The Australian government has made some important announcements over the past few months with regard to e-invoicing.
In the 2021-22 Budget, the government committed $15.3 million to increase the adoption of e-invoicing, which guarantees accelerated payment terms and low cost invoicing.
In this article, we will look deeper into what e-invoicing is and how any type of business can benefit from it.
What is e-invoicing?
Over 1.2 billion Business to Business (B2B) and Business to Government (B2G) invoices are exchanged every year– most of which are sent as paper invoices or PDF invoices attached to emails.
According to the ATO, the average invoice processing cost for a paper invoice is $30.87, while the processing cost for a PDF invoice is $27.67 on average. These methods are costly because they require manual data entry and validation.
Through e-invoicing, processes can be automated, and invoice data can be quickly exchanged between the systems of the buyers and suppliers. E-invoicing can reduce the cost of processing to $9.18– 66% cheaper than the cost of processing a PDF invoice.
Australia has adopted the Peppol framework (Pan-European Public Procurement OnLine), which is a globally recognised standard and process for exchanging e-invoices and e-orders that is currently being used in 39 countries across the world. Suppliers and buyers must send their invoices through their systems to a certified Peppol Access Point, which will verify the data and then send it on to the receivers’ certified Access Point and into their system.
In other words, data will be shared almost instantly, eliminating the need for manual data entry or manipulation.
How businesses can benefit from e-invoicing
The Australian government believes that e-invoicing can help the economy save $28 billion over 10 years. Sounds awesome, but what does this mean for businesses? The following are some of the key benefits of e-invoices.
Automatically connects you to other buyers and suppliers
Using e-invoicing allows you to become automatically connected with every other buyer and supplier in the network. This allows you to automate invoice processing.
Highly secure and prevents risk of invoice fraud
PDF invoices can be easily intercepted and manipulated. With e-invoicing, the sender and bank account details are validated before transmitting the data.
The network is highly secure and only accredited Peppol Access Points providers can exchange documents. They follow strict security protocols to prevent intrusion and implement multi-factor authentication and data encryption.
Improves cash flow management
Late payments can negatively affect businesses. Meanwhile, buyers can miss out on early payment discounts due to lost or slow processing of invoices.
Through e-invoicing, the whole process will be accelerated, bringing significant benefits for both parties. In Australia, the federal government and other government agencies guarantee 5 day payment terms for e-invoices.
Are you ready to transition to e-invoicing? Get in touch with us today for professional guidance.