a business owner:
What is an e-invoice?
E-invoicing, also known as electronic invoicing, is a method that makes use of digital documents to create invoices. The customer and the supplier split the invoices. After that, the government’s tax website checks it, making it safe and reliable to use.
The Benefits of Using e-Invoice for Your Company
Accounting firms agree that e-invoicing provides a lot of benefits. When compared to manual methods, e-invoices use automated and effective procedures that produce superior outcomes. Keep in mind that papers get damaged and could fade over time. More importantly, you can save money, time, and effort with e-invoicing thanks to these benefits:
- Make compliance management easier.
E-invoicing makes managing invoices easier and makes your system as a whole more transparent. Additionally, experts say that this electronic system enables the BIR to monitor consumer and business tax compliance, resulting in accurate tax payments.
- Encourage both internal and external cooperation.
You can create a reliable data repository on a single platform by using an appropriate e-invoicing procedure that aligns your internal operations with each department and supplier.
- Make the most of discounts for early payments and working capital.
E-invoicing ensures that bills are sent out immediately after an order is completed. Because of this timely delivery, there is less delay, and payments are made faster. When releasing invoices and collecting receivables, the likelihood of “snail-mail” delays is also reduced by electronic invoicing.
- Minimizes risk of over payment and fraud.
Even bookkeeping professionals agree that e-invoicing makes thing easy. It enables you to follow every business transaction with ease because e-invoice keeps track of payments and other financial transactions. Digital certificates and seals are included in every transaction, making it less likely that documents will be forged or duplicated.
- Enhance cash flow.
Using e-invoice to modernize your payment methods makes it easier to pay bills and shorten cycle times. Your company’s days sales outstanding (DSO), or the number of days it takes to convert due credit into cash, may also benefit from this strategy. It should come as no surprise that a faster DSO gives you better control over the cash flow of the company.
BIR E-invoicing Requirements
Counterfeit solicitations were generally used to dodge making good on duties and direct extortion, representing a huge issue for the specialists. By requiring e-invoices through the public authority site, a framework for e-invoicing was proposed to end these tasks.
The nation’s e-invoice project is implemented by the BIR: the ESI. Delivering an invoice report to the BIR platform after sending invoices to customers is one of its components.
The BIR’s requirements for e-invoicing are as follows:
- Exporters of goods and services, owners of e-commerce businesses, and individuals who are regarded as large taxpayers’ services (LTS) are required to issue electronic receipts and invoices rather than manual ones.
- Upon completion of the inspection, these categories of taxpayers should register and receive a BIR sticker:
- Their cash registers or point-of-sale systems, as well as their certified sales data transmission systems, which will transmit electronic receipt or invoice data to the EIS.
- The computerized accounting system they use to generate electronic receipts and invoices.
- These rules must also be followed by taxpayers who use the EIS:
- The standard API guidelines must serve as the foundation for the sales data transmission system.
- To ensure the security of business transactions, companies covered by the EIS are required to register with the electronic invoicing or receipt system.
- The next thing they need to do is get the BIR to certify their sales data transmission system. The BIR will send the EIS certification once it has been approved.
- The BIR must first approve any transmission of invoice data.
- The company is required to submit its sales reports for transactions the following day once it receives the BIR’s approval to transmit data.
e-invoicing will undergo a period of adaptation over the next few years. However, once more, the system’s potential to simplify compliance, collaboration, and communication processes justifies the effort.
If you’re ready to switch to e-invoicing, don’t hesitate to ask our accounting services in Pasig for help. Our team of CPAs can support your company’s transition to this new system.
