As the business world transitions to a cloud-based operational environment, trends in the online space are now influencing everyday business activities. In fact, the shift towards online business operations has been encouraged not only by private businesses but also government bodies alike.
In Australia, the federal government announced that as part of its 2021 Federal budget, $15.3 million would be used to accelerate the adoption of e-invoicing by public services as well as Australian businesses. As such, e-invoicing is no longer a voluntary financial move – rather one all businesses are advised to make during the modern digital age.
As e-invoicing increases, what does it mean for your business and how can you prepare for it as part of your digitalisation? Keep reading to find out!
E-invoicing as an efficient solution to business financial systems
E-invoicing – also known as electronic invoicing – is the process of directly sending invoices digitally through business financial systems. It is not as simple as emailing a PDF of an invoice between organisations.
Rather, it involves the use of high-tech data transmission software to digitally ‘read’ invoices and export their information into existing account management systems. Modern e-invoicing software programs also allow systems to instantly receive data without having to manually sift through documents for approval.
According to the Australian Taxation Office, e-invoicing means that businesses will no longer need to:
- Generate paper-based or online PDF invoices for printing, posting or emailing purposes
- Manually enter or scan their invoice related data into their existing accounting systems or software.
E-invoicing in the domestic business environment
In Australia, e-invoicing follows the Pan-European Public Procurement Online (Peppol) standard which integrates e-invoicing software seamlessly with existing Australian businesses identified with an ABN (Australian Business Number).
The Peppol system is an international standard applied over 38 countries around the world, and standardises data that is securely collected through the Peppol network’s access points. These access points allow suppliers and buyers to interact seamlessly and exchange their invoices reliably (in both a domestic and international setting).
The ATO’s Australian Peppol Authority works closely with digital service providers and members of the business community in Australia to ensure that the Peppol framework is being met in the country. The Australian Peppol Authority:
- Defines the Australian requirements for use of the Peppol standards (e.g. requirements surrounding GST tax invoices)
- Administers access points in the Peppol network for Australia
- Educaties, encourages and provides support for Peppol e-invoicing standard across Australian government sectors as well as the broader Australian business community.
The Australian government is also working in collaboration with payment providers such as EFTPOS, VISA and MASTERCARD to implement policies to help increase the efficiency of e-invoicing systems and streamline the process so that it is attractive to businesses. This includes a 5-day payment guarantee for e-invoicing.
Although the Australian government is not making e-invoicing mandatory, it is certainly pushing the new system as an upcoming replacement to all traditional forms of invoicing.
3 benefits of e-invoicing
Contributing to the rising popularity of e-invoicing is its many benefits (compared with traditional invoicing methods). The main three benefits of e-invoicing include:
Saving time and money
Using automatic e-invoicing software will allow businesses to save time and money when it comes to sending and processing their invoices. This is especially the case for larger businesses which are sending and receiving hundreds of invoices a day. The Australian Taxation Office estimates that e-invoicing is on average $2 cheaper per processed document than paper invoices.
Today’s specialised e-invoicing software protects your business information with many strong security measures, such as two factor authentication. Additionally, e-invoicing processes under the Peppol network also record the buyers’ and sellers’ ABN (Australian Business Number), meaning the risk of fake and compromised invoices is lower (than paper invoices or regular digital invoices).
There is no doubt that e-invoicing is much more efficient than paper-based invoicing. This is because it does not require manual data entry, has standardised information requirements and can also easily facilitate international invoicing. E-invoicing also eliminates problems of losing paper-based invoices (and the data within them) and PDF invoices in your email inbox.
Incorporating e-invoicing into your business
The shift towards e-invoicing is only a matter of ‘when’ rather than ‘if’. Especially with the Australian government pushing towards Peppol-supported e-invoicing, the business industry is set to transform itself with the growing use of e-invoicing. As a result, it is best to be prepared and to start incorporating e-invoicing into your own business.
E-invoicing is already an available feature on many accounting softwares such as XERO and MYOB. You can work with an accountant to help your business make the transition towards e-invoicing and to teach you the basics of accounting and e-invoicing software for you. An accountant will also be able to help you decide which e-invoicing program or software is best for your business, and how best you can incorporate it into your business so that it yields the most efficient results.
E-invoicing will soon become a staple in the business world and will also help resolve existing problems of inefficiency in paper form invoicing. Be sure to develop your understanding of the online business trend so that you can properly take advantage of e-invoicing for your business in the future.