With the dramatic advancement of IT and communication technologies and the accelerating globalization of commercial exchanges, the adoption of electronic transactions and ecommerce is steadily increasing in Japan. In the case of electronic transactions, business documents such as invoices are exchanged not as printed materials but as digital, data-based files.

Moving to paperless invoices offers clear benefits over paper-based methods, including reducing the hassle of mailing or hand-delivering records and achieving cost savings. This has drawn the attention of many businesses looking to improve their back-office operations.

Below, we explain the background to the growing adoption of paperless invoices, along with their advantages and disadvantages.

What’s in this article?

• Explaining the move to paperless invoices
  
• Why businesses are moving to paperless invoices
  
• How to move to paperless invoices
  
• Advantages of paperless invoices
  
• Disadvantages of paperless invoices
  
• Steps to take when moving to paperless invoices
  
• How Stripe Invoicing can help
  

Explaining the move to paperless invoices

Going paperless in commercial dealings means using electronic data instead of paper to simplify workflows and lower expenses. One example of paperless invoicing is a web-based invoice management system offered by payment processing companies. When businesses adopt such tools, they can centrally manage not only document creation but also their sending and storage, all within a single solution.

The move to paperless is happening in the corporate world and in the daily lives of regular people. Digitized alternatives are becoming more common in many spheres. While people think of e-books, online magazines, and newspapers on tablets or smartphones, the shift to digital now extends to stadium tickets for sports events and concerts, as well as public transit tickets.

Why businesses are moving to paperless invoices

Widespread adoption of remote work

One factor driving the transition to paperless invoicing is the widespread adoption of remote work. This has led to a greater emphasis on electronic transactions, which are more convenient. The move toward digital invoicing enables the swift completion of entire workflows remotely.

Compliance with the Electronic Bookkeeping Act

In Japan, starting January 2024, the Electronic Bookkeeping Act requires businesses to store any transaction-related documents exchanged initially in digital form as electronic data. As a result, organizations that have adopted paperless invoicing must store billing records digitally rather than print them. As long as enterprises satisfy the retention conditions of the Electronic Bookkeeping Act, they can convert printed invoices into electronic data through what is often called “scanner storage.”

The current Electronic Bookkeeping Act is one of the factors driving the shift to paperless billing and operations.

Compliance with the invoice system

Under the Japanese Qualified Invoice System, which took effect in October 2023, issuing and retaining qualified invoices requires recording more detailed items than in the previous categorized invoices. This means organizations must pay attention to comply with the rules.

Qualified invoices can still be issued on printed media and exchanged by mail or delivered in person. However, creating qualified billing records from scratch on paper, whether by hand or using a computer, increases the amount of work, and mistakes or omissions could occur. Consequently, an increasing number of businesses are embracing digital workflows to avoid these risks and improve efficiency.

How to move to paperless invoices

There are two main ways to make the move to paperless billing:

Using spreadsheet software

Invoices can be prepared via spreadsheet software such as Excel. Making use of free downloadable templates is another way to make the move to paperless while still controlling costs. Nonetheless, relying on these programs still involves hands-on tasks, including entering items and values, which require effort and time. Additionally, although unlikely, it is important to understand that manual errors can occur during computer operations.

Implementing a system

This approach introduces dedicated tools—for example, an automated invoice-generation platform—and relies on them to manage the entire workflow in one place, from issuing billing records to storing them. Automating invoice creation reduces the manual steps mentioned above and helps avoid entry errors. Centralizing workflows on a single platform further simplifies the shift to paperless processes.

Advantages of paperless invoices

Reduces costs

When dealing with statements on paper, not only does generating and sending them require significant effort, but it also leads to expenses for paper, envelopes, ink, postage, and the personnel needed to perform these tasks. In contrast, paperless invoices don’t incur any of these extra costs.

Furthermore, the savings achieved through digital operations apply equally to receipts. Specifically, for printed receipts, when the sales amount exceeds ¥50,000 before tax, the National Tax Agency mandates affixing revenue stamps based on the sales amount and canceling them. Revenue stamps are not required for documents delivered electronically by email or through cloud services. However, they are needed if a file created on a computer is printed and delivered to a business partner on paper.

In this way, moving transaction-related documents such as invoices and receipts to paperless formats reduces spending for print media, postage, and stamp duty.

Easier invoice management

With paper invoices, as the number of files increases, the workload for filing grows as well, complicating administrative work overall. Paper invoices take up storage space, and locating past records among large volumes of files can be physically demanding. There is also a risk of physical deterioration, leading to compromised legibility or, worse still, the complete loss of records.

Digital invoicing eliminates filing and frees up space, while search functions in invoice software enable quick retrieval without the worry that they have deteriorated or been lost.

Ideal for remote work and work-from-home

Exchanging paper documents creates greater time and hassle when employees are working remotely. By switching to paperless, as long as there is a solid internet connection, invoicing duties can be handled conveniently on a computer from anywhere.

Same-day response for corrections and reissues

When a printed invoice needs correction or reissuance, the process starts by tracking down a physical copy, followed by contacting the client to retrieve it or authorize its disposal. Reissued billing records then require more work to mail, or worse, to deliver them in person. In contrast, paperless invoices allow for the nearly instant reissue of corrected records, ensuring the entire process runs smoothly.

Disadvantages of paperless invoices

Individual arrangements for business partners who still prefer paper invoices

Some trading partners might not yet have adopted paperless operations. It is important to remember that they still might prefer to receive hard copies, as they have done in the past. As explained in greater detail in the next section, “Steps to take when moving to paperless invoices,” it is important to be flexible when interacting with these business partners by offering both printed and electronic options.

Costs for system implementation and operation

Generating invoices in spreadsheet software or free templates, converting them to PDF, and sending them via email or saving them to a computer incur no additional costs. This is because the systems belonging to a payment processor, which require implementation and operational expenses, aren’t being used.

Nevertheless, if the goal is to improve the entire billing process by integrating with existing customer data and consolidating the whole workflow, from automatic invoice generation and dispatch to storage, into a single solution, there will be fees for rolling out and running a new platform. For this reason, businesses need to investigate beforehand whether the savings achievable through paper-free workflows outweigh the expenditure of introducing and operating a new platform, and determine the overall cost-effectiveness.

When making these calculations, it is important to closely examine the labor and personnel spend associated with paper invoices. From a long-term perspective focused on productivity and efficiency, the investment of implementing and operating a paperless system could yield significant financial gains compared with the labor and overtime required for creating and mailing paper invoices individually.

Steps to take when moving to paperless invoices

Clarify the purpose of going paperless

First, think about why you’re transitioning to paperless. For instance, if you want to reduce the overall burden of invoice-related tasks, one way of doing so might be to introduce a comprehensive system provided by a payment processor.

On the other hand, if the goal is to save space by storing printed billing records (copies and original receipts) as electronic data, it is necessary to adopt a toolset that meets the scanner storage requirements of the Electronic Bookkeeping Act.

When clarifying these objectives in this manner, we recommend following the specific steps outlined below:

• First, make a list of the features or functions that the company needs
  
• Select several candidate frameworks that meet those needs
  
• Evaluate the cost-effectiveness of the options that meet those needs, and make a final selection
  

Notify others about the changes to workflow and operations

When moving to paperless operations, it is key to inform all employees of the change in advance. It’s also a good idea to have a work manual available for reference whenever needed.

Furthermore, to ensure you can appropriately respond to inquiries from business partners, prepare a manual outlining how to address questions about the managing of digital records.

Obtain approval from your business partners

When shifting to paperless invoices, it is key to obtain prior consent from trading partners. If you move to digital processes without their agreement, they might not notice billing records issued as electronic data, potentially leading to late payments.

To prevent such issues, businesses implementing paperless setups must prepare a notification about the transition to electronic invoices well in advance and obtain counterparties’ consent as early as possible.

Handling business partners who prefer paper invoices

After your business has provided notification about your transition to paperless billing, some of your business partners might respond, requesting that documents continue to be paper-based. In such cases, your business will need to deliver invoices to the client by mail or in person.

Therefore, to handle both paperless and printed exchanges, it is important to organize business partner information so you can determine which method to use for each. Especially for those who require paper-based transactions, focus on extracting their information exclusively and strive to establish a flexible system that meets these needs.

Prevention of electronic data tampering

One of the primary goals of the Electronic Bookkeeping Act is to ensure the authenticity of electronic records and prevent their tampering. As a result, organizations transitioning to digitized workflows must adopt tamperproof measures in accordance with the Electronic Bookkeeping Act. These actions include:

• Applying a timestamp
  
• Receiving and storing documents using a platform that creates a record of changes, deletions, etc.
  
• Accounting software with JIIMA certification that meets the legal requirements by default
  

As we can see, there are a variety of preparatory steps involved in moving to paperless invoices. On the other hand, once the transition is complete, it enables continuous efficiency of billing operations and will ultimately make managing the process easier and more comfortable.

Moreover, as explained in this article, relying on a payment processor’s services allows organizations to centralize invoice management, significantly reducing work and effort and improving overall efficiency. For instance, if Stripe Invoicing can issue and store invoices appropriately to meet the conditions of the current invoicing framework and the Electronic Bookkeeping Act, specifically the requirements for ensuring authenticity and visibility through a search function, it will be possible to achieve smoother, more logical 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 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.