Why Switch to E-Invoicing - The Disadvantages of Using Paper Invoices

There are numerous reasons why businesses should switch to e-invoicing instead of using paper invoices and bills. The following are a few disadvantages of paper invoices such as higher operational costs, lack of transparency, etc.

Over the past few decades, e-invoicing has been gaining many proponents and supporters in business and trade realms. The European Union, in particular, actively champions the implementation and use of automated invoicing systems and has introduced a European Standard e-invoice format that is to be used by businesses and by the public sector. In many countries, it is now mandatory to make use of an electronic betalingsløsning where transactions with the public sector are concerned (European Commission, "E-INVOICING", 2016). This is because there are many benefits of making use of automated invoicing such as cost-efficient storage, cutting on paper, printing and postage costs, quick and transparent processing of data, faster payments, etc.

However, there are still many businesses that use paper invoices and bills instead of digital faktura for making and receiving payments. It is advisable for such companies to switch to e-invoicing. The use of paper invoices entails many disadvantages, as listed below:

Chance of errors from both ends: With paper invoices, employees would have to spend time and energy in manually entering data into required fields, cross-referencing invoice with product codes and details, etc. Creating paper invoices and entering data into it, thus, are prone to human errors on both the receiver’s as well as the sender’s end.

Multiple sources of additional costs: The costs involved in generating and sending paper invoices the traditional way are very high: apart from paper, printing and postage, companies also incur other operational costs. For example, companies could put expensive employees to better use in posts that would make better use of their skills.

Higher chance of disputes: An invoice is a legal document. If there is any error in the data that an invoice carries, or if there are any delays in sending or receiving the invoice, there could be disputes between the business and its clients. Apart from turning relations sour, such errors could also obstruct cash flow and entail lawsuits and other such hassles.

Lack of transparency: Paper invoices have to be created by employees and stored in a physical location. They are sent via third parties such as postage and courier companies and are received by the accounts departments of clients, who then process the invoices. This means that there are multiple systems involved in the use of paper invoices which could lead to a lack of transparency in accounts and payment processes.

Businesses could thus consider these disadvantages of using paper invoices and switch to electronic payment methods. Basware is one company that can help businesses send and receive elektronisk faktura in an efficient manner. More information can be found on their website.

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