Modernizing B2B Payments: E-invoicing (2024)

With digital processes essentially replacing paper-based transactions in the consumer payments industry, business-to-business (B2B) payment methods are also evolving. Standardized networks for exchanging electronic invoices (e-invoices) and digital remittance information are essential in modernizing B2B payment transactions, and government initiatives are now accelerating the creation and adoption of these frameworks.

The most active global region for e-invoicing, the European Union, already has an effective network in place for standards-based document exchange, and recent legislation will drive even greater usage. And in the United States, businesses have been exchanging invoices electronically through various channels for decades, but the anticipated release of a fully operational network by the Business Payments Coalition (BPC) in 2023 will further ramp up e-invoicing adoption.

Below, we outline key concepts related to e-invoicing and explore the reasons for making the shift from paper billing to digital invoicing and electronic remittance.

What is Electronic Remittance?

Electronic remittance, or digital remittance, is information describing the products or services a buyer has purchased. Remittance may be sent along with a digital payment or transmitted separately.

What is E-Invoicing?

In e-invoicing, two business entities—a supplier and a buyer—exchange an invoice document in a standardized electronic format.

What is an e-invoice?

The document in an e-invoicing exchange, an e-invoice, meets two key requirements:

  1. It contains data in a structured format, specified by an electronic exchange network
  2. It can be automatically imported into the buyer’s system

Notably, unstructured invoice data (e.g., pdf or Word format), invoice images (e.g., jpg or tiff), invoice information on a web page or in an email, scanned invoices, and paper invoices sent via fax cannot be used in e-invoicing transactions.

E-Invoice Exchange Framework

An e-invoice exchange framework provides a network for sending and processing electronic invoice and remittance data. It operates much like an exchange framework for email communications. Within an email exchange framework, users sign up with a service provider (e.g., Gmail), and this provider acts as an access point, delivering emails between users. The frameworks enable users to sign up a single time and exchange communications with virtually any other email user.

As part of an e-invoice exchange framework, a business can engage in digital invoicing and remittance with any other participating organization. Critically, e-invoice frameworks enable straight-through processing for businesses—that is, the completely automated exchange of invoice, payment, and remittance data from start to finish.

A typical workflow within an e-invoice exchange framework includes the following steps:

  1. A retail operation purchases items from a supplier
  2. The supplier creates an invoice for the items and submits it to an e-invoicing service provider (access point 1)
  3. Access point 1 sends the invoice to the retailer’s designated service provider (access point 2)
  4. Access point 2 converts the supplier’s invoice data into the format required by the retail operation’s accounting system and sends it to the retailer
  5. The retailer processes the invoice and pays the supplier via ACH, wire transfer, card, or instant payment
  6. Remittance information describing the purchase is sent through the same set of access points

E-Invoicing Benefits

Why do businesses choose e-invoicing? The advantages of a digital approach include:

Cutting costs

By sending invoices electronically instead of printing and mailing hard copies, companies save on administrative expenses, which can be a substantial budget item, especially for small businesses.

Speeding processes

With e-invoicing, businesses exchange invoices and remittance information far more quickly, without administrative resources devoting time to the process.

Easing cross-border business

As more and more countries worldwide adopt e-invoicing as a best practice, business across borders will be faster, more efficient, and highly secure.

Simplifying tracking

Companies using e-invoicing solutions know when a bill has been sent, reviewed, and paid. At tax time, financial information is readily accessible. And e-invoicing platforms can serve up analytics, allowing businesses to view key metrics—how quickly they get paid, on average, for example—at a glance.

Streamlining invoice creation

E-invoicing solutions also offer templates, enabling businesses to quickly and easily create professional invoices with logos and other company branding.

Enhancing security

In e-invoicing, businesses conduct encrypted transactions with trusted parties. The process virtually eliminates the risk associated with manual, paper-based exchanges.

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Modernizing B2B Payments: E-invoicing (2024)


Is e-invoicing applicable for B2B? ›

E-invoicing in India falls under the Goods and Services Tax (GST) law. According to the law, businesses registered under the GST system must use e-invoices for all B2B transactions.

What are the payment methods in B2B e commerce? ›

The most common types of B2B payment methods are paper checks, ACH payments, wire transfers, credit cards (AP credit cards), and cash. Each B2B payment method has its own set of benefits compared to the next and here is how the different types of B2B payment methods differ.

How do I correct a modified e-invoice? ›

If there is a mistake or wrong entry in the e-invoice, what has to be done? If there is a mistake, incorrect or wrong entry in the e-invoice, then it cannot be edited or corrected. Only option is to cancel that invoice/IRN and report a new document (with new number) and generate a fresh IRN.

What is a B2B payment solution? ›

B2B payments are the exchange of currency for goods or services between two businesses. This is an inter-commerce transaction that does not involve a consumer. Businesses include corporations, retailers, wholesalers, and start-ups to name a few.

What is the threshold for B2B e-invoice? ›

Who is Required to Generate e-invoice, and What is its Applicability? As per the new rules of GST on e-invoicing, all businesses having a turnover exceeding Rs.5 crore have to generate e-invoice. This threshold was Rs.10 crore before the latest amendment.

Is e-invoice applicable only for B2B or B2C? ›

Although e-invoicing applies only to B2B invoices, the law requires certain entities to generate and print a dynamic QR code for B2C invoices.

What is the best payment method for B2B? ›

Because they're so simple, ACH payments work great for B2B recurring payments. Many organizations use ACH because it's cost-effective. In fact, some financial institutions charge nothing at all and push this form of transaction over paper checks. ACH payments are a good way to manage cash flow and settle accounts.

What is the most preferred payment option used in B2B commerce? ›

The most popular B2B payment methods are invoice payments, SEPA direct debit, credit card payments and PayPal. Buy Now Pay Later (BNPL) is also becoming increasingly popular in the B2B sector. Via Mollie, all of these B2B payment methods can be offered simply and securely via a single contract.

Which e payment mechanism is widely used in B2B? ›

Main B2B E-Payment Methods

The most common B2B payments are eChecks, credit cards, ACH, and wire transfers.

Can an e-invoice be modified? ›

Amendment and cancellation on the IRP

Therefore, an e-invoice can be cancelled on the IRP only within 24 hours. Further, the whole of the invoice would have to be cancelled since partial cancellation is not possible. Amendments to an e-invoice cannot be carried out on the IRP.

What is the time limit for amendment in B2B invoice? ›

For Amendment in B2B Transactions

Revised date cannot be later than the last day of the tax period when the original invoice/note was uploaded. Return filing period must be mentioned compulsorily.

What is the 7 day time limit for e invoice? ›

What is the 7 day limit for e invoice? Earlier, the GST Network has issued an advisory implementing a time limit of 7 days to report invoices and documents to IRP from 1st May 2023. The same was defered until October 2023. From 1st November 2023, the time limit of 30 days applies to taxpayers with turnover over Rs.

What are the most common B2B payment terms? ›

Common terms for B2B transactions are net 30, net 60, and net 90, which indicates the number of days until payment is due.

What is B2B payment automation? ›

B2B payment automation is a software solution that streamlines payment processing and enables businesses to send and receive electronic payments.

How does B2B invoicing work? ›

B2B invoicing is the process of demanding due payments between B2B businesses. It happens when a supplier sends invoices to a buyer to enable them to collect payment. A B2B invoice indicates the cost of products or services rendered to the buyer.

What is B2B e-invoicing? ›

B2B e-invoicing, the digital exchange of invoices between businesses, is fundamental for contemporary commerce. With regulations driving its adoption, it streamlines operations and enhances transparency, revolutionizing invoicing practices for businesses in today's regulatory landscape.

How do I create an e invoice for B2B sales? ›

Enter a particular GSTIN of the company and get the OTP verification done. Enter the annual turnover details with the related financial year and submit. You can get registered for e-invoicing. Next time onwards, login to the e-invoice portal and upload B2B invoices using a chosen mode to generate IRN.

Is B2B considered e-commerce? ›

Nearly all B2B commerce occurs on the internet as e-commerce. Transactions are conducted via different categories of websites, including the following: Company websites.

How do I invoice B2B? ›

A well-structured B2B invoice should include essential elements such as an invoice number, business details, payment methods, item descriptions, and the amount due. However, one of the most crucial aspects is payment terms.

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