BUSINESS

Is GST e-Invoicing The Future of Business Finances And Transactions? Why?

×

Is GST e-Invoicing The Future of Business Finances And Transactions? Why?

Share this article
Is GST e-Invoicing The Future of Business Finances And Transactions? Why?

The implementation of Goods and Services Tax (GST) has brought major changes for businesses in India. The extensive tax reforms introduced under GST have impacted everything from accounting procedures to supply chain management. One key reform that is altering business finances and transactions is the rollout of GST e-invoicing. This new electronic invoicing system requires businesses to generate all invoices digitally through a government portal before sharing them with clients or vendors. 

With e-invoicing mandatorily applicable for businesses with over Rs 5 crore turnover, it is poised to become the future of financial transactions and documentation in India. Here is why e-invoicing will drive this change. 

Reduced tax evasion

Tax evasion has been a long-standing concern, with various manual methods of duplicating and modifying invoices misrepresenting information. The structured e-invoice mechanism eliminates this. It generates standardised, authentic, and secure invoices with a unique IRN that validates each invoice’s information with the government before it is shared. This real-time tracking and verification of e-invoices also enables businesses to input tax credits faster while improving tax compliance.

Streamlined processes

With e-invoicing integrated into accounting and ERP software, the invoice generation process is automated, quick, and efficient. Bulk generating invoices on the portal, downloading them in standard formats like JSON and PDF, and directly sharing them with buyers saves time over manual methods of invoice preparation. Any modifications or cancellations are also seamlessly handled on the portal. This leads to faster processing of invoices, payments, and refunds across the transaction cycle.

Better analytics and reconciliation

The structured nature of e-invoice data makes it easy to extract analytics. e-Invoicing providers and accounting software generate custom reports on ITC claims, GST liability, purchase registers, and more. The invoices’ common format also enables easier reconciliation of books of accounts. With real-time access to sales and purchase data, businesses can derive actionable business insights too.

See also  Erik ten Hag issues Kobbie Mainoo warning after FA Cup final heroics | Football

Lower costs

When an invoice is generated directly using the e-invoicing solution, it slashes hardware, stationery, printing, mailing and manpower costs associated with traditional invoicing systems and record-keeping. The reduced processing times for acknowledging, amending, or cancelling invoices also spell major cost savings for accounts payable and receivable teams. There is also less revenue leakage owing to consistent compliance.

Scope for innovation

As GST e-invoicing stabilises, it can pave the way for more innovative use cases of the system. Small businesses can access e-invoicing solutions at lower costs through GSPs. New financing instruments like marketplace lending against invoices can open up with better tracking of this asset class. Linking e-invoices to smart contracts can also enhance and automate the enforcement of contracts.

Conclusion

While early adoption of e-invoicing has seen initial procedural and change management challenges, the sheer scale of its usage will drive rapid transformation. Over the next 2-3 years, e-invoicing could become indispensable for businesses managing their finances and transactions. 

With a strong push from policymakers and fast-tracking of technology readiness amongst businesses, GST e-invoicing does seem poised to become the standard for B2B financial documentation in the Indian business landscape shortly.

Leave a Reply

Your email address will not be published. Required fields are marked *