In today’s fast-paced and increasingly digital world, eInvoicing has become a popular method for automating invoicing processes. Here, Mark Stockwell, Director eInvoicing, Australian Taxation Office (ATO) shares everything procurement professionals need to know about eInvoicing.
The Australian Government has been working to promote eInvoicing as a more efficient and secure way for SMEs to manage their invoices. The recent Australian Government budget included funding for a further four years, signalling the Government’s intent to drive eInvoicing more progressively in line with OECD’s initiative on Tax Administration 3.0 and international trade.
What is eInvoicing?
eInvoicing is different from traditional methods, such as paper, PDF and email. It’s the exchange of standardised and structured invoice data between buyers’ and suppliers’ software via a secure encrypted network.
It doesn’t matter what invoicing software you are using, any business who is set up to send or receive eInvoices can exchange eInvoices with any other eInvoicing-enabled business.
What are the benefits?
One of the key benefits of eInvoicing comes through increased productivity and reduced admin costs. With eInvoicing, suppliers sending eInvoices can:
● Be confident of timely and accurate delivery of their invoices
● Save time spent on chasing late payments due to missing emailed invoices
● Enjoy faster payments
Businesses receiving invoices will save time and money currently spent on:
● Scanning
● Data entry
● Following up on missing information
● Fixing errors when processing invoices
These are often the cause of delayed payments.
No longer needing extra steps to process invoices will help businesses to further streamline their accounts payable processes. Better quality data will improve accuracy, reduce errors and provide for better management of company finances.
eInvoicing can also deliver other potential benefits, including better supplier-customer relationships and decision making supported through data analytics, while helping with reporting obligations such as Payment Times Reporting.
Mitigating cyber threats
In addition to the productivity benefits, eInvoicing can help to improve the security of business transactions. As cyber threats continue to increase against businesses, it is more important than ever to make sure your business is as safe and secure as possible.
eInvoicing provides increased security for businesses since invoices are sent and received via a secure network of accredited service providers, bypassing the need to use email, thus helping to eliminate emails and PDFs as possible attack vectors.
This can help mitigate the risk of your business becoming the victim of a false billing or payment redirection scam, and reduces the number of opportunities for attackers to send viruses disguised as PDF invoices. It also protects your critical suppliers from being impacted and disrupting your supply chain.
All of this can help reduce the risk of theft and loss of money, data or sensitive information, while keeping you, your trading partners and the community safe.
Assisting with ESG targets
eInvoicing can also help businesses meet their ESG targets by:
● Reducing the environmental impact of invoicing processes through reduced paper usage
● Minimising energy consumption for mailing and processing invoices
● Decreasing greenhouse gas emissions
● Demonstrating good governance through the enhanced accuracy and security eInvoicing provides
How it works
The Australian Government has adopted the Peppol framework as the standard for eInvoicing.
Peppol is a set of procurement standards, legal agreements and an eInvoicing delivery network that is used by more than 40 nations worldwide – including New Zealand, Singapore and Japan in our region – to facilitate the exchange of eInvoices and other procurement documents.
In Australia, eInvoicing is not used for tax compliance. While the ATO is appointed as the Australian Peppol Authority, its role is to govern the framework. The ATO manages the changes to specifications, accredits service providers and works with many stakeholders across the economy to drive adoption.
The ATO can’t see eInvoices transmitted through the network and does not collect any invoice data. It has worked closely with many large companies, including Bunnings and Woolworths, to determine the value of Peppol for digitally mature businesses and implementation impacts for their customers and suppliers.
These companies are now eInvoicing champions, supporting their trading partners’ transition to this new invoicing channel and reaping mutual benefits.
The ATO is also working closely with eInvoicing solution providers to ensure that their products are eInvoicing ready, including a range of free and low-cost solutions for small businesses with simple invoicing needs.
Many small businesses are already enabled via their existing software, making the supply chain more efficient and secure. The more trading partners that enable eInvoicing, the greater the benefits that will be seen by everyone as the network of businesses using eInvoicing grows.
What next?
Getting started with eInvoicing has never been easier, with more and more eInvoicing-ready products now available on the market.
The ATO website provides valuable information on eInvoicing and offers resources for businesses to explore their options and get started with eInvoicing.
By embracing eInvoicing, businesses can improve productivity, reduce administrative costs, enhance security and support their ESG targets, while also contributing to a more sustainable future.
To find out more about eInvoicing and to start exploring your options, visit ATO.gov.au/eInvoicing
Catch Karen Lay-Brew, Strategic Advisor to the ATO on eInvoicing at the 12th Annual PASA Premier Confex on 17th October, where she will discuss the imperative of eInvoicing to help you get ahead of the curve.
