With GST coming into effect in 2017, all Indian businesses are now required by law to create GST-compliant invoices – both on paper and electronically. The number of e-invoices across the globe is on the rise (volume of e-invoices in 2016 was approx. $30 billion worldwide, with an average growth of 10-20% per year); as has the volume of e-retail, with global transactions crossing the $2.3 trillion mark in 2017.
This led the think tank at Razorpay to have another of our lightbulb moments – we already had the infrastructure for businesses to accept payments online. Why not merge it with an invoicing feature so that accepting payments against a GST-compliant invoice becomes easier for everyone? This would automatically cut down the need for multiple software and make the payment process more seamless for everyone included.
So, we set to work. And the outcome is an intelligent software that provides automation of GST incorporation into invoicing – a feature that very few products in the market currently allow. As the Product Manager for this new feature, I am proud to introduce you to ‘Razorpay GST-compliant Payable Invoices‘.
Razorpay GST Invoices – How Do They Help?
Invoices have been in trend since the ancient times when merchants used clay tablets to keep a record of supply. In the simplest of terms, an invoice is a “document which states the supply of goods and services and forms the basis for a tax levy”.
GST-compliant invoices differ from the earlier VAT invoices by a few crucial factors:
- It is important to mention details like GSTIN of the supplier and the customer, the place of supply, the HSN/SAC codes which are specific to the goods/services being sold.
- The invoice needs to have a clear breakup of the tax levied. Just stating the value of tax is not enough; there needs to be a breakup of the CGST/SGST/IGST components.
- It is mandatory to issue invoices for all registered supplies as not doing so will be considered an offence under the law.
For a B2B business, e-invoices are an effective way of managing compliance as well as saving costs. It is estimated that creating invoices online can help reduce operational costs by 60-80% vis-a-vis paper-based invoicing. However, this saving does not mean much if you spend money on multiple software for payment, accounting and for invoicing.
The Benefits of Using Razorpay GST Invoices
The Razorpay GST Invoices gives you access to a single powerful system- where you generate invoices and collect payments via the same software. Ultimately, this helps your business reduce operational costs, reduce payment delay and delinquency, and manage cash flow in a better manner. Most importantly, it adds an informational element to the transaction. The customer knows exactly what they are paying for upfront.
The hallmark of any good product is that it simplifies an industry pain point and helps improve business processes. Our invoicing feature helps you in the following ways:
- You can create ‘Payable Invoices‘ for B2B or B2C transactions easily and accept payments via a single process. For monthly recurring invoices, you can use our APIs to create invoices in bulk.
- Automatically include the GST breakup in your invoices. Since this is linked to the HSC/SAC codes of the supplied items, there is zero chance of error in levying taxes. Remember, GST tax rates vary according to the tax bracket of the item and correctly calculating tax is an important part of creating GST-compliant invoices.
- Your customers can choose to pay from multiple payment options available on Razorpay or even use Virtual Accounts to make offline payments against the invoices. This enables customers to make instant payment – anywhere, any time – and helps businesses maintain regular cash flow for important tickets.
- The ‘Dashboard Tracking’ option allows you to tally Account Receivable (outstanding amount) and the money collected/received from your Razorpay dashboard. There is no need for a separate accounting software for this.
- In certain cases, your customers may want to make partial payments against an invoice. Let’s say they only wish to credit a small amount as an advance and expect to be able to pay the rest when they receive the goods. Razorpay GST Invoices come with a ‘Partial Payment’ option for such use cases.
Most importantly, you can use our software to create invoices even if you’re not registered under GST. Our intuitive and intelligent software can be used to create normal invoices without GST taxes that can be sent to your customers as proof of transaction.
Creating GST Invoices with Razorpay – The Process
At Razorpay, we have always been very particular about keeping the user flow/user experience simple, so that our users – whether they be a startup or an established business – can use the product seamlessly. We have tried to do the same with the GST Invoices and I have detailed the process below. For easy understanding, I have broken down the process into five steps from creation to reconciliation.
Step 1: Creation and Generation of GST Invoices
- To create an invoice for a customer, begin by adding all the necessary details such as the GSTIN of the customer, PAN details, mobile phone, and email id.
- Next, add item details of the goods/services sold to the customer. You can choose the HSN/SAC codes for the same, and add it to the invoice.
- Once you add the item details and the place of supply, the GST will be automatically calculated by the software. The GST rate is linked to the item code and the place of supply; hence there is zero chance of error.
You can save the details for further use. This will help in the mass creation of invoices and faster creation of recurring invoices.
Step 2: Sharing of GST Invoices
- The invoices are shared via email and SMS (you added these details in the first step).
Note: Even in legacy software, the sharing has to be done manually. However, Razorpay automates the process so that it is easier and faster.
Step 3: Payment
- You can share your bank details over the same mail to facilitate online payments. This works for ‘Payable’ invoices that need to be paid online.
Step 4: Notification
- If the invoice is paid online, you will receive notifications via the webhooks available on our site. If the payment is done via RTGS or NEFT, then it needs to be manually tallied.
Step 5: GST Reconciliation
- Reconciliation for Razorpay GST invoices is done the same way as for any other invoice. You will have to account for the monthly ‘Account Receivables‘ and ‘Invoices Issued‘ and ensure that they both tally.
So there! The easiest invoicing solution for businesses is now in town – Razorpay GST- compliant Payable Invoices. Have you used it yet?