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As eInvoicing becomes more common and businesses who rely on invoices for payment become weary of antiquated invoicing methods, it’s time to look at an example of how making the switch to eInvoicing radically improves payment collection.
Before we jump into an example of what happens when you make the switch to eInvoicing, let’s quickly outline what eInvoicing is and how it works.
What exactly is eInvoicing?
eInvoicing has superseded outdated manual or paper-based invoicing. eInvoicing is a new method of sending invoices from software to software. With eInvoicing, you send your invoice directly from your accounting software, with no emailing, printing, scanning, or PDFs. All you need to do is input the invoice details, such as the payment amount and the client’s name into your cloud accounting or invoicing software then hit ‘Send’.
Your outgoing invoice will be received immediately in your client’s software, and all they have to do is pay in a few clicks. Done! It’s that easy.
The simplicity of eInvoicing means that your invoices are tended to more quickly, getting you paid faster and boosting cash flow.
Let’s look at the example of Dylan the cleaner to see how eInvoicing works in the real world
Dylan owns his own cleaning business for commercial premises. His primary method of payment collection is to issue invoices to his business clients.
A key challenge for Dylan is the all-too-common prevalence of late invoice payments and a large accounts receivable ledger. These late payments limit Dylan’s available cash flow which creates problems if he has bills due, cleaning supplies to purchase or household expenses to pay for.
Dylan also finds his old invoicing methods to be cumbersome, time-consuming, and admin heavy.
Scenario 1 – Dylan’s old invoicing method
Up until now, Dylan would do cleaning jobs throughout the day and then come home to his PC.
From there, he would open up an invoicing template to manually create invoices for his day’s work. After saving them as PDFs, Dylan would then email them one by one to his clients and wait patiently for payment.
Before Dylan switched to eInvoicing, he would also have to manually enter this invoice information into his accounting software (to sit on his accounts receivable ledger) as unpaid income.
For Dylan’s clients, the process would be equally time-consuming. They would have to make time to read the email and download the PDF invoice and often print it as well. They would then manually pay this, through their preferred payment method, and similarly save this invoice as a record in their system.
If the client is late in settling the invoice, Dylan would have to take time to interrogate his accounts receivable ledger and reach out to the client by phone or email to remind them personally.
Dylan would then need to check this payment appeared in his bank account and again have to record this in his accounting software to remove it from his accounts receivable ledger.
Job finally done.
Scenario 2 – Dylan switches to eInvoicing
So, what happens when Dylan switches to eInvoicing?
Upon completing a job, Dylan can now simply fire up his mobile phone to immediately access his cloud accounting, right there at the client’s premises.
Once logged into cloud accounting, Dylan will have his customer records already saved. He simply needs to input the eInvoice details and fire it off.
The client then receives a notification of the invoice. If they have an eInvoicing ready accounting software, the invoice can be imported directly into their system. All they need to do now is to pay the Invoice and record the payment in their accounting software with a few clicks.
The simplicity and speed of eInvoicing, free from PDFS and emailing, slashes payment turnaround times, boosting cash flow while reducing admin.
Dylan can also see that the invoice was received and read with ‘read receipts’, giving him surety over the delivery of his eInvoice.
Better yet, if the client is late in paying, the eInvoicing functionality will send them automatic reminders, meaning Dylan can send and forget.
Watch our webinar: eInvoicing is here: Is your business ready?
At Reckon we are more than just accounting software, we aim to help small businesses build the foundation to grow and succeed – easy and affordable compliance is an essential part of this.
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