The electronic invoicing system is a form of billing, provided to the buyer in electronic form via a pre-defined structured data exchange, where this e-billing can be enabled by two main options: The first is point-to-point contact between buyer and seller, which often happens when using EDI invoices, the other option is through a network that connects many buyers and sellers, and the network model is commonly used today in the electronic invoicing system, thanks to its scalability and efficiency for all parties involved.
What is the exact concept of e-invoice and its benefits, and what software supports the second phase of e-invoice in Saudi Arabia?, That's what we'll recognize in the rest of the article, read on.
What is electronic invoice?
Electronic invoice is an invoice delivered electronically in a specific standard format, electronic invoices contain invoice data in structured form and can be automatically imported into the payment accounts system of the purchasing enterprise, and typically include a visual presentation of the invoice data, however, it can be temporarily displayed during processing or converted into visual formats.
As electronic invoice can be defined as a legal and financial alternative to paper invoice, this technology system is already a reality driven by mandatory regulations in all regions of the world, however, despite its expansion, confusion remains about what electronic invoicing really means.
Benefits of Electronic Invoice
Digitization of electronic invoices brings many advantages, but the main advantage of the electronic invoicing system, is certainly to save companies costs, in return manual invoicing is very complex, expensive and time-consuming, when converting to electronic invoicing system, companies can save up to 80% compared to paper invoicing.
Also using the digital invoice issued, companies can save the costs of materials, printing and mail, they can also save the ability of employees and use it more effectively, the electronic invoice can reduce the sources of manual error and deliver the invoices more quickly, as the quick delivery of the bills follows a faster payment, resulting in increased liquidity.
How do electronic invoices work?
Electronic invoices are the process of sending, receiving and certifying invoices electronically, eliminating the use of paper as we indicated, reducing the expenses related to printing and mail, for creditor accounts, the electronic billing process consists of three steps:
The buyer sends an order to the seller, the purchase order is usually sent as an electronic document (PDF), then the buyer specifies the information to be included in the purchase order, such as the description of the item, quantity, price and delivery date.
The seller creates an invoice based on the information provided in the purchase order, after which the invoice will be sent to the buyer with all the required details such as the description of the commodity and the unit price.
The buyer agrees to pay the electronic bill delivered after reviewing all the details contained therein, the buyer can also send the invoice for approval or rejection if it does not conform to the terms and conditions.
General electronic invoice standards and conditions
Materializing the overall process is not enough to ensure the legal value of electronic invoices, in fact, so that you can truly get rid of burdensome paper invoices, you must be able to meet certain criteria where you must be able to guarantee:
Validity of invoice issuer:
Know the sender and the ability to ensure that he or she says.
Safety of invoice content:
You must be able to ensure that the invoice (and the data it contains) is unchangeable during its processing.
At all times, the bill should be readable and clear.
Also in order to properly implement electronic invoices, companies need to ensure that they complete the following steps:
- Set up an electronic invoicing system, where this can be done either internally or by an external vendor.
- Ensure that the new billing process conforms to the formats, requirements and detailed XML structures.
- Integrate receipt and processing of electronic invoices and other relevant electronic documents into current accounting workflows.
- Registration with the IRS.
Proposed form for electronic invoice
The electronic invoice form issued through the modern system contains:
- Company Name
- Tax Number
- Buyer's Name
- Buyer's Address
- Invoice Number
- Release Date
- Description of mutual goods
- Quantity of goods
- Commodity Prices
Electronic billing application (invoice) in Saudi Arabia during the second phase
The second phase of the electronic invoice system in the Kingdom of Saudi Arabia began on 1 January 2023 in a phased manner. The second phase is known as the integration interconnection phase. The electronic billing systems of the cost must be linked with the Zakat, Tax and Customs Authority system (billing platform), and electronic invoices must be issued as required. and will be implemented in a phased manner.
What are the requirements of the second phase of the electronic invoice?
The second phase of the electronic invoice, in Saudi Arabia, requires certain conditions and standards, namely:
- The facility's technical solution is compatible with all electronic billing requirements, including making sure the ability to connect to the Internet.
- Linking and consolidating integration and linking the technical solution of electronic invoice, and the systems of the Authority "invoice."
- Issue and save electronic invoices based on a specific formula (XML) or (PDF/A-3 including XML).
- Adherence to technical and technical specifications for the second phase of electronic invoicing (invoice).
Which software supports the second phase of the electronic invoice?
Among the programs that support the second phase of the Kingdom's e-invoice, we have selected two programs:
DAWRA Electronic Invoicing Program
Douzma is one of the best electronic invoice programs that supports Arabic language in business management for easy use and integration with institutions and stores providing cloud business solutions from anywhere and at any time of any device, DZRA also provides e-invoice application with simple solutions and steps and includes essential applications such as the Sales and Invoice Programme and the Warehouse Management and Customer Management Program, With an easy user interface, it can also be used anytime and anywhere saving time and effort.
Egnite Integrated Platform allows you to manage your entire project from a single location from e-stores, point of sale systems, connectivity with global local markets to inventory, order management and shipping. It helps with electronic invoicing, serves various sectors such as e-commerce, and is available in Arabic and English.
Ignite is highly structured and sophisticated. The program assists businesses in managing financial and administrative processes across a range of cloud applications that operate online.
The business environment is undergoing significant changes as technologies continue to grow, and digitization is introduced in many areas and operations, which explains the move of large companies, from manual invoicing to electronic invoicing, allowing them to improve control and security of their activities.
1. <<Electronic Bill Payment & Presentment (EBPP)>>, investopedia
2. <<Violation of refraining from issuing the tax invoice>>,wikipedia