Self-billing is an invoicing process where it’s not the supplier (the contractor), but the customer (the purchaser) of goods and services who prepares the invoice. Therefore, customers actually invoice themselves.
How does self-billing work?
As an example, we’ll take an organisation which makes frequent use of external professionals. All these external professionals (suppliers, in this case) send separate invoices to the organisation for services rendered (the customer, in this case). All of these invoices have to be checked and amended where necessary. Furthermore, every external professional draws up their invoices in their own style. Not only does this take up a lot of time, but it is error-prone, both from the finance department side and the professional themselves.
TimeChimp lets the organisations themselves make up uniform self-billing invoices.
- The independent contractor inputs their hours and declarations into TimeChimp;
- An employee of the organisation checks and approves this data;
- A self-billing invoice is drawn up and sent by the employee to the organisation;
- Both the external professional and the organisation can see the invoice in their own environment.
What is self-billing?
Self-billing, also called reversed or reverse billing, reverses the ‘normal’ invoicing process. As soon as the customer approves the data that is to appear on the invoice, you draw up the actual invoice. In the traditional process, the supplier sends an invoice to the customer and the customer checks to see if everything on the invoice is correct. Because in self-billing all of this is checked ahead of time, the risk of invoicing errors is minimal and therefore many fewer corrections and credit notes are required.
Legal requirements for self-billing
Self-billing invoices created in TimeChimp satisfy legal requirements. For example, ‘invoice issued by customer’ always appears on our self-billing invoices. It’s also important to have the prior agreement of all parties to the use of self-billing. The external professional (or supplier) has to agree to remain responsible for the accuracy of invoices, even if they are generated by you, as an organisation (or customer).
List of advantages
- Saves your finance department and suppliers a lot of time
- No more incorrect information on invoices
- Reduces the risk of human error
- Reduces the use of credit notes and corrective invoices
- Invoices are paid more quickly because your suppliers no longer have to make their own invoices and you don’t have to check invoices after they’ve been made
- Improves your finance department’s oversight
Who is self-billing suitable for?
The question is easy to answer. Every organisation could benefit from self-billing. A frequently occurring problem is inaccurate or twice paid invoices and you can avoid these with self-billing. Where self-billing makes the most difference is in organisations with a large external layer. Therefore, organisations which use a lot of external contractors, freelancers, external professionals and flexible workers. TimeChimp’s self-billing not only saves you a lot of time and prevents you from making mistakes as an organisation, but your external workforce also benefits a lot from it too. It’s a win-win!