E-invoicing has become the norm in our tech-driven world. Paper invoices are largely part of the past, and almost every business, big and small, has opted for a digital alternative.
However, many businesses are still making use of unstructured data transmission (UDT) when creating and issuing invoices. The issue with using a UDT format is that this format isn't standardized. Therefore, it requires a person to process it rather than allowing technology to take the task over. This means more time, more money, more labor resources, and definitely more frustration.
The solution? The implementation of structured data transmission (SDT).
As we head towards a new year, the move towards SDT looks set to become even more important and prevalent. With SDT, there’s a standard format used between businesses, streamlining the online invoicing and accounting process, reducing the need for human resources, and shifting over to a reliance on technology and automation.
With this in mind, these are the top invoicing trends that look set to impact business in 2023.
- XML Invoicing
XML invoicing is a type of format that allows invoicing data to get shared electronically. An ever-increasing number of businesses are making a move towards this type of technology that makes use of extensible markup language (XML) to send and receive invoices.
XML makes use of a standard format, which makes sharing of information easy between different software, apps, and systems. XML invoicing ensures that invoices are sent without any concerns over compatibility, as the language is universal. This reduces the number of emails and communications that may arise over compatibility issues and readability errors.
- EDI Invoicing
EDI stands for Electronic Data Interchange. This technology makes it possible to exchange business documents within a company (either on a single premises or spread across several locations). It’s most certainly a reliable and secure way to share invoicing information between departments.
EDI is also a very speedy process, and it completely replaces the need for paper documentation. Plus, it's entirely traceable, so there’s little to no room for fraud. With EDI utilized in a larger company, the time taken between receiving an invoice and making payment is potentially dramatically decreased. This allows for quicker batch processing and enhanced customer satisfaction.
- Hybrid Invoicing
As the name suggests, hybrid invoicing involves e-invoicing using a combination of formats, like XML and EDI. For example, you could have an invoice that’s in a PDF format but that has some XML data included. This would essentially mean that all the data would need to be available in both formats.
This is a great way to combine technology and compatibility and enjoy the best of both worlds. You get all the benefits of the latest technology, but don’t have to worry about leaving anyone behind when it comes to compatibility. Smaller businesses that may not have sophisticated invoicing processes or systems are not excluded, and they can still create standardized invoices that get processed easily.
- Invoice Compliance
Invoice compliance is a big talking point, and there are different types of compliance that are relevant here. You can have e-invoicing that’s compliant with the formats set out by the business and the processes and procedures dictated by internal operational requirements.
Alternatively, invoice compliance may relate to conforming to regulations stipulated by a particular country for the purpose of invoicing communication. These regulations may include how invoices get sent, stored, and settled. They may also stipulate whether internet or penalties are allowed or what actions are available when settlements are late.
Sometimes, depending on the country, there are no specific e-invoicing regulations, whereas, in others, an actual paper trail is required for tax purposes. In 2023, compliance is going to become even more of a focus, especially as there has been a rise in cybercrime and other security breaches. Internal company compliance and compliance with local invoicing law is set to become even more essential.
- OCR In Invoice Processing
Optical Character Recognition is a type of technology that converts documents in digital formats into a file that’s editable and allows for a text search. If you think about a business where there are endless amounts of data processed each day, OCR is a game changer.
The OCR mechanism stores font and text patterns as a template, and the software uses an algorithm that matches patterns to compare these text images to a database. This process takes place character by character. With OCR, even the most rudimentary, technologically lacking invoices, can get read digitally. This allows for their information to get entered into a database, and from there, to enter the workflow for processing. This is not only useful for invoicing, but it also allows businesses to make data-driven decisions based on the facts and figures collated.
Takeaway: The Future Of Invoicing
When we think about the trends for 2023 that will determine how we send and receive invoices, they ultimately come down to a few key points.
Gone are the days when an invoice simply needed a quick fact check before issuing. Now, there’s a myriad of factors to consider, and the use and implementation of technology are at the core of these considerations. For those who need to learn how to adapt to these changes, there are plenty of e-learning opportunities available online. A free bookkeeping course or webinar can readily bridge the gap between old and new accounting processes.
In the next year, invoice readability looks set to become more automated and the need for invoices to be in a standard format will increase. Invoice compatibility needs to provide for easy exchange of data, and service providers and software will keep moving towards this.
Security of information is also becoming more and more vital, and the move towards an SDT type of invoicing provides a more secure way to do this. Data theft and fraud are real issues, and retaining confidentiality is always crucial. All of these factors ultimately work together for compliance. Different countries have different regulatory requirements, and businesses need to ensure that they are meeting these standards. Given these factors, understanding and adopting modern B2B invoicing practices can play a crucial role in improving your company's efficiency and compliance.
The world of business is always changing, and in the case of invoicing, the changes are certainly positive. A more standardized, safer, simpler way of invoicing can only change businesses for the better.