Today in Japan, the rapid advancement of information and communication technology has led to the widespread use of electronic transactions, which prioritize efficiency. In conjunction with these electronic transactions, business documents, such as invoices, have shifted to being paperless. This means that invoices are created, issued, received, and stored online.

The ability to exchange invoices online eliminates the extra work of physically mailing them out. It also saves space by replacing paper with electronic data, making it highly convenient for businesses.

Let’s take a closer look at the advantages of web invoices, as well as some disadvantages to be aware of. We’ll also discuss further why web invoices are becoming popular in Japan and how businesses can issue them.

What’s in this article?

• What are web invoices?
  
• Why web invoices are gaining attention in Japan
  
• The advantages of web invoices
  
• The disadvantages of web invoices
  
• How to issue and send invoices
  
• How Stripe Invoicing can help
  

What are web invoices?

A web invoice is exactly what the term implies: an invoice that is created, issued, sent, received, and stored online. For example, invoices that are generated automatically using an invoicing tool and then sent via email or shared on the cloud are classified as web invoices.

As long as it meets the invoice requirements, an invoice created and issued online has the same validity as a paper-based invoice. And in light of Japan’s recent push for digitization, many businesses in the country are adopting web invoices with the aim of facilitating smooth and speedy transactions.

Automated invoice generation tools are not solely for issuing invoices online; they also include features such as the ability to issue receipts, which makes them suitable for a wide range of business transactions.

Furthermore, some payment agents—also called payment processing companies—offer tools that enable the centralized execution of tasks, including creating, sending, and storing transaction-related documents. They can therefore help businesses simplify their operations and improve back-office work.

Why web invoices are gaining attention in Japan

Creating and sending invoices electronically has become popular across Japan for a variety of reasons. Let’s look at some of them.

Compliance with the Electronic Books Preservation Act

Under the current Electronic Books Preservation Act, electronic transaction documents—such as web invoices—must be stored in their original electronic format. Digitizing and storing paper invoices that were previously sent by physical postal mail is also permitted; the invoices simply need to meet the storage requirements related to scanned documents that are outlined in the Electronic Books Preservation Act.

Since this law has been in effect, web invoices have been gaining even greater attention in Japan.

Compliance with the current invoice system

Japan’s Qualified Invoice System was launched in Japan on October 1, 2023. This invoice system significantly impacts the purchase tax credit, also called an input tax credit, that businesses can receive from the government. Therefore, issuing and retaining qualified invoices that are compliant with this system requires greater attention than was needed for the previous rate-classified invoice system.

Certain information must be included on a qualified invoice, such as the invoice system registration number and the reduced consumption tax rate. Because the requirements are specified in minute detail, creating documents from scratch, either by hand or on a computer, can be cumbersome. Web invoices are becoming a popular way to reduce the work associated with creating invoices, as the process is more automated. This makes it possible to process them faster and more smoothly.

Widespread adoption of remote work

Since the COVID-19 pandemic, remote work has been embraced both in Japan and around the world. While some companies have chosen to have their staff return to the office full-time, hybrid and fully remote work arrangements have become common and are widely accepted. This increased diversity in how people work has led to a steady rise in the number of companies offering electronic transactions, which better support remote workers.

In the past, issuing a paper invoice required going to the office to print them, affixing a signature seal, and performing other administrative work. With web invoices now being common, the process has been simplified. And the ability to complete everything online has made web invoicing popular with many businesses.

The move to paperless transactions

In light of Japan’s digitization efforts, businesses have been reviewing back-office operations and simplifying them where possible. This includes transitioning to more efficient paperless invoices. The aforementioned rise in remote work has also contributed to the popularity of web invoicing, because it’s difficult to do paper-based invoicing tasks remotely. Paperless invoices are simply more efficient.

The advantages of web invoices

Adopting web invoices can be beneficial to businesses in a number of ways, including saving on costs and staying up-to-date with the law. Here’s a closer look at the advantages of online invoicing.

Going paperless reduces costs

Paper-based invoices often create the following costs:

• Printer ink
  
• Paper
  
• Envelopes
  
• Postage
  
• Filing folders
  
• Cabinets
  
• Maintenance and replacement costs for printer malfunctions
  

These costs tend to increase as the number of transactions grow. Web invoices, on the other hand, can help reduce these expenses or eliminate them completely.

The risk of lost documents and document tampering is lowered

When using paper invoices, you must take certain security measures, such as installing locks on cabinets and having designated personnel securely store the cabinet keys in a safe location. This is necessary to prevent removal, tampering, or loss of the documents. Even then, the paper tends to deteriorate over time and can lose its legibility as a result of accidents or disasters such as typhoons.

Using a web invoice system avoids these risks, and helps guarantee security. Common system features include:

• A time stamp function to prevent tampering
  
• A history verification function that shows whether the contents have been modified or deleted
  
• Security measures such as communication encryption when transmitting invoice data
  
• Cloud-based storage and management features to prevent loss and deterioration of documents
  

Web invoices reduce the invoice-related workload

For businesses that have numerous business partners, the entire process of using paper invoices—creating, sending, and storing—introduces extra time and work. Not only that, but manual operations also carry the risk of errors, such as omissions or incorrect entries. Further, when documents must be reviewed at a later date, each file must be physically located and retrieved from archives stored in a warehouse or in office cabinets, which can be physically demanding labor.

In contrast, web invoices are completely electronic data that can be managed centrally within an online invoicing system. Because all invoice-related processes can be completed within that system, the workload is reduced significantly compared to paper-based methods, ultimately leading to improved efficiency in accounting operations. In addition, since web invoices are stored in the cloud, it is easy to quickly search for and view documents from a single computer.

Web invoicing tools respond to legal changes

As previously discussed, businesses must abide by the Electronic Books Preservation Act. Typically, payment processing companies maintain robust systems and online tools that enable them to respond swiftly and flexibly to any legal revisions or changes in this and other laws. In other words, using a payment agent allows businesses to conduct transactions smoothly with web invoices, confident in the knowledge that they comply with all legal requirements. However, it is important to know that not all payment agents offer comprehensive support, so you need to thoroughly research a payment agent’s services before using them.

Some commercially available software packages have obtained a Japan Image and Information Management Association (JIIMA) certification. JIIMA certifications are granted to software companies that meet the requirements of the Electronic Books Preservation Act. Therefore, when considering a product or service, your first step needs to be confirming that it is certified by the JIIMA.

The disadvantages of web invoices

There are also some negatives, or points of caution, to think about before implementing a web invoicing system. Here are a few.

Some business partners can’t use web invoices

Some business partners might require entirely paper-based documents for a variety of reasons. When dealing with these kinds of businesses, using web invoices isn’t an option. To help you avoid this issue, be sure to determine whether any of your business partners require paper-based invoices before you decide to transition your own business to web invoices.

Mistakes can compromise information security

Web invoices are highly convenient because they eliminate the need to use postal mail. With a click of a button, all the necessary documents reach your business partners instantly. That said, it is important to acknowledge that with web invoicing, there is a risk of accidentally leaking confidential information.

For example, using even a single incorrect character in a recipient’s email address could result in the web invoice being sent to a third party completely unrelated to the transaction. This kind of minor mistake can lead to a major problem. Therefore, it’s important to use plenty of caution when handling web invoices.

Switching to web invoicing comes with operational costs

While this is not limited to just web invoices, changing or overhauling a system inevitably incurs significant costs. In addition to the initial costs to implement a new system, there tend to be monthly usage fees or transaction fees. It is therefore important to carefully assess the cost-effectiveness of a new web invoice system and also to consider the timing of implementation.

The ability to issue web invoices is impacted by internet connection conditions

Web invoices are exchanged over the internet. It’s important to remember that internet connections can get disrupted during heavy rain storms and natural disasters such as typhoons. To ensure you can handle unexpected communication failures without issue, good risk management is key. Specifically, make sure to download important web invoices early, store them securely, and ensure they can be viewed without internet access.

Businesses need to tailor the invoice format to their clients

A business partner might support web invoices but have specific requirements for formatting elements. In such cases, it is advisable to adopt a system with a high degree of flexibility for customization. This will allow you to issue web invoices that align as closely as possible to the client’s requirements.

How to issue and send web invoices

There are three major methods for issuing web invoices to business partners:

• Sending by email: Create an invoice on a computer, convert it to a PDF, and then attach it to an email.
  
• Sharing via the cloud: Create a PDF invoice and upload it to a cloud service, where the business partner can view and download it.
  
• Sending using online tools: Web invoices automatically generated by an invoice issuing system are sent to the business partner using the tool’s functionality.
  

Of these three methods, using an online tool offers the highest degree of convenience and security.

As explained previously, sending invoices by email carries the risk of information leakage due to mistyping email addresses. While using the cloud avoids the risk of misdelivery, creating invoices from scratch (i.e., without an online tool) still requires time-consuming manual work.

Online tools automate and centralize the entire invoicing process, including creating, sending, and storing the invoices. These tools offer more convenience, enable restrictions on data viewing and editing permissions, and offer encrypted communication. This makes them the most secure method, with thorough measures to prevent information leaks.

If your company is seriously considering adopting web invoicing, it’s advisable that you use online tools to help. The tools that payment agents offer can significantly improve the efficiency of invoice processing. If, like Stripe Invoicing, the tool can also comply with the Qualified Invoice System and appropriately issue and store invoices with an automatic generation feature, it will enable smoother, more efficient back-office improvements.

How Stripe Invoicing can help

Stripe Invoicing simplifies your accounts receivable (AR) process—from invoice creation to payment collection. Whether you’re managing one-time or recurring billing, Stripe helps businesses get paid faster and streamline operations:

• Automate accounts receivable: Easily create, customize, and send professional invoices—no coding required. Stripe automatically tracks invoice status, sends payment reminders, and processes refunds, helping you stay on top of your cash flow.
  
• Accelerate cash flow: Reduce days sales outstanding (DSO) and get paid faster with integrated global payments, automatic reminders, and AI-powered dunning tools that help you recover more revenue.
  
• Enhance the customer experience: Deliver a modern payment experience with support for over 25 languages, 135 currencies, and 100 payment methods. Invoices are easy to access and pay through a self-serve customer portal.
  
• Reduce back-office workload: Generate invoices in minutes and reduce time spent on collections through automatic reminders and a Stripe-hosted invoice payment page.
  
• Integrate with your existing systems: Stripe Invoicing integrates with popular accounting and enterprise resource planning (ERP) software, helping you keep systems in sync and reduce manual data entry.
  

Learn more about how Stripe can simplify your accounts receivable process, or get started today.