When it comes to electronic transactions, two prevalent terms are often intertwined: e-billing & e-invoicing. But contrary to popular belief, both these terms are different from each other. For the casual online consumer, this can get confusing. Fortunately, ReliaBills is here to help clarify things and make sure you’re using the right term for the right purpose.
Understanding E-Billing & E-Invoicing
For us to know which is which, we will need to discuss each term. With the internet blowing to new heights regarding what it can do, distinguishing between billing and invoicing is crucial. Whether you’re running a business or an average consumer buying things online, you need to know and be familiar with these terms. That way, you will become more knowledgeable about how online business transactions work and what specific documents are used in particular scenarios.
Let’s start by discussing each term separately. Afterwards, we’ll go through specific points that separate one from the other.
What is E-Billing?
Electronic billing, e-billing, or eBilling, is the method that involves sending bills and collecting payment digitally. In this manner, bills are sent, and payments are made over the internet via a safe and secure payment gateway. Through this process, transactions are now faster and more efficient.
For e-billing to work smoothly, you will need to have multiple online integrations. These integrations include the following:
- A fully-functional billing system
- Banking system
- Customer’s bank bill payment system
- An online payment gateway for the e-billing system to take place
E-billing is very useful for different business types, especially those that send recurring bills to its customers. For example, a SaaS company charges its customers every month for their services. That means the company also sends an electronic bill to each of its customers. This bill breaks down all of the charges for the current month and offers to pay online via various payment options.
What is an E-Billing System?
E-billing is simply the concept of being able to send bills and get paid online. For businesses to take advantage of this idea, they need to create an e-billing system. An e-billing system is an electronic procedure that helps generate and deliver invoices. At the same time, it also accepts customer payments.
An e-billing system typically follows these steps:
- Customer billing data is added to the billing system.
- The billing system generates a customer bill.
- Charges are accumulated and totalled.
- Bill is delivered to the customer online.
- Customers receive their bills via email.
Types of E-Billing Systems
There are four types of e-billing systems. Get to know each one of them and determine which e-billing system works best for you.
- Direct with the Business – The most common type of e-billing system involves the business sending their invoice to the customer for payment.
- Aggregator or Credit Card Dashboard – This type of e-billing system is used when a customer pays the business in person via credit card. They will then settle the balance later online through the e-billing dashboard.
- Open Invoice – also called a ‘self-billing system,’ this e-billing system is used when the business offers an option for payment that involves direct payment via charity. It can also be a business agreement where the customer will proactively pay the amount that they owe.
- Confirm Electronic Receipt Online – This type of -e-billing system involves business partners using banks or other online gateway providers to give a receipt or electronic reservation number to its customers. Customers will then have a specific window to go to the bank that they partnered with, look up the reference number, and pay the bank in cash. The bank will then be the one to deliver the money to the business.
Advantages of E-Billing
Just like e-invoicing, e-billing has its set of advantages that are unique to itself. Here are some of the notable benefits that you can get from using an e-billing system:
- It’s the Cheaper Option – Paper invoices and manual data entry are both resource and labour-intensive tasks that can take their toll on any business. With e-billing, you can eliminate all paper trails by streamlining your invoicing online.
- Environment-friendlier Option: As previously said, e-billing eliminates the need for any paperwork on your invoicing. Without the need for paper, companies that use e-billing are also contributing to the preservation of mother nature.
- Faster and More Efficient – With e-billing, you can enjoy efficiency at its finest. Payment collection will now be three times quicker and hassle-free. With your electronic bills landing into your customers’ email inbox in seconds, you can ensure that you’ll get paid right away.
- Better Client Experience –Your customers will also feel the impact of having an e-billing system in place. With an e-billing system in place, customers can enjoy a fast, safe, and secure transaction.
What is E-Invoicing?
Now that we know what e-billing is, let’s now proceed to its distant relative – e-invoicing. Electronic invoicing, e-invoicing or eInvoicing is exchanging invoice documents between a supplier and buyer via an integrated digital format.
Traditional invoicing involves a lot of paperwork. It’s manually intensive and prone to human error that results in increased costs and processing lifecycles. For growing companies, this can be a significant setback. Fortunately, all of these problems can be remedied with an e-invoicing system.
E-invoicing is a common business-2-business (B2B) practice. It has been a part of the electronic data interchange transactions for years now. If your business is making transactions with other companies, the invoicing system will come in handy as it drastically reduces the time it will take for a payment to be sent and received. At the same time, it also ensures that both businesses are safe since they are making transactions through a safe and secure online payment gateway.
An E-invoicing System typically follows this format:
- The supplier sends an invoice via:
- Web-based form
- Directly from the accounts receivable (AR) system
The buyer receives the invoice directly into the accounts payable (AP) system.
An e-invoice system contains data from the supplier in a format that can be entered or integrated into the buyer’s AP system. It shouldn’t require any data input from the buyer’s AP administrator.
Since an e-invoice allows for several formats to be employed, it’s useful to apply the following guidelines:
A True e-Invoice
- Structured invoice data that are issued in electronic data interchange (EDI) or XML formats.
- Structures invoice data that are issued using a standard internet-based worm form.
Not a True e-Invoice
- Unstructured invoice data that are issued in PDF or Word formats.
- Scanned paper invoice.
The significant cost and time savings brought by removing paper and manual processing are enticing benefits. However, the real advantage of e-invoicing comes with the integration level between you and your business partners. At the same time, it also affects your invoicing software and other business systems that you use.
The Difference Between E-Billing Vs. E-Invoicing
While e-billing uses built-in payment options, e-invoicing is a more simplified version of the entire process. It involves creating an electronic file that is then attached to an email. The payers will need to print the invoice and send it along with a check. In other cases, electronic fund transfers may also be arranged to settle the account.
While it’s a useful method for B2B transactions, e-invoicing does lack control and tracking. These are two features that e-billing systems offer. Without an established system, an e-invoice can sit in your customers’ invoices for days without being opened or noticed. Also, the data from an e-invoice needs manual transcription into accounting systems, raising the potential for errors.
At the same time, e-invoicing is also prone to the following errors:
- Slow mail
- Lost invoices
- Accounting snafus
- Insufficient funds.
However, keep in mind that both e-billing and e-invoicing are used for different situations. The former is more suited for business-2-consumer (B2C) transactions, while the latter is more a B2B option. Regardless, both are useful options when sending invoices and getting paid.
How ReliaBills Can Help
If you’re looking to start your e-billing or e-invoicing systems, you need a reliable invoicing system to make it happen. With billing and invoicing software, you have all the tools you need to get started. From beautiful invoice templates to a series of payment options, they offer everything you need to establish a solid system for e-billing and e-invoicing. What’s more, there is software that is FREE to use, like Wave and ReliaBills. All you need to is create an account and start creating your invoices.
So, as you can see, e-billing and e-invoicing are completely different. While some similarities warrant them to be mentioned at the same level, their application and usage differences are what separates them completely.