As part of the 2021 Federal budget, the government announced $15.3 million in funding to accelerate the adoption of e-invoicing by public services and Australian businesses. Through the adoption of e-invoicing systems and standards such as PEPPOL, the government hopes to reduce business costs and increase the productivity of the workforce and economy.
What is e-invoicing
E-invoicing (a.k.a. electronic invoicing) allows organisations to digitally send their invoices through their financial systems. While you might think this is like receiving a PDF copy of your invoice or a digital receipt from JB HiFi or Bunnings, it isn’t quite the same thing. E-invoicing is a direct data transmission from one system to another – allowing systems to instantly receive the data without having to manually scan through documents for approval. This cuts down on the time to process invoices and make payments.
The Australian federal and state governments are adopting the PEPPOL or Pan-European Public Procurement Online standard for e-invoicing. PEPPOL e-invoicing integrates seamlessly with software used to create invoices and identifies recipients based on their ABN.
This government is also working with payment providers such as EFTPOS, VISA and MASTERCARD to implement a 5-day payment guarantee for e-invoicing to help increase the efficiency of the system and encourage adoption by businesses. Whilst it isn’t a requirement for Australian businesses, the government is encouraging businesses to do so due to the associated time, cost and security benefits.
Why should you adopt e-invoicing for your business?
Save time and money
By adopting e-invoicing, you can save both time and money when it comes to processing invoices. You would imagine that since PDF invoices are sent digitally, the time and money it takes to process them would be smaller than paper. But by the ATO’s estimates, it isn’t much cheaper, averaging around $28 to process a PDF invoice vs $30 for a paper one.
So how much do you save by adopting e-invoicing? The ATO’s calculations put the costs of processing e-invoices at less than $10, making it 3x more cost effective. Plus there are the additional time savings as well! As a business owner, one of the most frustrating things can be managing your cash flow due to late payments of invoices by clients. On average, 53% of invoices are paid late and up to 23 days overdue. With an e-invoicing system your clients will receive your invoices instantly and you’ll be able to track whether they’ve seen them and paid them.
Increased security
PEPPOL e-invoicing also offers increased security as the ABNs of senders and receivers must be registered on the network. When you receive an invoice you’ll know who exactly is sending it and who you are paying.
Increased efficiency
With PEPPOL e-invoicing, there are several key efficiency benefits:
- Invoices won’t get lost in the post
- No manual scanning of documents
- No manual data entry into financial systems
- Standardised information requirements when sending invoices – i.e. no missing data
- No missing PDF invoices in your email inbox
- Facilitates easy international invoicing between PEPPOL compliant countries and systems such as Australia and New Zealand.
E-invoicing with Thriday
Thriday is a modern invoicing platform equipped with advanced features designed for small business owners. Automated reminders, discounts, and late payment fees ensure timely payments. Automated payment reconciliation streamlines financial tracking. Personalised templates enhance branding, giving invoices a professional touch. Thriday optimises invoicing processes, offering a comprehensive and efficient solution for businesses to manage transactions seamlessly.
E-invoicing with Xero
At POP Business, the accounting software of choice we recommend to our clients is Xero. What’s great about Xero is that it already supports PEPPOL e-invoicing!
If you’re already on Xero and need a hand setting it up, don’t hesitate to reach out to us, we’ll gladly help.
If you’re interested in adopting PEPPOL e-invoicing for your business, look no further! We can provide Xero subscriptions for 20% off when bundled with another POP service. You’ll not only benefit from electronic invoicing but the expertise of highly qualified chartered accountants who can help you grow your business!
