How implementation of e-invoicing has augmented the growth of MSMEs

The e-invoicing system in India has altered the way businesses interact with each other. With its introduction in 2021, the e-way bill has transformed business processes across the nation. Electronic invoicing was made mandatory for business-to-business (B2B) enterprises with the aim of enhancing transparency and ensuring improved compliance procedures in the GST landscape. This was a crucial move by the government that instilled multi-pronged development in the financial ecosystem of the government and the private sector. In sync with these developments, the government has recently announced that from 1st April 2022, businesses with an annual turnover of more than INR 20 crore would also be eligible for compliance under the e-invoicing sector.

In India, electronic authentication of invoices under GST has paved the way for tracking goods in transit as well as automated filing GST returns. This digitization of transactional processes helps in streamlining the supply chain, which is an important facet in seamless business management.

Over the last two years, around 80% of the businesses with annual revenue of more than Rs. 50 crores have adopted e-invoicing in their organizations. While it was introduced with a vision to curb tax evasions, it has gradually benefited businesses with automated GST filing and real-time tracking of stock. Moreover, it makes businesses a part of the digital economy where they become adept at handling their financial transactions digitally.

Rahul Meena, Founder and CEO, Treflo

Streamlined business processes with real-time tracking

Shifting from physical to digital invoicing has streamlined business processes by a significant percentage. In the wake of e-invoicing mechanisms in GST, both government and private entities are able to track the invoices in real-time. The seamless management of invoices has further enhanced receivables management, which was earlier completely dependent on manual processes. The digitization of invoices has also speeded the billing process, which is directly linked to the GST Network. This, in turn, reduces accounting and tax errors, thereby minimizing audit risks. Automation of end-to-end business processes fuels business growth, yielding timely filing for GST returns.

Digitization of accounts payable and receivable processes

To support e-invoicing, a significant number of businesses have been employing ERP and tech-enabled solutions that automate the complete invoicing process. A direct integration streamlines business processes like accounts receivables and payables. As a result, businesses have greater transparency and more control over their day-to-day operations. Micro, small and medium enterprises (MSMEs) that were earlier dependent on manual data entry or accounting have been able to manage their payments as well as working capital in a more efficient manner. An automated e-invoicing system also instills a reconciliation between the accounting books and returns efficiently. This tech-enabled mechanism has improved audit trails while cutting down on compliance costs for internal business processes.

Final Word

The implementation of e-invoicing has paved the way for seamless financial and supply chain operations for businesses across various industries. During the pandemic, when supply chains suffered mayhem of multiple lockdowns, the e-invoicing mechanism helped track goods in transit and meet tax compliance. It has, without a doubt, strengthened the exchange between different stakeholders involved in the operations of a business enterprise. When an e-invoice is generated, it automatically updates the e-way bill in the system and even auto-fills the GSTR-1 for the suppliers. Therefore, digital invoicing has been transforming the Indian business landscape with streamlined invoicing and automated GST returns, further accelerating business processes and growth.

Author: Rahul Meena, Founder and CEO, Treflo