What is an E-Invoice System?
An E-Invoice system is a platform through which sellers and buyers exchange trade invoices electronically. While on the one hand, it supports automated processes and streamlines invoice management. On the other hand, it promotes digitization and accelerates digital transformation.
In India, the E-Invoice system for B2B transactions was first introduced in October 2020 to promote corporate transparency & Curb fraud. However, only businesses with a turnover of over Rs 500 crores were included in its ambit.
Nevertheless, as per the latest government notification, from 1st April 2022, E-invoicing is compulsory for businesses with a turnover of over 20 crores. Therefore, now for B2B Companies, it is highly crucial to generate E-invoices to avail themselves of Input Tax Credit benefits. Moreover, failure to do so would also lead to penalties.
How Does The E-Invoice System Work?
An E-Invoice System is a great tool that empowers the government to authenticate the B2B Invoices. As part of it, businesses electronically upload their invoices in JSON format to the Invoice Registration Portal (IRP) of the GSTN. Moreover, after successfully authenticating the invoices, the portal generates the Invoice Reference Number (IRN). Further, it digitally signs the e-invoices and generates a QR Code on the invoice. Additionally, the IRP sends the digitally signed e-invoice, IRN, and the QR Code back to the seller. The seller then prints the QR Code and issues it to the buyer. Once this process is complete, the buyer can view the ITC (Input tax credit) related to this invoice in their GSTR 2A.
Benefits of E-Invoicing in the Digital Transformation Era
Interoperability
With the E-Invoice system, businesses can generate invoices using a standardized format. Moreover, the e-invoices can be read by different software. While on the one hand, it promotes the interoperability of data. On the other hand, it paves the way for cohesive data networks and efficient business processes.
Data Reconciliation
By using the E-Invoice system, businesses can resolve the data reconciliation issues under GST. As a result, it allows them to reduce the mismatch errors and ensures a secure ecosystem for storing the data. Likewise, it also enables businesses to pre-populate the invoice data into their tax returns without the “need for fresh data entry.”
Streamline Costs
Research suggests that the E-Invoice system helps businesses lower their costs by around 70- 80% compared to traditional paper-based invoices.
Automated Processes & Faster Payments
E-Invoicing promotes process automation and allows businesses to unlock the productivity of their employees. Doing so reduces the challenges associated with manual processes such as data entry errors, duplication, transcription errors, false accounting, and tax returns filing. Similarly, by reducing manual entry errors, it expedites payments.
Real-Time Tracking
The E-Invoice system facilitates real-time data tracking concerning the order-to-cash cycle. Therefore, businesses can easily monitor the status of their invoices and stay updated. Moreover, data availability in real-time ensures compliance and lowers the scope of audit risks. Likewise, it also leads to the faster availability of Input tax credit and promotes better seller and buyer relationship.
Conclusion
An E-Invoice system is one of the main drivers of Digital Transformation. However, to capitalize on the digitalization process through E-Invoicing, businesses require a suitable ERP Solution.Without a suitable ERP Solution, businesses will encounter several challenges such as manual data entry errors, accounting errors, delays in invoice approvals, duplicate invoices, missing information, etc.
This is where Dhyey Consulting can help you by providing you with a smart solution in the form of Microsoft Dynamics NAV & Microsoft Dynamics 365 Business Central. As a Top ERP & CRM Provider in Vadodara, Gujarat, we are well versed with all the latest government legislations & can help you in embracing features like e-invoicing for ensuring better compliance.
Why Choose Us?
We are a Microsoft Partner based in Vadodara, Gujarat, with offices across India & overseas. With over a decade of experience in Business Management Consulting, we strongly believe in and work towards Microsoft’s vision of facilitating a holistic and unified Digital Transformation for all our clients. Our highly skilled & knowledgeable Techno-Functional Consultants not only adhere to a customer-centric approach & provide our clients with round-the-clock support but also have an exceptional track record when it comes to project management and service delivery. We are committed to providing our clients with the best possible service and experience, and we firmly believe that our team of experts is the best in the business. If you’re looking for a partner that can help you with your digital transformation, look no further than us.
For more information or to book a free consultation with one of our experts, please write to us at enquiry@dhyey.com.
