As the business world transitions to a cloud-based operational environment, trends in the online space are now affecting day-to-day business activities. In fact, the shift to online business has not only been encouraged by private companies, but also by government agencies.
In Australia, the federal government has announced that as part of its Federal budget 2021, $15.3 million would be used to accelerate the adoption of e-invoicing by both public services and Australian businesses. As such, e-invoicing is no longer a voluntary financial step, but one that all businesses are encouraged to take in the modern digital age.
As e-invoicing grows, what does it mean for your business and how can you prepare for it as part of your digitization? Keep reading to find out!
E-invoicing as an efficient solution for business financial systems
E-invoicing – also known as electronic invoicing – is the process of sending invoices digitally directly through business financial systems. It’s not as simple as emailing a PDF of an invoice between organizations.
Rather, it involves using high-tech data transfer software to digitally “read” invoices and export their information to existing account management systems. Modern e-invoicing software also enables systems to receive data immediately without having to manually search documents for approval.
According to the Australian tax office, e-invoicing means businesses no longer:
- Generate paper or online PDF invoices to print, post or email
- Enter their invoice-related data manually or scan them 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 that seamlessly integrates e-invoicing software with existing Australian companies identified with an ABN (Australian Business Number).
The Peppol system is an international standard applied in 38 countries around the world and standardizes data collected securely through the access points of the Peppol network. These access points enable suppliers and buyers to communicate seamlessly with each other and exchange their invoices reliably (both at home and abroad).
The Australian Peppol Authority of the ATO is working closely with digital service providers and members of the business community in Australia to ensure that the Peppol framework is adhered to in the country. The Australian Peppol Authority:
- Defines the Australian requirements for using the Peppol standards (e.g. requirements around GST tax invoices)
- Manages access points in the Peppol network for Australia
- Education, promotes and supports the Peppol standard for e-invoicing in Australian government sectors and the wider Australian business community.
The Australian government is also working 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 to make it attractive to businesses. This includes a 5 day payment guarantee for e-invoicing.
While the Australian government does not mandate e-invoicing, it is certainly pushing for the new system as an emerging replacement for all traditional forms of invoicing.
3 benefits of e-invoicing
Contributing to the rising popularity of e-invoicing are its many advantages (compared to traditional invoicing methods). The three main benefits of e-invoicing are:
Save time and money
By using automatic e-invoicing software, companies can save time and money when sending and processing their invoices. This is especially the case for larger companies that send and receive hundreds of invoices per day. The Australian tax authorities estimates that e-invoicing is on average $2 cheaper per document processed than paper invoices.
Today’s specialized e-invoicing software protects your business information with many strong security measures, such as two-factor authentication. In addition, e-invoicing processes under the Peppol network also register the ABN (Australian Business Number) of the buyers and sellers, which means that the risk of false 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 standardized information requirements and can also easily facilitate international invoicing. E-invoicing also eliminates the problem of losing paper invoices (and their data) and PDF invoices in your email inbox.
Integrate e-invoicing into your business
The shift to e-invoicing is just a matter of ‘when’ rather than ‘if’. Especially with the Australian government pushing for Peppol-supported e-invoicing, business will transform itself with the increasing use of e-invoicing. Therefore, it is best to be prepared and start integrating e-invoicing into your own business.
E-invoicing is already an available feature on many accounting software such as XERO and MYOB. You can work with a accountant to help your business make the transition to e-invoicing and to teach you the basics of accounting and e-invoicing software for you. An accountant can also help you decide which e-invoicing program or software is best for your business and how best to integrate it into your business so that it produces the most efficient results.
E-invoicing will soon become a staple in the business world and will also help solve existing problems of paper billing inefficiency. Be sure to develop your understanding of the online business trend so that you can take full advantage of e-invoicing for your business in the future.
Marshall Thurlow is director and founder of Orion Marketing Pty Ltd† He is a digital marketer with expertise in SEO† website design, content marketing and project management. With over 15 years of experience in government, non-profit and private sector, he is well equipped to lead teams to success. He is a strong believer in environmental sustainability, critical thinking and forward thinking.