Online invoices are worthwhile for small businesses

Fewer than five percent of German companies use electronic invoicing. This electronic process saves costs and effort—and can even be linked to the company's online banking system.

This article is part of the special topic " Invoices: What matters"

Thomas Finken is Product Manager Payments at DZ BANK and manages the website "VR-InvoiceService". mittelstanddirekt.de he explains the principle of electronic invoices.

DHB: What advantages do electronic invoices have over traditional paper invoices?
Finches: Invoice issuers and recipients save costs – an average of €5,00 per invoice when both sides are added together. A paper invoice costs around €7,00 when you include paper and postage costs or labor costs, for example. Processing an electronic invoice, on the other hand, costs approximately €1,50 to €2,00 per invoice – including signature management, transport costs, and archiving.

Electronic invoices are also more efficient: You have to pick up a paper invoice from the mailbox, stamp it, and so on. It takes time for the invoice to reach the accounting department—and accordingly, it takes a long time for the recipient to pay. This can cost you any cash discounts. One advantage of electronic invoices is their transparency, as multiple employees can access the invoices simultaneously: An invoice doesn't have to pass through multiple departments in succession before it reaches its destination.

It's particularly advantageous for small and medium-sized businesses to link their online banking with their billing service. This allows them to initiate the transfer automatically directly from their PC as soon as they receive the bill. This is convenient for accounting if their main bank and billing service provider offer this connection.

DHB: Is e-invoicing worthwhile for smaller companies?
Finches: Electronic invoices are worthwhile for companies of all sizes. Even small and medium-sized businesses with a manageable number of employees save time and money. Furthermore, electronic invoices contribute to security and sustainability for all companies: Companies save paper, are environmentally friendly, have secure archiving, and appear particularly innovative to customers and suppliers.

DHB: Why then do so few medium-sized companies make use of it?
Finches: Many invoicing services are very costly because they use the so-called "direct biller system": This requires the invoice sender to install special software and hardware. The disadvantage is that the customer requires a similar system environment to view the invoices. Other invoicing services offer a web-based solution. This is a modern process: All parties involved are connected to a communications platform and can send and receive invoices as required. All companies really need is an internet connection and the customer's or supplier's email address.
Invoices are usually archived online. Therefore, when choosing an invoicing service, medium-sized businesses should not only consider cost. Rather, reliability and experience should be a prerequisite for any collaboration.

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DHB: What do you think is particularly important for customers?
Finches: It's particularly important to our customers that no data is leaked and that input tax deduction is fully guaranteed. Business owners should ensure that their invoicing service provider has extensive experience in this field. The service provider should be able to offer a customized solution tailored to the customer's level of accounting automation. Some businesses find it difficult to integrate customers into electronic invoicing, for example, important major customers: The customer has to participate, after all, they receive the online invoice. Therefore, the invoicing service should also support the invoice issuer's major customers through the integration process. However, efficient invoicing usually quickly wins customers over.
And: The transition to electronic invoices should be possible step by step. For the business owner, this means, for example, that they can initially send electronic invoices and receive paper invoices in parallel. The paper invoices are automatically forwarded to the invoice service. The service provider can then, for example, scan the invoice and archive it online. This allows a medium-sized company to smoothly transition its invoicing process.

DHB: How long does the transition usually take?
Finches: This always varies. It depends on the level of automation within the business and what the customer wants. How large is their accounting department? Should the service provider forward online invoices directly to the tax advisor? Should the existing invoice layout be retained? Which requests of major customers should be considered? In any case, a web-based solution requires significantly less effort to convert than the direct billing option, which requires custom software and hardware. A smaller medium-sized company opting for a web-based solution can expect a conversion time of just a few days. 

DHB: What does a medium-sized company have to do if it wants to switch to electronic invoices?
Finches: First, they should find out which solution is suitable for their business. They can also test the online invoicing system for free on www.vr-rechnungsservice.deHere you will find further information and contacts regarding electronic invoices.

The interview was conducted by Kristin Schröder, unique relations.