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ERP Integration For E-Invoicing

The first phase of e-Invoicing was launched on 1 October 2020. In this phase, businesses having a turnover of more than INR 500 crores in any previous financial year from 2017-18 had to implement e-invoicing for their B2B invoices mandatorily. The second phase (launched on 1 January 2021) focused on businesses with a turnover of more than INR 100 crores.

In brief, this e-Invoicing process is not about generating invoices on the Government portal. Businesses/Taxpayers have to create invoices on their internal accounting systems or ERPs and upload them on the Invoice Registration Portal (IRP) for verification. Once the IRP verifies the details, it will digitally sign and send back the e-Invoice with the Invoice Reference Number (IRN) and Quick Response (QR) code to the Taxpayers. Though the Government well communicated the idea about e-Invoicing, the implementation process needed attention.

There was a lot of hustle-bustle among businesses as the concept of e-Invoicing was relatively new. Taxpayers had multiple options to get this new invoicing system in place. However, for Taxpayers dealing with voluminous transactions, it was not feasible to use the offline excel utility to generate e-Invoices. The best fit solution was ERP integration.

Benefits Of ERP Integration For E-Invoicing

As of today, most businesses have resorted to ERPs to manage their day-to-day business. An e-Invoicing solution routed directly through the ERP will indeed reduce efforts and ensure greater accuracy. In simple words, if your ERP is configured for e-Invoicing, it will be able to communicate with the IRP directly through APIs/Plug-ins (and vice versa). With this, Taxpayers can seamlessly generate e-Invoices/Invoice Reference Numbers (IRNs) from within the ERP itself.

To understand this process better, here is a diagram to show how Masters India can integrate with your ERP for e-Invoicing:

E-Invoicing Process Flow

Note: ERP integration for e-Invoicing can be done in two ways:

  • APIs based integration,
  • SFTP based integration.

The benefits of ERP integration are:

  • For the successful generation of IRN, synchronisation between businesses’ ERP and the IRP is crucial. ERP integrations allow for automatic data flow from ERP to the IRP. If the integration is flawless, businesses do not have to jump between screens to obtain IRN’s. The automation also facilitates seamless data flow from the IRP to the ERP (IRN, QR code, signed e-Invoice) and thus reduces manual errors and non-compliance risks.
  • The Government has notified an e-Invoice schema to ensure that the data uploaded on the IRP by all taxpayers is in a uniformed pattern. That is why any data/document fetched from the ERP for IRN generation will need to be validated in real-time or before it is passed to the IRP. With the automation of the e-Invoicing process through the taxpayer’s ERP, any error that arises during field-level validation will be promptly sent back to the taxpayer. This system will also notify about business-level validation errors such as the applicability of tax or duplication of a document number, etc.
  • As per the e-Invoicing rules, a partial amendment of an e-Invoice is not allowed. With ERP integration, possible inaccuracies can be reduced.
  • The IRP accepts files only in JSON format. With the integrated ERP, the conversion of files to/from JSON format will be automated.
  • Many organisations have multiple PANs and a complex legal structure. It can also have numerous GSTINs if there are branches all over India. A well equipped ERP can manage multiple PANs, branches, and GSTINs, all in the same workspace.

The taxpayers need to evaluate the features/updates that their ERP providers can deploy. On the other hand, GSPs like Masters India can integrate with most of the ERP’s and automate the e-Invoicing process end-to-end through APIs. This helps taxpayers like you generate e-Invoices instantly with near to zero clerical errors.

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