Find the Best e-Invoicing Software

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.

In India, e-invoicing was introduced last year (2020). It went live in a phased manner, based on aggregate annual turnover (AATO). In the first phase, e-invoicing was made mandatory for companies with a turnover of more than ?500 crores on 1st October 2020.

The Central Board of Direct Taxes and Customs (CBIC) made the e-invoicing system mandatory for businesses with a turnover of more than ?50 crores from 1st April 2021.

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 payment.

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 software.
• 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 generate 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.

Features of E-Invoicing Software

While each e-invoicing software offers different features, the basic ones are the same. Here are the key features of an e-invoicing system:

• Unique Invoice Reference Number (IRN): It enables you to automatically generate an IRN from the government portal after you upload the invoice.
• Automatically send and receive invoices: Most e-invoicing software allows you to send and receive invoices to your customers automatically. This helps save costs, increase scalability, prevent you from missing payments, and achieve the best ROI possible.
• Supports multiple invoice formats: When it comes to invoicing formats, every client has a different requirement (CSV, XML, EDI, PDF, etc.). Most e-invoicing systems allow you to create invoices in different formats.
• Archiving capabilities: Archiving capabilities allow you to manage all your invoices (paid) by storing them in one place.

Advanced e-invoicing systems offer additional features, such as:

• Creating professional quotes

• Client portal where your customers can view their transactions

• Bank transactions report

• Project-wise timesheets to track every billable minute

• Share sales orders with customers

• Manage purchase orders from your vendors

• Know your GST liability

• Stay compliant with GST regulations

• Mobile app (both Android and iOS)

• Automation to eliminate manual errors and save time

Benefits of E-Invoicing Tool

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

• 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 generates 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.

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 implementation of technology, businesses are likely to use big data to bettto 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 e-invoices are used 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 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 the 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.