Digital Invoicing


What is Digital Invoicing?

Digital invoicing refers to invoices that are prepared in a digital format and can be viewed, tracked, and processed using digital technology. This includes invoices created as PDF files, Word documents, and other electronic-based document formats. The term “digital invoice” is sometimes used synonymously with “electronic invoice” or “e-invoice,” but the two are not exactly the same. (We will explore those differences later on in this entry.)

In the past, many businesses handled those tasks manually, using paper-based systems that often led to delays and confusion that wasted considerable amounts of time and money. Today, most large scale organizations have moved to using invoicing software that greatly reduces the risk of slow payments, duplicate payments, invoice fraud, human errors, and other pitfalls that can create disruptions in the invoice fulfillment process. Digital invoices are a crucial part of that invoice processing system.


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Invoice automation software that allows you to process more invoices with fewer human touchpoints and less time managing exceptions.

Trying to manage invoicing for a busy enterprise organization without the assistance of automation is a recipe for errors and inefficiencies. Printing, mailing, and tracking paper invoices is both expensive and time-consuming, as is attempting to manually process and manage all of the complicated paperwork involved. Any competitive business that processes a large volume of invoices on a regular basis needs to make an investment in automating its accounts payable (AP) system or risk serious delays in payment, invoicing errors, compliance violations, and damaged relationships with valued suppliers. Let’s look at some of the many benefits of e-invoicing or digital invoicing for a high-volume organization.

What is the difference between a digital invoice and an electronic invoice?

A quick search of the internet will show you that many seemingly reliable resources use the terms “digital invoicing” and “electronic invoicing” interchangeably. While the two concepts are very closely related, they are not exactly one and the same. A “digital invoice” is a broader term that refers to any invoice that can be viewed and processed digitally. As mentioned above, this can include invoices created in Microsoft Word, Adobe PDF, and other document creation formats. A digital invoice may even be a paper invoice that has been scanned into a digital format.

An “electronic invoice,” or “e-invoice,” is a more specific term that refers to invoices created in a structured data format. Electronic invoices can come in a wide range of formats, but some of the most common include XML formats, electronic data interchange (EDI) formats, and universal business language (UBL) formats. An invoice submitted via an online web form using  structured invoice data is also considered an electronic invoice. While all electronic invoices are by definition also digital invoices, all digital invoices are not necessarily classified as electronic invoices.

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What are the benefits of using digital invoicing software?

No matter your industry, digitizing your organization’s approach to invoicing using AP automation software yields immediate benefits not only for your business, but also for your vendors, suppliers, and trading partners. By upgrading your operations to a digital invoicing solution, your business can begin to:

Cut down on human errors

Attempting to manage a high-volume invoicing system using outdated methods such as manual data entry and paper-based invoices is a virtual guarantee of incurring avoidable mistakes. Every human touch point in a system increases the risk of human errors. Even simple mistakes can quickly snowball into much larger problems, including delayed payments, duplicate payments, overpayments, and underpayments. Beyond the initial time lost to those errors, locating and correcting each one by hand can take a great deal of time and effort. While it may seem less expensive at first glance to leave invoicing in the hands of your existing AP team rather than investing in automated software solutions, the actual fact is that the fines for late payment, corrections of payment errors, and damage done to vendor relationships are far more expensive.

Investing in AP automation drastically reduces the risk of invoice errors by digitizing mistake-prone functions such as data entry, routing approvals, finalizing payments, and other tasks that can become tedious and repetitive for your AP team. Not only does a digital invoice solution help to reduce those kinds of avoidable errors and slowdowns in the first place, but when errors do occur, it also becomes much easier to pinpoint the causes, identify a solution, and ensure that the same issue does not repeat itself the next time.

Keep employees more engaged

Even for dedicated accounts payable professionals, the day-to-day reality of processing invoices can be some tiresome work. Manually processing a large volume of invoices that all feature similar data can quickly become repetitive and less-than-stimulating for many AP employees. The more tedious the workload, the more likely those employees are to become unengaged in their work. Less engagement means a greater risk of human errors, invoice fraud, and employee burnout. That can quickly become an expensive problem for businesses that need to hire, onboard, and train new accounts payable team members on a regular basis.

An automated AP software solution with digital invoicing functions can go a long way toward keeping those employees more engaged. By allowing many of those tedious jobs to be handled via automation, an organization can free up accounts payable workers to focus on more engaging tasks that make better use of their time and skill sets. Automation can also help boost engagement by making those roles more flexible and fulfilling. Many AP functions can be handled remotely using a mobile device, allowing an AP team the flexibility to process invoice data, collaborate with other team members, and perform their jobs from anywhere with an internet connection.

Process invoices faster

Even beyond slowdowns caused by human error, a manual invoice processing system simply moves a lot slower than the alternative. Performing manual data entry, hunting down sign-offs for invoice approvals, and physically routing materials to the appropriate people and departments can eat up a tremendous amount of time. Studies have shown that processing one invoice from initial receipt to final payment takes around 25 days for the average mid-sized business using a manual or paper-based solution. For vendors that require or expect prompt payment, that turnaround time can be a dealbreaker.

With an automated accounts payable solution, that invoice processing time is often cut down to three or four days. When all of those repetitive tasks are handled by an automated software solution, routines that formerly took days to complete can be accomplished in hours or even minutes. That saved time helps your team to keep the invoicing workflow moving smoothly, to avoid supply chain disruptions, to maintain a consistent cash flow, and to strengthen valuable relationships with your vendors and suppliers.

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Get real-time visibility into the invoicing process

A lack of visibility can be a real problem when dealing with invoices. Processing an invoice manually makes it all the more difficult to follow its journey from receipt to payment. It is simply far more difficult to keep accurate tabs on paper documents as they are routed through a workplace to all of the necessary stakeholders than it is to track a digital invoice. When bottlenecks, errors, and slow-downs inevitably happen, finding the source of the problem becomes all the more difficult.

Automating your AP processes provides real-time visibility into your invoice data, no matter where it is in the process. Tracking documents as they are processed gives your AP team valuable insights into your invoicing workflow. That visibility helps to streamline processes and correct inefficiencies. It also helps to create an audit trail that makes it easy to access crucial information at a glance.

Ready to learn more about the many ways investing in an automated accounts payable software solution from MHC can help your business process digital invoices more efficiently? Contact us today to schedule a demonstration of our industry-leading solutions.

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