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Australia’s Continued Push Towards eInvoicing – What Does It Mean For You?

May 28, 2021

Australia’s Continued Push Towards eInvoicing – What Does It Mean For You?

The winds of digital change continue to blow strong behind the sails of Peppol e-invoicing across Australia, over the past few weeks we’ve seen some important announcements made by Federal and State governments:

  • In the recent Federal budget, the government committed a further $15.3 million to support the Treasury and the Australian Peppol E-Invoicing Authority (run by the ATO) to accelerate e-invoicing
  • This week (25th May), the New South Wales state government announced that e-invoicing will become mandatory for all NSW government agencies  from the 1st January 2022

These announcements follow similar pushes to e-invoicing from the Federal government over the past 12 months with e-invoicing becoming mandatory for all government agencies by 1st July 2022 (some are being pushed for 1st July 2021). The carrot that is being dangled by both the Federal and NSW governments is that if suppliers send their invoices as an e-invoice to the those agencies they are guaranteeing accelerated payments terms of 5 days – a huge cashflow win for your business.

With all this activity around e-invoicing, there is a lot of information, acronyms and information around. We wanted to break this down for you in more detail. Let’s start with the basics:

What is e-invoicing?

Over 1.2 billion Business to Business (B2B) and Business to Government (B2G) invoices are exchanged annually in Australia, the majority of those invoices are sent either as paper invoices or as PDF invoices attached to an email. These are costly ways to process invoices with manual data entry or validation usually required. The Australia Tax Office (ATO) estimate that:

  • Average invoice processing cost for a paper invoice is $30.87
  • Average invoice processing cost for a PDF invoice is $27.67

The majority of the costs is based on the usual manual work required to enter the invoice data into your systems and process it for approval and payment.

Electronic invoicing (or e-invoicing) is the automated digital exchange of invoice data directly between a buyer’s and supplier’s systems, removing the need for any manual data entry or validation. The ATO estimate that it can reduce the cost of processing an invoice down to $9.18. The NSW Government estimated a shared saving between suppliers and the NSW government of $71m based on the 4.2 million invoices across NSW Government in 2019.

e-invoices are 66% cheaper to process than PDF invoices.

Australian Taxation Office

Are PDF invoices e-invoices?

No, PDF invoices may be sent to someone electronically via e-mail, its not a system to system exchange of data that removes the need for any manual data entry or processing of an invoice.

How can you send an e-invoice?

E-invoices are not a new concept, they have been around for a while in a number of different formats, standards and names. Typically, they have been focussed on connecting a buyer with a supplier and have historically been quite expensive and time consuming to setup – this meant that it was largely only looked at by large businesses who had a big volume of orders or invoices. The lack of a consistent and single format and framework for e-invoicing has kept it from being mainstream.

The turning point for e-invoicing has been the adoption of a globally recognised standard for sending e-invoices and e-orders known Peppol (Pan-European Public Procurement OnLine). This standard enables anyone who is part of the network to easily and safely, send e-invoices and e-orders to each other. The standard also enables a simple and accessible way for businesses to be onboarded onto the network. There are already 200,000+ businesses across 34+ countries on the Peppol network. AustraliaNew Zealand and Singapore have all adopted this standard as the basis for their e-invoice mandates.

What is Peppol?

Peppol is a globally recognised standard and process for exchanging e-invoices and e-orders and is currently used in 39 countries across the world. Peppol e-invoicing works by suppliers and buyers sending their invoices or orders through their systems to a certified Peppol Access Point. The Access Point verifies the data on the invoice or order and then sends it on to the receivers certified Access Point who transmits the data into their system. This means that data is shared almost instantly into the receivers system without any manual data entry or manipulation required. In essence, Peppol provides a secure and easy gateway for businesses to send invoices or orders in a way that talks directly to the systems that need it.

What is a Peppol Access Point?

A Peppol access point is what your system connects to so it can send and receive information to other businesses access points in the network. Put simply, an access point is like your mobile phone number, it can be provided by any carrier but it is able to send and receive calls and messages to any other carrier all on the same network.

This means that once you are connected to an access point you will be able to send and receive e-invoices or e-orders to any other business that is connected to the network without any extra work.

Why would I want to send e-invoices?

The Australian government believes that e-invoicing can save the economy $28bn over 10 years. Sounds great? But what are the actual benefits. E-invoicing and e-ordering can help support businesses with a range of challenges that they face today:

Connect once, connect to all suppliers

Through a Peppol access point you connect once then connect all of your buyers and suppliers through the Peppol network. If your trading partner is not on the Peppol network yet, we can help onboard them which doesn’t require any investment from you or your trading partners.

Reduce invoice processing time and save costs

With e-invoicing the invoice data goes from supplier’s accounting system to buyer’s accounting system directly. No more manual entry, no more data corrections, no more chasing missing information and no more enquiries about invoices getting lost or forgotten. This frees up your team to focus on more value adding activities to grow your business. The ATO estimate that moving to e-invoicing can save a business up to 66% in invoice processing costs, reducing the cost per invoice down from $27.67 for a PDF invoice to $9.18 for an e-invoice.

Eliminate Invoice Fraud

The sender is validated to ensure they are who they say they are and that bank account details match your records before transmitting the data through the Peppol network. The network itself is highly secure as only accredited Peppol Access Points providers like Valtatech can exchange the documents over the Peppol network. Access providers like us are required to meet strict security protocols equivalent to ISO27001 covering intrusion prevention, multi-factor authentication for privileged user access and data encryption to ensure the security of the network.

Improved Cash Flow

Businesses can be crippled when buyers pay them late, invoices can get missed when its reliant on human intervention. Equally, buyers can miss out on early payment discounts if the invoice is lost or not processed quickly. E-invoicing speeds the whole invoice processing piece up for both sides removing the worry of whether an invoice has been received and processed or not. In Australia, Commonwealth and NSW government agencies guarantee 5-day payment terms for e-invoices which makes e-invoicing even more attractive.

Environmentally Friendly

e-invoicing is far more friendly to the environment compared to paper and PDF invoices helping to support your sustainability goals as an organisation.

How can I get started with e-invoicing?

We understand that there is a lot of information around about this and that it can be confusing, our job is to simplify the whole process. We’ve got a range of options that are cost effective and quick to implement to get started If you think you are ready to look get started with e-invoicing let’s chat!

About Valta Technology Group

Valta Technology Group is a Source to Pay advisory and Managed Services provider specialising in implementing and building value cases for its customer to achieve world class intelligent Process automation, source-to-pay and procure-to-pay processes. With offices in Melbourne Australia, Manila Philippines and partners in New Zealand, Valtatech offers leading managed technology solutions, best practice advisory services assisting organisation across Asia Pacific to automate their finance and procurement functions.

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