An electronic invoice, commonly called an e-invoice, is a billing document that is transmitted, received, and processed digitally. Many electronic invoices are created digitally using invoice processing programs, but you can also scan printed documents and convert them into PDF or Word files. Some companies host electronic invoices on cloud software, but you can also send them via email or upload them in a user's digital portal.
Electronic invoices include balances owed for past or current services as well as information about your company, such as your address, phone number, or website. Some customers make manual payments after receiving an invoice, but electronic invoices are often compatible with finance and accounting software for businesses. This lets companies automate the payment process rather than having an employee personally review each bill.
You can track invoices easily from start to finish if they have a digital life cycle. Depending on the program you use, you may have the option to track when a bill is sent, open, and funded. You can also send automatic payment reminders when an invoice is past due or provide options for payment arrangements.
Billing is a necessary process in the business world, but sometimes chasing payments requires nearly as much effort as producing the goods or services that prompted the invoices. Electronic invoices save time and increase productivity, whether you're a solo practitioner or you manage a large company. You can create invoices quickly and easily with an electronic billing program rather than taking the time to print and mail paper statements, and you don't have to sort through a stack of checks or money orders when payments arrive.
Electronic invoices encourage prompt payments; some customers even fund their invoices the same day they receive them. This helps provide a stable, consistent cash flow for your company, but it also alerts you quickly when issues arise. Electronic invoices provide insight into a customer's payment habits, but you can also pinpoint potential issues, such as a nonpaying client who is upset with your company's performance. This gives you a chance to reach out and correct the problem so that you can receive payment for the rendered services.
Eco-friendly business owners appreciate the paperless process associated with electronic invoicing. There are no documents to print or share with customers and no stacks of paperwork for your own office to manage. You can index and search for information in a digital archive rather than sorting through hard copies. This saves your company time, whether you need an itemized payment history for a long-term client or want to calculate the combined total of invoices you've sent clients during the calendar year.
Errors are less likely when you automate the billing process with electronic invoices, but when a customer does dispute a charge, you can quickly identify and correct issues in the digital archive. This improves customer satisfaction because problems are addressed immediately rather than days or weeks later. It also saves your company money because you don't have to spend time searching for information when it's conveniently available in a digital payment processing system.
When used properly, electronic invoices simplify the payment process for companies, clients, and customers. Electronic invoicing programs help you include essential information for each billing statement, but make sure that you list your contact information correctly. Customers need a way to contact you quickly if they have questions or concerns about a statement, and billing statements often go ignored until issues are resolved.
When creating an electronic invoice, avoid industry jargon or company codes that may confuse customers. Your customers may be hesitant to send funds for something classified as "Product 57468545" or "PEMFNC Meeting," but you may not have trouble securing payments for "Blue Comforter — Twin Size" or "Initial Consultation for Decorating Services."
Consider sending a true electronic invoice rather than simply attaching a PDF file or Word document to an email. Some email providers flag attachments, so your billing statement may end up buried in a customer's spam folder. Your customer may also struggle to download or open your file, especially if they don't have access to the same program you used to create the statement. Rather than taking time to convert your billing statement into a compatible format, your customer may simply postpone payment until you mail out a paper invoice.
It's okay to set a specific due date for your invoice, but customers often appreciate having the option to make partial payments. This lets them break up a large invoice into manageable chunks, and it also works well for customers who like to pay with multiple credit or debit cards. Accepting partial payments also increases your odds of getting paid quickly for your work because customers aren't forced to wait until they can cover the full balance.
Make sure you're transparent about fees associated with your electronic billing statement. This may include late fees, credit card processing fees, and fees for returned e-Checks. Customers like to know what to expect, and providing this information also helps reduce the risk of legal issues that can stem from failing to properly disclose applicable fees.
Investing in software for electronic invoicing may initially seem expensive, but over time, your company can actually save money. Electronic invoices free up storage space because you don't need paper files, and creation requires minimal effort. This lets your staff focus on other tasks rather than creating and managing billing statements for your company. Just make sure you still have workers available to field questions about invoices and choose a reputable provider for your electronic invoicing system.