What is Invoice Management System: A Complete Guide!

Invoices form the core of a business, ensuring smooth cash flow and organized financial records. Manually managing invoices is time-consuming, tedious, frustrating, and error-prone. Lost bills, missed payments, and compliance-related issues mess up business operations.

An invoice management system becomes a game changer for businesses that deal with massive transactions. Whether you are a newbie or have an established business, a system to auto-manage your invoices becomes crucial. 

Let’s explore what is Invoice Management System. The blog will take you through a complete guide on IMS. 

What is Invoice Management System? 

The Invoice Management System (IMS) is a built-in feature on the GST portal. This feature was integrated in late 2024 on the GSTN portal, facilitating recipient taxpayers’ efficient invoice management. It allows taxpayers to accept, reject, or keep invoices pending filed by suppliers. 

The Invoice Management System under GST resolves issues related to mismatches between the returns submitted by the recipients and invoices filed by the suppliers during ITC claim settlement. 

What is Invoice Management System Dashboard?

The IMS dashboard refers to a centralized interface that presents real-time insights into invoicing operations. It gives analysis into payment tracking, invoicing summary, compliance reports, and payment due dates. 

Invoice Management System – Key Features 

1. Communication: 

• The IMS offers communication functionality within the GST portal. 
• This feature connects the suppliers and recipients on a single dashboard interface through the invoice. 

2. Single-window GSTR-2B Process: 

• This feature of invoice management system GST facilitates recipient taxpayers with multiple inward suppliers to manage and auto-generate GSTR-2B with fewer intrusions. 
• The taxpayer must select either of these three options i.e. ACCEPT, REJECT, or PENDING to confirm auto-generated ITR reports. 

3. Zero Compliance Burden:

• Invoice management system under GST is specially designed to release the additional compliance burden on taxpayers.
• If a taxpayer does not take action on an invoice within the specified period, it is considered ‘deemed accepted’ under GST compliance no.  
• IMS eases Input Tax Credit reporting by seamlessly managing the inward invoicing operations. 

4. Summary View: 

• Many businesses wonder what an Invoice Management System is and how it helps.
• It presents a summary view of all invoices and actions on each invoice. 
• This promotes strategic decision making and assists in auditing the processes.  

5. Amend Submitted Invoices: 

The invoice management system also gives the liberty for suppliers to amend the saved invoices through form 1A of GST returns. 

Benefits of Invoice Management System 

1. Precision Audit: 

• Invoice Management System under GST facilitates auditors to verify every invoice systematically eliminating the need to access multiple interfaces. 
• 22 This reduces errors and promotes accuracy. 
• Let’s consider a pharma company. It leverages an IMS to monitor medicinal batches and expiration dates. During audits, the IMS reports highlight expired items or missing stocks through real-time updates. 

2. Accuracy in GSTR-3B: 

• The IMS gives a complete summary of GSTR-3B for all inward invoices. 
• So, taxpayers can be stress-free about invoices being missed out while filing form 3B of GSTR. 
• For example: A wholesaler using IMS automatically captures taxable sales, GST rates, and ITC details for each invoice. For GSTR-3B filing, the system ensures the output tax matches GSTR-1 and input tax matches GSTR-2B. This reduces errors, mismatches, and compliance risks. 

3. Reduces Pending Invoice Complications: 

• The invoice management system minimizes the complexities associated with the pending invoices. 
• The pending invoices are carried to the upcoming tax periods with no impact in GSTR-2B and 3B filing. 
• Consider a service provider using an IMS to issue multiple invoices. This reduces the manual efforts by flagging overdue invoices, sending payment reminders, and updating payment status in real-time. 

4. QRMP Taxpayers: 

• Both the small businesses as well as the QRMP taxpayers can benefit from the IMS feature on the GSTN portal. 
• MS generates monthly invoices, but GSTR-2B is generated quarterly for QRMP taxpayers.
• QRMP taxpayers leveraging IMS dashboard can generate GSTR-2B form quarterly. 
• For example: A small manufacturing business under QRMP scheme generates invoices using IMS throughout the month. It auto-captures B2B invoices, calculates tax liabilities, and generates summary reports for easy monthly tax payments and quarterly GSTR-1 filing. 

How do I use IMS on the GST Portal? 

1. Log In to GSTN Portal

• Login to GSTN Portal with your credentials. 
• Navigate to Services > Returns > click on “Invoice Management System” (IMS). 

2. View Summary on IMS Dashboard 

The dashboard allows the buyers to witness all the inward supply invoices reported by the registered suppliers for GSTR-1, GSTR-1A or IFF on a single screen. 

The invoices are classified into categories like B2B invoices, CGST Section 9(5) invoices by the e-commerce operator, credit notes, and debit notes. These include both original and amended invoices.

1. ions on Invoices 

Here, you need to choose either A (Accept), R (Reject), or P (Keep Pending) based on the actions you wish to take. In case you leave the buttons unselected, it will automatically consider it as no actions taken. Once the action is taken, click on ‘Save’ to secure the changes done. 

If you are looking for a specific invoice, leverage the filters and download the reports in excel format. 

1. Want to Keep Invoices waiting? Then select P

If you want to ignore the invoice for a few days or months, you can select ‘P’ i.e. pending. But, make sure you accept or reject the invoice before the ITC deadline. 

2. Generate GSTR-2B

The portal allows access to GSTR-2B after 14^th of every month for the preceding month. For buyers, who have not taken action in IMS after 14^th of the month, then the details of GSTR-2B remain final for claiming ITC in GSTR-3B. 

3. File GSTR-3B 

Once all the actions are taken into the invoice management system, all the GSTR-2B details will auto-populate based on the IMS actions. These details will flow into the respective sections for GSTR-3B filing under table 4. 

Check out Detailed Guide on How to File GSTR-3B Return Filing.

Review/ edit the details for errors and proceed to file GSTR-3B. 

Conclusion

Hopefully, you have understood What is invoice Management System? It’s features, dashboard, benefits, and process. Shoot your queries below, and get them clarified right away!

Good News for the Users of Munim! Soon, we are launching an Invoice Management System under our GST return filing software. Stay tuned until this new feature is live on Munim GST Return Filing.

FAQs

1. How to enable an invoice management system in GSTN? 

• Login to GSTN Portal
• Go to IMS
• You will find this under IMS dashboard > Services > Returns> IMS
• From here, you can start managing your invoices. 

2. What is the Invoice Management System Under Goods and Service Tax? 

IMS refers to a feature in the GSTN portal and online return filing software that allows invoices to be managed easily. This makes generating, accepting, and rejecting GST-compliant invoices on the go. 

3. Why do we need IMS in GST? 

To promote operational efficiency, offer regulatory compliance, and mitigate the non-compliance risks. 

4. Is IMS mandatory in GST? 

Currently, IMS is optional, but it is beneficial to leverage the feature to attain precision when filing returns.