The concept of E-invoicing was introduced in the Indian market in 2019 and was termed mandatory in 2020. Post GST inclusion and adoption, this was indeed a strategic decision by the authorities.
It’s been a short while but e-invoicing has secured a position for itself in the business especially the finance industry. It is increasingly preferred over traditional billing and invoicing systems. The credit for this goes to the technological development and advancements that we have now.
Despite being a recent entrant, organizations have welcomed e-invoicing and are satisfied with the change in the operational pattern. The safety and reliability of the e-invoicing along with its contactless and remote approach give it leverage over the brick and mortar system. The pandemic further helped in its penetration and growth in the businesses.
It was just this year that the Central Board of Indirect Taxes & Customs (CBIC) made electronic invoicing mandatory for all tax-paying businesses. Such a policy implementation in place leads to the creation of various opportunities thereby boosting various sectors.
The new rule’s implementation further implies that the e-invoicing system will be able to accommodate an increased number of taxpayers into the system. It will lead to businesses becoming a part of the digitally working economy as account software usage will be preferred for the e-invoicing processes. They will also benefit as they will be able to handle their accounts and finances swiftly and digitally.
This mandate will boost the digital account software market in the country and will lead to a rise in the number of small and medium enterprises. The taxpayers can generate e-invoices via direct API, IRP, and offline utility. With this, they can also create bulk invoices. With this initiative, the government is anticipating e-invoicing to further extend benefits like improving the payment procedure for businesses and boosting invoice-based lending to MSMEs.
This announcement by the government is indeed beneficial for the growth of the e-invoicing process. Additionally, it has opened up avenues for MSMEs to undergo digital transformation and connection.
Benefits of E-invoicing
E-invoicing offers various benefits to the organizations and the taxpayers. The key ones are-
Accuracy
With e-invoicing and accounting software in place, there is accurate documentation in the digital space and there is no scope for errors. It improves the productivity of businesses and swifts up the invoicing process thereby enabling digital payments. This further improves their relationship with their suppliers.
Simplifies admin related tasks
Switching to the e-invoicing system can help streamline the working of the MSMEs. The firms will be relieved from the admin-related jobs of accounting and will be able to focus their attention and efforts towards the other relevant jobs at hand.
Minimizes frauds
Since there is a standard accounting process, there is real-time documentation and tracking of the data which leads to the minimization of frauds. Being under strict surveillance, there is less to zilch scope for fraudulent transactions.
Visible payments and cash flow management
Since there is a digital record, the payment process has been simplified as the payment and accounting are visible and can be accessed in real-time. It helps MSMEs to manage and handle their business and payment processes effectively and avoid last-minute transactions.
Instant loans
E-invoicing helps small-size businesses to secure instant loans simplistically. It will also reduce the compliance procedure as the businesses will be able to pre-input the returns basis the information collected and analyzed via e-invoices.
Time and money-saving process
Being an electronic process, it helps keep the financial data in place and up to date. It also saves time and money. All the account and payment details are available online. Hence, every time the MSMEs have to make payments, they can auto-fill the details, and the payment and invoicing will happen in just a click!
Compliance can be complex
No matter how easy and simplified the process sounds, the compliance regulation is indeed complex and ever evolving. The technical know how and the ability to manage all the electronic data is something which will have to be acquired. Additionally, the shift from offline to online would again be a cumbersome process but once adopted will bring various benefits to the government and the taxpayers.
Summing Up
Despite offering various benefits, E-invoicing also comes with its share of challenges as the taxpayers should be up to date about tax policies and technology adoption. While inculcating it would help MSMEs imbibe its benefits and utilize them optimally to thrive in the competitive market; the major challenge with E-invoicing is that an ideal process is only for B2B and is not B2C friendly. This makes it troublesome for the organizations, especially MSMEs to adopt it.
E-invoicing is the new fad in the market. The earlier the business adopts this electronic invoicing procedure, the more beneficial it will be. On the whole, E-invoicing is indeed the future of electronic billing procedure and will soon be used at its prime owing to its various benefits. It can turn out to be a blessing in disguise if implemented and used effectively.
The blog has been authored by Rajesh Gupta, Co-Founder and Director, Busy Infotech
DISCLAIMER: The views expressed in the blog are solely of the author and TheSMEIndia.com does not necessarily subscribe to it. TheSMEIndia.com will not be responsible for any damage caused to any person/organisation directly or indirectly.
