Electronic Invoicing – time to ditch the filing cabinet?

Electronic Invoicing -  time to ditch the filing cabinet?

What is Electronic Invoicing?

Electronic invoicing is the transmission and storage of invoices without the delivery of paper documents.

Why use this method?

This can offer many advantages over traditional paper invoices. The rapid electronic transmission of documents in a secure environment may provide for:

  • An improvement to the traceability of orders
  • Decrease in paper storage
  • Reduction in paper and handling costs
  • Fast access and retrieval of information
  • Security and ease of  dispute handling
  • A better impact on the environment

Regulatory issues

HMRC have issued specific guidance surrounding the use of Electronic invoices.

  • They must contain the same information as paper invoices
  • The same rules apply to storage of electronic invoices as to paper invoices. Therefore you will have to keep copies of all the invoices you issue and all the invoices you receive for 6 years.
  • Should you choose to issue, or receive, electronic invoices, you must retain them in a readable form, or be able to reproduce them in a readable form without delay.
  • On investigation or enquirey HMRC can request access to the operations of any computer systems which produce or receive VAT invoices as well as to the data stored on them. They will also look at your supporting documentation including your file structures etc; audit trail; controls; safe keeping; and information on how your accounting system is organised.
  • You may be able to meet your obligations as regards production of records by giving HMRC physical access to your systems at your premises or possibly via remote access to your systems.

Invoices received from suppliers

If you receive electronic invoices from your suppliers, you must meet the same conditions for storing them as set out for your sales invoices.

If you do not wish, or are not able, to receive electronic invoices you should ask your suppliers to issue you with paper invoices. This is a commercial matter between you and your supplier.

Many modern accounting systems are able to provide an electronic invoice issue and retention system. It is important to ensure your system is backed up and data accessible for the required periods. For further guidance you should speak to either an IT professional, your software provider or an accountant.