There has been a lot of hype in the media regarding eInvoicing lately, so what is it and how can you use it in your business to save time and money?
What is eInvoicing
eInvoicing or Electronic Invoicing is a way to automatically exchange invoice details through software using a secure network.
The system only works between businesses and not with consumers.
Why it was introduced
It is reported that more than 1.2 billion invoices that are exchanged in Australia every year, with around 90% of these invoices being processed manually to some degree.
The ATO has calculated that on average, paper and emailed PDF invoices cost between $27 and $30 to process. eInvoicing enables process automation and reduces costs to less than $10 an invoice. With more than 1.2 billion invoices, the cost savings to businesses, governments, and industry as a whole can be huge!
The true cost saving, however, will only be unlocked with the widespread adoption of eInvoicing.
The role of the ATO Role
eInvoicing in Australia is being delivered via the Peppol network. Peppol is an international eProcurement framework developed and maintained by OpenPeppol.
In 2019, the Australian Government adopted the Peppol framework and established the ATO as the Australian Peppol Authority to develop and administer the framework in Australia.
The ATO does not receive a copy, nor is able to view the contents of any eInvoices being transmitted between businesses.
The benefits of eInvoicing include:
- more accurate invoices, resulting in fewer mistakes to chase up and correct
- reduced time and costs dealing with manual processes including fixing invoice errors
- no more lost invoices – save time by getting the right information to the right contact on time
- confidence in the security of the Peppol network – less chance of invoice fraud or scams
- faster payments
- better business decisions, based on correct, real-time financial information.
Is eInvoicing secure?
According to the ACCC’s Scam Watch, Australian businesses lost nearly $128 million to business email compromise scams in 2020.
eInvoicing can help keep your business safe by:
- using a channel that offers stronger security controls than email, such as encryption
- reducing the risks of fake, unsolicited or compromised invoices and other false billing scams
- exchanging eInvoices through the network of approved service providers, called access points, who implement security controls to prevent, detect and mitigate the risk of invoice fraud
- using your trading partners’ ABNs, which are validated, to ensure invoices are sent to legitimate businesses
- preventing lost or delayed invoices.
How to get paid fast with eInvoicing
If you are transacting with Commonwealth, State, Territory or Local government agencies, are in various states of adopting the technology. It has been mandated by both the Commonwealth and NSW government agencies. These agencies are also paying eligible eInvoices within 5 days or are paying interest on late payments.
How eInvoicing works
The system can be used to both send and receive invoices. There are currently 22 registered service providers in Australia. The full list of eligible products can be found here.
eInvoicing to receive invoices
By receiving eInvoices, it replaces much of the data entry, however, it does not replace your approval process or payment processes. You still remain in full control of when and how your invoices are paid.
eInvoicing to send invoices
The process relies on verified ABN details to identify businesses that are registered.
You will need to ensure that your customer’s ABN is recorded against the contact. You can use the Peppol directory to see if your customer is registered.
If you are using an add-on to your accounting software for your invoicing like ServiceM8, you will need to check with them on their roll-out plan for eInvoicing.
eInvoicing with Xero
Xero is a registered service provider to send and receive eInvoices.
Instructions for Xero users to:
eInvoicing with QuickBooks
QuickBooks has partnered with software provider Link4 to enable eInvoicing capabilities.
To find out more about Link4 and to activate the app, see Link4.
If your suppliers aren’t yet using eInvoicing, you can utilise software like Hubdoc or Dext to help your process invoices effectively and efficiently to reduce costs.
For more information on eInvoicing or how to implement it into your business, book a discovery call today.