SThe COVID-19 pandemic has threatened traditional ways of doing business. During this time more and more businesses, whether big or small, have felt the need to reach out to customers digitally. Customers too, now expect a seamless digital experience. From placing an order to receiving invoices, passing on input tax credit, and making payments, customers expect the entire experience to be digitised.
Only some time back businesses embraced digital means of payment as UPI became more acceptable. This completely changed the way they ran the show; collecting payments became faster, cash resources improved and therefore adoption rates went higher. But if you are a small business, you may have conflicting priorities; your resources are limited and therefore, you will pick up those changes which are impactful for your business.
To meet the needs of customers who expect a seamless digital experience, the most important change you need to consider is implementing digital invoicing. Invoicing is the cornerstone of a business transaction. Once an invoice is raised it can help with accounting at both the supplier’s and the customer’s end. However, when an invoice is raised digitally it can set the entire compliance chain in motion. It can populate your GST returns, help with ITC claims for the customer and allow payments to be made faster.
In fact, the benefits from digital invoicing are so vast that they will surpass the success businesses have had from digital payments. As per NPCI data, the volume of digital payments was at Rs 2,06,462 crores in March 2020 when the pandemic began and rose to Rs 5,04,886 crores in March 2021. Currently, around 20 crores invoices are generated in a month by GST registered taxpayers with a turnover of Rs 100 crores or less. As businesses grow, just think about the impact digitisation could have on compliance for both taxpayers and the government as more and more businesses undertake GST-compliant invoicing.
Implementing a digital payments setup needs little to no digital literacy, whereas digital invoicing may require at least some learning to take place for a smooth adoption. SMEs should consider choosing tools that are easy and quick to set up and allow extreme configurability to make documents and invoices as per changing needs of a business. In such a scenario software that is highly intuitive will see better adoption as it will be able to onboard people quickly with the only prerequisite being that they have some basic internet knowledge.
An important component of choosing to become digital is adopting cloud-based services. When you manage your business through the cloud it becomes possible to be agile and it also allows 24x7 business continuity. This is more and more relevant as there seems to be a long road ahead due to covid and in such a long journey, new means of doing business will evolve. Cloud services also help you reduce operational costs and make collaboration with customers and employees easy and secure. A lot of interaction with customers will go digital in this phase and it will become a norm for thriving in the post covid world.
Small businesses also face challenges with the evolving legislative landscape. There are frequent changes in law and making sure your invoicing is up to speed with these changes is essential for continuity. Small businesses cannot afford disruption caused due to not being compliant with regulatory changes. The other significant advantage of digital invoicing comes from a business becoming transparent and formalised. This can help small businesses become eligible for government schemes related to loans from banks. Besides, a compliant business that brings more transparency can expect to work with large corporations which need a basic digital setup to source from small businesses.
Businesses strive to be on the right side of the law, and adopting digital invoicing can help them win this. Businesses have to look at digital invoicing as a tool to reinvent themselves quickly to help navigate the challenges that lie ahead. Digitisation will no longer be a choice but an imperative for businesses that hope to grow and take leaps in the post covid world.
The author, Archit Gupta, is Founder and CEO at ClearTax. The views expressed are personal
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