Many invoices get exchanged every day by the buyers and sellers, still the process remains extremely labor-intensive and prone to manual errors for a long time. The Concept of GST and E-Invoicing was introduced in September 2019, which helped multiple organizations who deals with many invoices to eliminate manual intervention and use technology.
E-Invoicing at initial times was not mandatory, but later it became mandatory for annual turnover of 500 crores or more from October 1st, 2020. Ever since, it has gone through multiple phases with a reduced turnover limit every time. Currently for businesses with 5Cr + turnover, E-Invoicing is mandatory. E-Invoicing can soon be mandatory for 1cr + turnover, hence it is important to have the clarity of E-Invoicing. For a Comprehensive background on E-Invoicing and its working, check out the earlier blog post - What is E-Invoicing in GST? A Comprehensive guide (tcsion.com)
Further to it this will help us to get the bust the myths and highlight benefits for modern businesses.
Myths and Facts about E-Invoicing
| Myths | Facts |
|---|---|
| Businesses need to choose which E-Invoice formats apply to their transactions as there are multiple formats. | There is only one standard format. Certain details may be optional depending upon the nature of the business. |
| Businesses need to generate invoices only through the E-Invoicing portal. | Businesses will continue to use their existing accounting software or ERP to generate invoices. The E-Invoicing portal will be used to verify and report invoice details. |
| E-Invoicing applies to all business transactions. | At Present, E-Invoicing is mandatory only for B2B transactions, exports and deemed exports. |
| Businesses need to purchase additional E-Invoicing software. | Businesses can continue to use existing software. Service providers have launched updates to software solutions to comply with the E-Invoicing process. |
| Generation of the Invoice Reference Number (IRN) is complex and time- consuming process. | On Uploading Invoice details, the IRN generation is almost instant depending on the speed of the internet connection. |
| The IRN overwrites the original invoice number generated by the accounting software. | The IRN is only a reference number for the purpose of GST reporting and will not overwrite the original invoice number, The original invoice number will be as per your billing software. |
| E-Invoicing will add one more compliance. | E-invoice and its reporting will reduce compliance. The creation of E-Invoice auto-populates the invoice data to GSTR-1, easing the compliance process. |
| E-Invoicing is eligible for all the businesses. | E-Invoicing is applicable to businesses who is having a turnover from 500 Cr to 5cr. |
E-Invoicing offers numerous benefits from cost savings to enhanced security, and it’s more accessible than many businesses realize. By understanding the facts and dispelling the myths companies can better leverage E-Invoicing to streamline their financial operations.
1. Streamlined compliance :
E-Invoicing automates the generation and submission of invoices from the GST portal, reducing manual effort and ensuring compliance with regulations. This minimizes the risk of errors and saves time.
2. Improved accuracy :
By following standardized formats and automated processes, E-Invoicing significantly reduces the likelihood of errors in invoicing data. This ensures that the information submitted to the GST portal is consistent and reliable, thereby enhancing overall compliance.
3. Faster processing :
Electronic invoices enable faster processing by tax authorities, leading to quicker refunds and resolution of disputes. With E-Invoicing, businesses can expect smoother interactions with tax authorities, resulting in improved cash flow and reduced administrative burden.
4. Enhanced data analytics :
The digital nature of E-Invoicing facilitates better data analytics, allowing businesses to gain valuable insights into their operations. By analyzing invoicing data, businesses can identify trends, track expenses, and make informed decisions to optimize their processes and maximize profitability.
5. Cost savings :
E-Invoicing eliminates the need for paper-based processes and reduces manual intervention in invoice generation and submission. This results in cost savings associated with printing, storage, and manpower, making it a cost-effective solution for businesses of all sizes.
6. Increased productivity :
E-Invoicing greatly reduces the need for manual effort for suppliers. Employees don’t need to spend time entering data because ERP systems automatically generate and send e-invoices when sales transactions are recorded or products ship to customers. This frees employees to spend more time on higher-level activities.
7. Automated matching and validation :
For customers, E-Invoicing simplifies the automated matching of invoices against purchasing and shipping documents (three-way matching) to ensure that the invoice accurately reflects what was ordered and received. This can save an enormous amount of effort. Suppliers can more easily reconcile the payments received against the original sales transactions.
8. Improved cash flow :
E-Invoicing can dramatically shorten payment cycles, improving cash flow for suppliers. Automation helps ensure that suppliers can send invoices promptly, meaning that customers may pay faster because they can quickly validate the invoices they receive.
9. Supplier discounts :
Many suppliers offer discounts for fast payment — and impose penalties when payments are late. E-Invoicing can make it easier for customers to pay quickly and enjoy supplier early-payment incentives.
10. Less environmental impact :
E-Invoicing eliminates paper, ink and envelopes from the invoicing process, reducing their environmental impact.
Understanding the realities of E-Invoicing helps businesses leverage its benefits, such as better compliance, streamlined processes and reduced fraud risks. The more informed businesses are about E-Invoicing, the easier the transition becomes. And to digitize your invoice generation, we have TCS iON E-Invoicing solution which helps is 100% made in India, easy to use, 100% secure, can integrate with an ERP system gives you multiple options for invoice generation while maintaining end to end E-Invoicing compliance.