Electronic Data Interchange — the exchange of business documents in a standardized electronic format — emerged from the 1960s work of Edward A. Guilbert, a DuPont executive wanting to facilitate the flow of purchase orders, invoices, and other documents between the company and the transportation carriers within its supply chain. Guilbert then spearheaded the creation of the Transportation Data Coordinating Committee, which helped develop the first sets of EDI standards for the transportation industry. The standards continued to evolve and extend to virtually all industries, and today there are many EDI standards — including those underpinning the faster payments platforms.From Paper Invoices to ACH, RTP® and the FedNow® Service: A Strategy for Community Financial InstitutionsCommunity financial institutions (CFIs) looking to increase small-business deposit retention, reduce check usage, and expand faster payments adoption may find that e-invoicing is a practical entry point.Many small businesses still rely on paper invoices and mailed checks, which slow cash flow and increase fraud risk. Indeed, 40% of small businesses are still paid by check, according to FreshBooks research. However, by offering such customers e-invoicing in conjunction with faster payment rails, CFIs have a practical way to help business customers “get paid faster with less friction,” while strengthening deposits and relationships.
What Is E-Invoicing?E-invoicing does not simply mean sending a PDF by email. E-invoicing is the delivery of invoices in a standardized, machine-readable format — often using Universal Business Language (UBL) or ISO 20022-compatible data structures — that allows accounting and accounts payable systems to process invoice details automatically. It works by embedding structured data such as purchase order numbers, line items, tax calculations, and remittance details so invoices can be ingested directly into accounting systems with minimal manual intervention.Instant payment networks like the FedNow Service and the RTP network support ISO 20022 Request‑for‑Payment messages at the payment layer, while e‑invoices operate at the commercial layer. Together, e‑invoices and instant payment requests can streamline both reconciliation and settlement.“When combined with more complex B2B payments involving invoices with purchase orders, receipt level details, discounts, taxes, and more, e-invoices provide the structured data needed load invoices into AP systems, while instant payment requests facilitate and automate the payment itself,” the Faster Payments Council writes.When e-invoicing is combined with faster payments, businesses achieve end-to-end AP automation, real-time AR reconciliation, enhanced visibility and control, smarter payment workflows, and reduced risk and fraud.For CFIs, this boils down to more electronic volume running through your correspondent’s rails, more consistent deposits, and better data.How E-Invoicing Improves Liquidity, Reduces Check Fraud, and Expands Treasury RevenueStronger deposits and liquidity. Faster settlement through ACH, RTP, and the FedNow Service means money lands in business accounts sooner. That translates to improved customer cash flow and a bolstered deposit base for the CFI. It also means less of their money is kept in third-party tools, such as Venmo or PayPal. Indeed, according to research by Autobooks, for every $1 that businesses deposited into their bank accounts, $7 stayed off-platform if they were using a third-party tool.“When financial institutions started to offer e-invoicing and a payment link to their business customers, it forced the full settlement into the bank account. That led to an increase in deposits held at the financial institution,” says Autobooks’ chief marketing officer Derik Sutton.Lower fraud and back-office pain. While mailed checks open up several possibilities for fraud or back-office errors — mail theft, altered checks, manual posting — digital payments initiated from secure e-invoices over established rails can eliminate those risks.“E-invoicing solutions that are integrated with electronic payment options can help small businesses move away from checks, replacing them with electronic payment mechanisms that are inherently safer,” says Scott Anchin, senior vice president of strategic initiatives and policy at the Independent Community Bankers of America.E-invoicing can also reduce re-keying and exception handling in operations.New fee and relationship opportunities. E-invoicing plus faster rails can be a bundled treasury management and receivables solution for key small-business segments. Potential revenue levers include tiered pricing for premium reporting or faster-payment usage, plus deeper primary-bank relationships.According to the 2022 Autobooks Small Business Data Report, offering e-invoicing plus faster payments capabilities equated to $8.45 in estimated monthly transaction revenue per active small business account — not to mention a stronger customer experience, lowering delinquencies and overdrafts. How You Can Get Started
What Is E-Invoicing?E-invoicing does not simply mean sending a PDF by email. E-invoicing is the delivery of invoices in a standardized, machine-readable format — often using Universal Business Language (UBL) or ISO 20022-compatible data structures — that allows accounting and accounts payable systems to process invoice details automatically. It works by embedding structured data such as purchase order numbers, line items, tax calculations, and remittance details so invoices can be ingested directly into accounting systems with minimal manual intervention.Instant payment networks like the FedNow Service and the RTP network support ISO 20022 Request‑for‑Payment messages at the payment layer, while e‑invoices operate at the commercial layer. Together, e‑invoices and instant payment requests can streamline both reconciliation and settlement.“When combined with more complex B2B payments involving invoices with purchase orders, receipt level details, discounts, taxes, and more, e-invoices provide the structured data needed load invoices into AP systems, while instant payment requests facilitate and automate the payment itself,” the Faster Payments Council writes.When e-invoicing is combined with faster payments, businesses achieve end-to-end AP automation, real-time AR reconciliation, enhanced visibility and control, smarter payment workflows, and reduced risk and fraud.For CFIs, this boils down to more electronic volume running through your correspondent’s rails, more consistent deposits, and better data.How E-Invoicing Improves Liquidity, Reduces Check Fraud, and Expands Treasury RevenueStronger deposits and liquidity. Faster settlement through ACH, RTP, and the FedNow Service means money lands in business accounts sooner. That translates to improved customer cash flow and a bolstered deposit base for the CFI. It also means less of their money is kept in third-party tools, such as Venmo or PayPal. Indeed, according to research by Autobooks, for every $1 that businesses deposited into their bank accounts, $7 stayed off-platform if they were using a third-party tool.“When financial institutions started to offer e-invoicing and a payment link to their business customers, it forced the full settlement into the bank account. That led to an increase in deposits held at the financial institution,” says Autobooks’ chief marketing officer Derik Sutton.Lower fraud and back-office pain. While mailed checks open up several possibilities for fraud or back-office errors — mail theft, altered checks, manual posting — digital payments initiated from secure e-invoices over established rails can eliminate those risks.“E-invoicing solutions that are integrated with electronic payment options can help small businesses move away from checks, replacing them with electronic payment mechanisms that are inherently safer,” says Scott Anchin, senior vice president of strategic initiatives and policy at the Independent Community Bankers of America.E-invoicing can also reduce re-keying and exception handling in operations.New fee and relationship opportunities. E-invoicing plus faster rails can be a bundled treasury management and receivables solution for key small-business segments. Potential revenue levers include tiered pricing for premium reporting or faster-payment usage, plus deeper primary-bank relationships.According to the 2022 Autobooks Small Business Data Report, offering e-invoicing plus faster payments capabilities equated to $8.45 in estimated monthly transaction revenue per active small business account — not to mention a stronger customer experience, lowering delinquencies and overdrafts. How You Can Get Started
- Identify target segments. CFIs should reach out to contractors, professional services, landlords or other local businesses that invoice frequently and wait on checks. These segments feel the cash-flow friction most acutely.
- Assess your current payment rails. Confirm which rails you already support — standard and same-day ACH, RTP, and FedNow Service — and how those services are accessed. For many CFIs, rail access and settlement are enabled through a correspondent partner. Understanding your current capabilities and any prefunding or liquidity requirements is step one.
- Evaluate e-invoicing front-end options. Determine whether your core or digital banking platform offers an embedded invoicing tool, or whether you would integrate a third-party solution. The e-invoicing platform should connect directly to your customers’ deposit accounts and allow payment initiation over the rails your institution already supports.
- Ensure structured data compatibility. Look for solutions that use standardized formats — such as UBL or ISO 20022 messaging structures — so invoice and remittance data can flow cleanly into accounting and AP systems. The goal is not just digital delivery, but automation and reconciliation.
- Coordinate across core and correspondent providers. Confirm how payment instructions will route from the invoicing tool through your core and onto ACH, RTP, or the FedNow Service. Your correspondent typically enables access to those rails; your core connects the transaction to the deposit account. Clarity here avoids operational surprises.
- Launch a focused pilot. Select a small group of business clients and position the solution around tangible outcomes — faster receivables, fewer checks, simpler reconciliation. Equip relationship managers with straightforward talking points tied to cash flow and fraud reduction.
- Track measurable outcomes. Monitor electronic receivables volume, deposit growth, reduction in check usage, payment speed, DSO trends, and client engagement. Use that data to refine pricing, bundling, and broader rollout strategy.
E-invoicing is not simply a digital replacement for paper billing. It is a practical way for CFIs to connect small-business receivables to modern payment rails using infrastructure they already access.By pairing structured invoice data with faster settlement options, CFIs can help business customers accelerate cash flow, reduce reliance on checks, and simplify reconciliation. In doing so, institutions strengthen operating account primacy, improve deposit retention, and expand treasury management relationships.
