What is Electronic Invoicing (e-Invoicing)?

Electronic invoicing gets a lot of attention, but few business owners have more than an elementary understanding of what it is, how it works, and the many benefits this technology can provide.
In this article, we’ll teach you all you need to know about e-invoices, including their basics, their history, and the challenges aspiring e-invoicers face.
We’ll also introduce and explain e-invoicing solutions so that you can get started with using this time-saving, cost-saving, billing technology.
Let’s dive in!

What Is Electronic Invoicing?

A form of electronic billing, e-invoicing is the act of delivering a digital invoice to customers in a standardized, integrated format.

The e-invoice is sent, processed, received, and stored electronically.

Because of its specific structure, the data from the electronic invoice can be integrated into the recipient’s accounts payable system, without the need for an administrator to input data.

And it’s immediately stored in your accounts receivable system as well.

What is electronic invoicing infographic

Source: einvoicingbasics.co.uk

The benefits of using e-invoicing include reductions in human error, the automation of administrative invoicing tasks like data input, and easy access to online, centrally stored invoicing history and data.

Because of the possible efficiency gains, e-invoicing has become widely popular amongst B2B companies as a cost-saving alternative to the long process of manual paper-based invoicing.

Digital Invoice vs. Electronic Invoice

When Xero surveyed small businesses to see if they could accurately define an electronic invoice, they found that 47% of them incorrectly stated that it was sending a PDF or a link to the invoice in an email.

It’s important to note that electronic format invoices are a subset of digital invoices and that not all digital invoices are e-invoices.

For example, although Word and PDF files and other scanned documents are considered digital invoices, they lack certain qualifications to be considered e-invoices.

Digital invoice vs e-invoice checklist infographic

Source: Summitto

For an invoice to be regarded as an electronic invoice, it must meet the following criteria:

Electronic invoices have data structured in a specific way that enables the buyer’s financial system to automatically understand and integrate it into its system.
The structured invoice data is issued in XML formats or Electronic Data Interchange (EDI) and using standardized web forms.
The data file transfer occurs between computer systems, and the average human, although capable of reading the e-invoice’s exterior, would not be able to make sense of the code behind the scenes.

Although digital invoices save your team time and reduce paperwork and other office expenses, they don’t offer the same boost to billing team efficiency that you’ll get with e-invoicing.

Having your invoices automatically sync with your trade partners’ systems, as well as with your other internal billing systems, will save your team a whole lot of time, not to mention the hassle of reconciling software systems and re-entering data.

The History of E-Invoicing

Before getting into the history of e-invoicing, we have to discuss the technology that supports the electronic transfer of data from computer to computer, known as Electronic Data Exchange (EDI).

What is EDI simple explanation infographic

Source: Kellton Tech

EDI is a set of technical standards for e-documents that was first introduced in the 1960s by Ed Guilbert when he developed a type of electronic communication between supply chains in the United States Army.

The invention made long-distance communication extremely fast compared to the traditional postal service, and it was soon picked up by various industries, from grocery to automotive, thus contributing to globalization.

Companies started using EDI technology to issue e-purchase orders, e-catalogs, e-invoices, and other digital documents.

It reduced costs and helped them skip all the steps involved in paper communications.

E-invoice timeline vs paper invoice comparison infographic

Source: fedpaymentsimprovement.org

Since the 1990s, e-invoicing has spread into almost every industry, and its usage rates have increased every year in the USA. And other countries have been using it as well.

Around 58% of all invoices in Latin America were sent electronically in 2014, while only 1 percent were electronic in 2004.

Today, e-invoices are quite common, and they’re expected to continue increasing their market share at a steady pace.

According to research, the digital e-invoicing platform market is expected to have a compound annual growth rate of 21.5% from 2022 to 2027.

That’s well above the average growth rate.

One of the main reasons for such high growth is that e-invoices are effective cost-reducers and time-savers for B2B businesses, small and large.

It’s interesting to observe how e-invoicing is approached globally and by multinational companies. For instance, in the European Union, mandatory e-invoicing is standard for public procurement, showcasing a significant shift towards digital efficiency in financial transactions. Such global trends especially by the European Commission and different countries can provide insights into the evolving landscape of electronic billing.

That said, let’s go over some of the specific benefits they can provide.

Benefits of Using Electronic Invoicing in Your Business

Experts say that when you take into account all the time, shipping and printing costs and material involved in creating and invoice processing a paper-based invoice, the total cost per invoice can fall anywhere between $12 and $30 for a business.

Compared to inefficient paper-based invoicing and processing, automated e-invoicing processes can save businesses anywhere from 60 to 80%, according to Billentis’ research.

And those cost savings can be used more intelligently, from increasing marketing spending to investing in new technology.

For example, for every ten invoices, you send you’ll have saved enough money to buy yourself a blog post or a Facebook ad, both of which can bring you.

In addition to saving time and money, here are some other reasons why businesses should use electronic invoicing:

Your customers will appreciate it. Paying you through e invoice is a lot easier on your customers, especially if you give them multiple payment options (credit card). Being easy to work with is an essential trait of a small business. Invoices being sent in real time can greatly improve convenience and reduce annual turnover.
Your accounting staff will enjoy their jobs more. With fewer repetitive, often mundane invoicing tasks to handle, accounting staff can focus on the more fulfilling, complex work. And they’ll be less likely to leave. Accounting software, structured payment terms, and continuous transaction control enhance financial predictability and cash flow management, foster trust between business partners, and reduce late payment issues, leading to smoother business operations.
It helps the environment. When you cut back on paper and the fuel involved in transporting paper invoices, you indirectly help the environment and become more sustainable.
It creates greater visibility of your payments. Most e-invoicing software enables you to easily report on invoices so you can dig into the data and find ways to improve your invoicing process.
It improves cash flow. E-invoicing enables you to send and process invoices more quickly, leading to faster payments and increased cash flow.
You experience a reduction in human error. Invoice automation features in invoicing software prevent input errors that otherwise would cost a good chunk of time to fix especially when it comes to digital signatures.

Even better, if you’re using automated invoicing software, it likely comes with other features that streamline the invoicing process, allow you to view structured data formats, and even further reduce the cost of each e-invoice, as shown below:

Cost per invoice infographic low to high

Source: IPS

If you’re looking to streamline your invoicing process, implementing e-invoicing is an essential first step, as it will save you time, reduce material costs, and also make your customers happy.

What Are the Challenges of E-Invoicing?

While e-invoicing is more efficient overall than paper or digital invoice format, it is not without its challenges, especially when it comes to the implementation of e-invoicing systems.

Below are some of the main challenges you may face with e-invoicing:

It’s difficult for smaller businesses to sell internally. While large businesses can easily see and pitch the ROI of e-invoicing systems to internal stakeholders, smaller companies, with fewer invoices, have more trouble in this regard.
There is a lot to think about. Some B2B businesses fail to think about all the ways in which implementation will affect their customers or suppliers, so they risk losing those partners that are negatively affected.
Getting your trading partners on board. It can be difficult to convince the majority of your partners to send and receive electronic invoices. Businesses with e-invoicing solutions will be easier to onboard, but those doing it the old-fashioned way may resist.
Complications stemming from the different e-invoicing solutions. It can still be hard to onboard partners if you and they use two different e-invoicing solutions. For example, mapping, the process connecting the 2 ERP systems so they can exchange info, can be complicated.

How Can Businesses Create an Electronic Invoice?

The main method by which businesses create electronic invoices is through an automated invoicing software platform or “invoice automation”. 

The e-invoicing solutions we’ll describe later make the whole process accurate and fast.

There are other methods buyers and suppliers use to control access to e-invoices, including accounts payable (AP) platforms or supplier-hosted self-service portals.

With AP platforms, sellers have to log in to each customer’s AP platform and manually input their invoice data into standardized forms in order to receive payment.

This, however, is a suboptimal method, as the manual data entry leads to both errors and wasted time.

Plus, it’s just downright annoying to have to log into different portals for different customers.

The other option, supplier-hosted portals, enables the customers to log into the portal and pay their open invoices, as well as view their payment history.

This option is typically supported by online payment software.

What Are E-invoicing Solutions?

Invoicing software solutions help businesses create, send, and track e-invoices and automate such billing tasks as payment processing, thereby making the technical challenges associated with e-invoicing for small businesses a thing of the past.

As for functionality, below are five important features offered by invoicing software:

New invoice creation and send Create professional, customized e-invoices quickly. If integrated with your other systems, the tool should also enable you to draw digital information from customer records, timesheets, and project details. Easily send them as well.
Customer records creation Using various filters, easily find customer information, such as purchase history, in a centralized, online database.
Standardized invoice templates The software often offers clean, pre-designed invoicing templates with all the essential invoicing elements. This makes the e-invoice creation process a breeze.
Reporting Run tax, invoice, and payment reports directly in the software to spot trends and common issues with your invoicing process.
Payment processing The tech should facilitate payment processing of credit and debit card payments in a secure manner.

Most of these invoicing software tools also integrate with other key business systems, from your CRM and accounting system to e-commerce platforms, enabling everyone, across finance, accounting, and billing, to operate from the same information.

Further, most of these e-invoicing platforms are cloud-based, meaning you can create and access invoices from anywhere, not just from the office like you would have to with on-premise software.

Some platforms even come with apps that make it simple to build and send invoices while you’re out and about.

Amongst service-based businesses, our online payments software with e-invoicing functionality, Regpack, is designed to make the entire invoicing process as efficient as possible, so that you can spend more time on big-picture work that impacts your business.

The tool also allows you to report on invoicing data to find those big-picture projects that will improve your business.

For instance, you might filter the payment data to find out which of your customers often pay late:

User management software image

Source: Regpack

And with that intel, you can do things like reach out to these specific people more frequently after sending an invoice or use the automated reminder feature to send out follow-up emails automatically.

In sum, there are a whole lot of invoicing software solutions out there to help you accomplish the sometimes technically challenging yet incredibly impactful implementation of e-invoicing.


Of the various global invoicing trends emerging today, e-invoicing has to be the most widespread and impactful.

Businesses and service providers that adopt this process are experiencing lower costs, less administrative work, competitive advantages, and happier customers and accounting staff members.

Although implementing and finding the right e-invoicing solution can be slightly complex tasks, it’s often worth the hours of contemplation, the internal and external conversations, and the investment.

No other invoicing best practice, not even using automatic follow-ups, will provide you with an equal return on investment.

If you’d like to get started with this journey, consider checking out Regpack one of the best solution providers for e-invoicing and a leading provider of registration software. Regpack is an online payments platform designed to facilitate electronic billing and invoicing and be your business partner.

About The Author
Asaf Darash
CEO and Founder of Regpack

Asaf, Founder and CEO of Regpack, has extensive experience as an entrepreneur and investor. Asaf has built 3 successful companies to date, all with an exit plan or that have stayed in profitability and are still functional. Asaf specializes in product development for the web, team building and in bringing a company from concept to an actualized unit that is profitable.

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