What are the latest trends and innovations in E-invoicing for AR financing and factoring?

1 AR financing and factoring

AR financing and factoring are two ways of using accounts receivable (AR), or unpaid invoices, as a source of funding for businesses. AR financing is a form of asset-based lending, where a business borrows money from a lender based on the value of its AR. Factoring is a form of invoice discounting, where a business sells its AR to a third-party factor at a discount in exchange for immediate cash. Both methods can help businesses overcome cash flow challenges, especially for small and medium-sized enterprises (SMEs) that may face long payment terms or late payments from their customers.

2 E-invoicing standards and regulations

One of the main drivers of E-invoicing adoption is the increasing number of standards and regulations that mandate or encourage its use. For example, the European Union has implemented the Directive 2014/55/EU, which requires public authorities and their suppliers to use E-invoicing by 2020. Similarly, many countries in Latin America, Asia, and Africa have introduced E-invoicing schemes that require businesses to comply with specific formats, validations, and reporting requirements. These standards and regulations aim to improve transparency, efficiency, and compliance in the invoicing process, as well as to prevent tax evasion and fraud.

3 E-invoicing platforms and networks

Another trend in E-invoicing is the emergence and growth of platforms and networks that facilitate the exchange and integration of E-invoices between businesses and their customers, suppliers, lenders, and factors. These platforms and networks can offer various features and services, such as invoice validation, verification, authentication, transmission, storage, retrieval, and analysis. They can also enable seamless and secure access to AR financing and factoring options, by connecting businesses with multiple lenders and factors that can offer competitive rates and terms. Some examples of E-invoicing platforms and networks are Tungsten Network, Tradeshift, Basware, and Invoice Bazaar.

4 E-invoicing automation and intelligence

Another innovation in E-invoicing is the use of automation and intelligence to optimize and streamline the invoicing process and the AR financing and factoring decisions. Automation can help businesses to generate, send, receive, and process E-invoices faster and more accurately, by using technologies such as optical character recognition (OCR), robotic process automation (RPA), and application programming interfaces (APIs). Intelligence can help businesses to analyze, monitor, and manage their E-invoices and their AR portfolio, by using technologies such as artificial intelligence (AI), machine learning (ML), and blockchain. These technologies can help businesses to improve their cash flow forecasting, risk assessment, pricing, and negotiation strategies, as well as to detect and prevent errors, fraud, and disputes.

5 E-invoicing benefits and challenges

E-invoicing can offer businesses that use AR financing and factoring many advantages, such as reducing invoicing and financing costs, improving visibility and control of AR performance and cash flow, and enhancing customer and supplier relationships. Furthermore, it can increase access to financing options and liquidity, as well as help businesses comply with standards and regulations. However, there are also challenges associated with E-invoicing, such as adapting to different formats, rules, and systems in different countries and regions; integrating E-invoicing platforms with existing accounting and financing systems; ensuring the security, privacy, and reliability of data and transactions; and managing the change and adoption of E-invoicing among internal and external stakeholders.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?