Electronic invoicing provides much needed boost for Singapore businesses

Gaining new customers and generating more revenue are, without a doubt, key to running a business whether it's a large or small one.

However, collecting payment for products delivered and services rendered are often tedious processes that take up an inordinate amount of time and effort as well.

The story is a familiar one. Usually, a seller would generate a PDF or paper invoice from its finance system, then send this to a buyer. Here, the invoice is checked for accuracy and compliance by the buyer before the details are added its own system. Only then payment is made.

If a business deals with different customers, it could end up trying to accommodate the various accounting and procurement systems that each customer is using.

That is not to mention the different formats that invoices may have to be presented in. Missing a full-stop in a company's name, like "Pte. Ltd." for example, could mean not being paid on time as the invoice might get rejected.

Late payment is an especially vexing issue for small businesses because it affects cashflow, but it is also a concern for large businesses looking to keep a healthy balance sheet.

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The roll-on effects of poor cashflow can be multiplied, for example, in poor credit ratings or unnecessary interest costs if a business is unable to pay for its own costs due to a delay in payments from customers.

Healthy cashflow, conversely, will allow a business to plan better and scale up with the resources it needs to, say, expand to new markets.

Hence, many businesses in Singapore have turned to a nationwide e-invoicing network - InvoiceNow - to overcome the many challenges of manual or paper invoices.

Accounting systems that are InvoiceNow-ready connect via the common Peppol standard, which enables businesses large and small to send their invoices electronically through the network and get paid for their services and products more promptly. This includes being paid with PayNow or other bank transfer methods in Singapore.

More than 50,000 business are connected to the InvoiceNow network since its launch in 2019, enabling them to transact directly and seamlessly from their accounting systems.

They can keep using their preferred accounting and electronic resource planning (ERP) software while exchanging invoices with partners that are using a different one.

Once an e-invoice is generated, it is sent from a seller's system into the buyers' system without any human intervention. In other words, inefficiencies and inaccuracies are cut out.

This is because the invoice that is sent by the seller will be automatically converted to a structured digital format to the buyer, through the InvoiceNow network into the buyer's accounting system. Once the invoice details are verified, payment can be scheduled even ahead of the typical 30 days credit terms and as a result, payment can be made faster.

For one user, freight services and logistics firm Royal Pacific, invoicing processing time has been cut by about half since it started using InvoiceNow in early 2021.

"Especially with the additional stress from this Covid-19 period, e-invoicing has helped tremendously to reduce the pressure from trying to meet daily accounting deadlines," said Mr Yoga Widarmoko, Royal Pacific's director, in a Straits Times report in Nov 2021.

E-invoicing also helps cut the cost of manual processes that are common today. By reducing the amount of time and effort in re-keying data into their own systems, businesses can save up to S$8 per invoice, according to a study commissioned by IMDA in 2018.

The good news is that as more businesses come onboard, the same convenience and cost benefits can be expanded to them as well.

Once connected to InvoiceNow, businesses can look to send invoices to different customers without worrying about connecting to different systems.

And since the Peppol standard is used by many businesses overseas as well, invoices can be sent across borders more easily as one's customer base grows across the globe.

How does one know if a business partner is connected? For local businesses, the SG Peppol Directory offers a quick search with a company name. For overseas businesses, a global Peppol directory offers the similar feature.

With all the data captured digitally, it also becomes easier for a business to apply fraud detection and analysis to reduce the risk of fraud as well.

Additionally, businesses that still use paper invoices will be able to do away with them to cut waste and boost their sustainability efforts.

In November 2021, the Housing & Development Board, JTC and Maritime and Port Authority of Singapore started to issue e-invoices for direct receipt into their business customers' accounting systems through InvoiceNow.

Together, the three entities' 25,000 business customers receive more than 49,000 invoices, representing 70 per cent of public service invoicing. This means they could enable a good number of businesses to reduce their carbon footprint.

To tap on InvoiceNow, businesses need to have an invoice or accounting software that can connect them to the network.

For SMEs, there are free and affordable solutions, while large businesses can work with any of IMDA's approved list of Access Point providers and their accounting or ERP software vendor to integrate this feature.

IMDA has a list of Peppol-ready solution providers that can support SMEs' move to e-invoicing.

For large businesses, a list of Access Point providers who can link business systems to the Peppol network will be able to help them get connected.

Business leaders can also attend the monthly business briefings organised by IMDA that will help them get onboard, start transacting and enjoy the benefits.

For more information on InvoiceNow, click here.