Technology is evolving rapidly. The paper invoicing system is becoming a relic of the past. On July 2022, 7.4 million electronic invoices are already in the BIR’s EIS or newly implemented e-invoicing system. Many companies have changed their traditional paper invoicing system into a digitized system.
Are you one of them? The digitized invoicing system is preferred due to its ease and convenience. Accounting services in the Philippines remind entrepreneurs that paper can get damaged or fade with time. Thus, going digital is more permanent with backups. Thus, it is only a matter of time before many other businesses also decide to change their system into a digitized one.
What is E-invoicing and how does it work?
E-invoice is short for electronic invoice. It is a digital billing document that clients receive from clients. The e-invoice system has an automatic and efficient process that gives better results than the paper invoicing system. This new method also replaces the process of manual encoding and mitigates the risk of making errors.
What are the advantages of implementing E-invoice in your Business?
Are you one of the companies who is deciding or have already switched from paper invoicing to a digitized invoicing system? Here are 5 advantages of implementing an e-invoice system in your business.
1. Stimulate Internal and External Collaboration
Having a proper e-invoice procedure will align your internal operations with your external operations. This applies to your suppliers or each department that will help you create a well-grounded data repository in one platform. If this sounds like tedious work and you need help with information or record management, you can seek help from bookkeeping services in the Philippines.
2. Simplifies Tax Compliance
With the e-invoicing system, your whole system will be transparent. Tax services in Manila attest that this allows the Bureau of Internal Revenue or BIR to ascertain and monitor if you’re complying and paying the correct taxes.
3. Reduces the Risk of Fraud and Overpaying
The e-invoice system records all the financial activities of your business which allows you to trace every transaction the company makes. These transactions always come with certificates and digital seals to make sure that the chances of forging and/or duplicating the document will be reduced.
4. Optimizes the Working Capital and Early-Payment Discounts
E-invoicing makes sure that after completing an order, the bills get released immediately to make payments quicker and lessen the lag time. It also lessens the delay when you release the invoices and collect the receivables.
5. Improves The Cash Flow
With the e-invoice system, the cycle time frames and bill payments are quicker. It improves your company’s days sales outstanding or the days it will take to convert due credit into cash. Note that a quicker DSO means you have better control of your company’s cash flow.
What are the BIR e-invoicing requirements?
Now they require mandatory issuance of e-receipts or e-invoices instead of the manual receipts/invoices for e-commerce business owners, goods & services exporters, and large taxpayers’ services or LTS.
The categories of taxpayers mentioned should register and get a BIR sticker upon finishing the inspection of the following:
- computerized accounting system used for generating e-receipts and e-invoices
- cash register machines or point-of-sale (POS) systems
- certified sales data transmission systems that will deliver the e-receipt or e-invoice data to the EIS.
What are the guidelines for taxpayers using the EIS?
- The API or application programming interface guidelines should be the basis of the sales data transmission system
- Your company must be registered in e-invoicing to make sure your business transactions are secured.
- Have a BIR-certified sales data transmission system and get an EIS certification.
- Submit your invoice data preferably in real time or within three days of the transaction date.
Once your company gets approval from BIR to transmit data, you should submit your sales reports the following day.
- Make sure to include the summary lists of your purchases and importations to transmit your sales data to BIR’s EIS.
Are you ready to switch to e-invoicing?
If you switch now, you need to be patient and give time for adjustment for this new and improved system. It may take a few years to fully adjust to it, but remember that it will not be a wasted effort if you consider how it can simplify your tax compliance, stimulate collaboration, and provide you better communication procedures between you and the Bureau of Internal Revenue or BIR. If you need assistance, get in touch with our team of CPAs. We are a one-stop shop providing accounting services in Pasig and many other services for both domestic and foreign clients.