The value of e-Invoicing
Companies can save costs and time and redirect resources to better use by joining the Nationwide E-Invoicing Framework
E-Invoice Project Office, Infocomm Media Development Authority
For many companies, invoicing can be a tedious and time-consuming process for many which often results in mistakes. One organisation that is familiar with this problem is the Dairy Farm Group.
“Manual invoicing is not only long and painful — there is also a high risk of human error. Even with our best efforts, it sometimes leads to inevitable delays in payments to our vendors,” says Mr Tom van der Lee, finance director of The Dairy Farm Group, the parent company of household names such as Cold Storage, Giant and 7-Eleven.
He noted that it takes at least one person to match and verify paper invoices and another to authorise each transaction, before the information can be keyed into the company’s accounting system. These steps are performed for every paper invoice received. If errors are made, the process has to be repeated.
Thankfully, such issues are being addressed with the introduction of common invoicing standards through the Nationwide E-Invoicing Framework, which allows invoices to be transmitted electronically from the sending system to the receiving system directly. This does away with time-consuming data entry and greatly reduces errors and storage cost associated with paper invoices.
“I believe SMEs stand to benefit a lot from this initiative. Once these inefficiencies are out of the way, they can receive their payments on time and are able to focus their efforts on improving and growing their business,” says Mr van der Lee.
The Dairy Farm Group is one of many businesses that have benefited from e-invoicing. Churros Republic, a food and beverage business that started out with a small kiosk in Bugis Village, opened their first flagship store in Our Tampines Hub last year. Mr Faizar Hussein, founder and CEO of Churros Republic, began experiencing cashflow issues when his business started to expand. He found that the majority of his time was spent generating invoices manually, as well as verifying and chasing for payments.
Since adopting e-invoicing, Mr Hussein has saved a significant amount of time and seen his cashflow improve. He has encouraged his clients and suppliers to join the e-invoicing network. “If everyone hops on this network, it will benefit all. Everyone gets their payments faster!” he said. With e-invoicing, he now has more time and sufficient funds to take on larger projects.
How it works
E-invoicing is the automated creation, exchange and processing of requests for payment between suppliers and buyers using a structured digital format. The e-invoicing network allows direct transmission of e-invoices from one finance system to another, and automatically matches invoice to the correct purchase order, resulting in faster payment. This greatly reduces the time spent chasing for payment, as well as verifying invoices.
The e-invoicing network connects both suppliers and buyers in a standardised network, where the end-user communicates directly to their service provider via different channels such as email, SFTP or API connections. Meanwhile, service providers have the ability to take in the information in different formats such as CSV, XML and PDF, and translate this information on the invoice into a set of standardised data. They are able to then send it to the recipient’s service provider through the e-invoicing network. The recipient’s service provider will then map the data back to their clients’ systems.
Simply put, the e-invoicing network is similar to a mobile network. Everyone is connected to a different mobile network operator but calls and text messages can be made or sent as long as you have the recipient’s mobile number. Similarly, it does not matter which service provider is selected as all of them can map to the common standard (PEPPOL) on the e-invoicing network.
With e-invoicing, businesses will be able get paid faster and enjoy enhanced efficiency. They can now avoid error-prone manual data entry processes and skip labour-intensive steps such as verifying information and rectifying errors. This will help companies reduce cost, access new financing options and even transact internationally.
The Singapore government has implemented the e-invoice system in the procurement portal Vendors@Gov, and will be working alongside the appointed service provider to make the system available to users by the end of this year.