How Will Recipients Receive E-Invoices From Their Suppliers? 

Introduction 

As the world moves towards digitalization, electronic invoicing or e-invoicing is becoming the norm for many businesses. The Indian government has implemented e-invoicing under GST in a phased manner. Read here to understand the e-invoicing mandate implementation.

In this blog, we will cover all aspects of e-invoicing, including what e-invoices are, how recipients receive e-invoices, the benefits of receiving e-invoices, tips for effectively managing them, the Invoice Registration Portal (IRP), the Enterprise Resource Planning (ERP) system, the verification process, and  more.

What are E-Invoices under GST? 

Under the e-Invoicing system, suppliers must generate invoices using their internal systems or Enterprise Resource Planning (ERP) systems and then upload them to one of the government appointed Invoice Registration Portals (IRPs) for validation. The IRP will then assign a unique Invoice Reference Number (IRN) to the invoice, sign it, and send it back to the supplier along with a Signed QR code. The Signed QR code needs to be printed on the invoice by the Supplier. Currently the e-invoicing mandate is applicable only to B2B invoices and Export supplies. B2C invoices are not covered.

How do Recipients Receive E-Invoices? 

The recipients may receive the PDF copies of e-invoice on email or physical copies like they traditionally get but on that now there will be a Signed QR code on that invoice. It is imperative that the final invoice shared with the recipient includes the Signed QR code received from the IRP. Failure to include the Signed QR code will result in the invoice being deemed invalid, as per the e-Invoicing rules and regulations.

E-invoicing mandate covers Tax Invoice, Debit Note and Credit Notes. Any other document which your supplier sends you may not have IRN. Also, a bill of supply does not have IRN. Separate invoices must be issued for taxable and non-taxable supplies in accordance with GST regulations. While many businesses continue to provide a single invoice for all goods, some suppliers also give separate bills of supply and tax invoices. In such circumstances, the Tax Invoice will have the IRN whereas the Bill of Supply will not.

The IRPs cannot directly share the e-Invoice with the Recipient. Hence, if the recipients are looking for reverse integration in their ERPs for their purchase data using e-invoices, they need to get the e-invoice json responses from the supplier. Suppliers registered with IRIS IRP can opt this as a Value Added Services to share the e-invoices directly from IRP portal to recipient.

Verification of E-Invoice by the Recipient 

It is crucial for recipients to verify the accuracy of e-invoices they receive to prevent mismatches or even overcharging or charges for goods or services that were not received. The logic for IRN and content of QR code is standard and is already published by the Government in the public domain. This implies any system can generate an IRN and QR code. However, digitally-signed QR code is available only for IRP-registered invoices. The recipients can verify the Signed QR code to ensure it’s a valid QR using E-invoice Verification section on IRIS Peridot mobile application.

Recipients can cross-check the information contained in the Signed QR, such as the supplier GSTIN, recipient GSTIN, invoice number, date, and invoice value, with their own records or even with the physical copy received.

Also post e-invoice generation it can be cancelled within 24 hours (i.e. till next day). Hence it is recommended to verify IRN status from the GSTN portal E-invoice Search section.

It is also important for the recipient to check whether their suppliers are required to generate e-invoices or not as per the e-invoicing mandate. If the supplier is covered under e-invoicing and is not generating IRN, the invoice becomes invalid as per GST rules. Thus, causing reconciliation issues to the recipient and it may also cause him to lose ITC. 

Signature Requirement for Suppliers

As per the provisions of Rule 46 of the CGST Rules of 2017, a digital signature from the supplier or an authorized party is mandatory to ensure compliance with GST regulations. However, this requirement is waived in the case of invoices with an assigned IRN. Hence, suppliers are able to share e-Invoices with recipients without their signature. The use of hard copies of invoices is also not necessary. This applies to e-Way Bills as well, as the transporter is not required to carry a physical copy of the invoice. A valid QR code with the IRN suffices as proof for verification by tax officials. 

Invoice Registration Portals (IRP) 

The Indian government as part of its e-invoicing mandate has made provisions for launching multiple Invoice Registration Portals for suppliers to seamlessly generate e-invoices even once volumes increase. GSTN has now on boarded 4 new private IRPs. So now there are total 6 IRPs. GSTN acts as a centralized repository for e-invoices, ensuring that no duplicate invoices are issued from two different IRPs. IRIS is one of the 4 private IRPs. All IRP platforms are accessible to all businesses and individuals who are required to generate e-invoices for B2B transactions.

Apart from all basic services that all IRPs provide IRIS IRP also provides a range of value added features, including: 

• Verification of e-invoices by buyers - All IRPs can verify e-invoices generated from any IRP if the signed json of e-invoice is available. In addition to this if any recipient is also registered on IRIS IRP and he wants to view invoices generated by their sellers on IRIS IRP then that can also be made available post seller consent.
• Storage of e-invoices for longer duration: All e-invoices generated on IRIS IRP can be stored for a longer duration. This will help the buyer as well to get old e-invoices. 
• Real-time data access - The IRP provides real-time access to consent based e-invoice data to recipients buyers as well, allowing businesses to view and manage their purchase invoices quickly and easily. 
• Integration with ERP systems - IRIS IRP VAS APIs can be integrated with Enterprise Resource Planning (ERP) systems of recipients as well, allowing businesses to manage their purchase invoices as well. 

Enterprise Resource Planning (ERP) System 

An Enterprise Resource Planning (ERP) system is a comprehensive software solution that helps businesses manage their core business processes, such as finance, accounting, procurement, and inventory management. In the context of e-invoicing, from seller angle, an ERP system provides a single platform for managing invoices from generation to registering for IRN and Printing invoice for recipients. From a recipient angle, integrating an ERP system also with e-invoicing provides several benefits for businesses, including: 

• Automated invoice processing - The ERP system can automate the purchase invoice recording process, reducing the risk of errors and saving time. This can be easily done if the e-invoice standard json is used for reverse integration.
• Accurate billing information - By integrating with e-invoicing, the ERP system ensures that all billing information is accurate and up-to-date. 
• Streamlined invoicing process - An ERP system streamlines the invoicing process, reducing the time and effort required to manage invoices. 
• Reduced risk of fraud - An automated process in ERP system can also help to reduce the risk of fraud As e-invoices can be verified automatically and then can be used for reverse integration

Benefits of Receiving E-Invoices to the recipient 

The switch to e-invoicing offers several advantages for recipients, including: 

• Increased efficiency - E-invoices are generated and processed much faster than paper-based invoices, reducing the time and effort required to manage invoices. 
• Improved accuracy - E-invoices are less prone to errors and mistakes, reducing the risk of incorrect billing information and ensuring that invoices are accurate and up-to-date. 
• Improved cash flow - E-invoices are processed faster, allowing businesses to receive payment more quickly and improving their cash flow. 
• Reduced costs - By reducing the time and effort required to manage invoices, e-invoices can help businesses to reduce their costs and increase their profitability. 
• Better visibility - E-invoices provide real-time access to invoicing data, allowing businesses to monitor their invoicing process and identify any issues quickly. 
• Improved security - E-invoices are stored securely, reducing the risk of fraud and unauthorized access to sensitive information. 
• Enhanced compliance - E-invoices are generated and processed in accordance with the e-invoicing mandate, ensuring that businesses are able to comply with all regulatory requirements. Reconciliation becomes easier with e-invoices. Thus any recipient claiming ITC on such invoices is more confident than doing a manual entry and then reconciling.

Tips for Effective E-Invoice Management for Recipients 

To ensure effective management of e-invoices, recipients should follow these tips: 

• Integrate e-invoicing solution with your ERP system - Integrating e-invoicing within the ERP system from a recipient angle essentially means automating your purchase register using the e-invoice data. It provides a comprehensive solution for managing invoices, from recording the purchase invoices to making payment to your vendor. This helps to reduce the time and effort required to manage invoices and ensure accuracy. 

• Verify invoices promptly - Verifying invoices promptly helps to reduce the risk of errors and ensure that all billing information is accurate. It also helps to improve cash flow by allowing payments to be processed more quickly. 

• Automate workflows - Automating workflows, such as invoice approval and payment, helps to reduce the time and effort required to manage invoices and improve efficiency. 

• Store invoices securely - Storing invoices securely, using a secure database or cloud-based solution, helps to reduce the risk of fraud and unauthorized access to sensitive information. 

• Monitor invoicing data - Monitoring invoicing data in real time helps to identify any issues quickly and improve the accuracy of billing information. 

• Implement strong security measures - Implementing strong security measures, such as encryption and secure access controls, helps to reduce the risk of fraud and protect sensitive information. 

• Stay compliant with e-invoicing regulations - Staying compliant with e-invoicing regulations is essential to ensure that all invoices are processed correctly and in accordance with the e-invoicing mandate. 

Conclusion  

With the e-invoicing mandate in place, businesses that have crossed the turnover limit are required to adopt e-invoicing and take advantage of the many benefits it offers. By using the IRP, and ERP systems, and verifying e-invoices, businesses can ensure that their billing process is streamlined and error-free.