The potential for e-invoicing to save businesses both time and money can’t be understated, but are business owners even clear on what it is?
There are over 1.2 billion invoices sent in Australia alone each year, with 89 percent of these sent by small to medium sized businesses.
The sheer volume of invoices sent each day leaves them open to being targeted by email scams and cyber fraud. Add to this human error, plus the time wasted chasing payments and responding to queries, and it’s easy to see why invoicing has become a costly and time-consuming process.
As our digital world expands, invoicing isn’t as simple as sending through a PDF and getting paid anymore. Thankfully, e-invoicing is a game changer.
In this article:
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What is e-invoicing?
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How does e-invoicing work?
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Benefits of e-invoicing
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Mandatory e-invoicing – who does this apply to?
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Identifying accredited e-invoicing service providers
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Is MYOB an accredited e-invoicing service provider?
What is e-invoicing?
E-invoicing (also known as electronic invoicing) is the digital exchange of invoices between a supplier and a buyer’s systems using a dedicated and secure network.
That means e-invoicing involves a little more than sending an invoice in a digital format – such as a PDF sent via email.
Every system that uses e-invoicing will use the same proven standard, which allows the different systems to speak to each other directly and securely without the need for any manual inputting of information.
How does e-invoicing work?
You can think of e-invoicing like making a telephone call – with your invoicing system speaking directly to another’s.
In Australia, we have adopted the Peppol system, an international electronic procurement framework that enables safe and streamlined cross-border exchange of invoices and associated data. It is operated by OpenPeppol, an international non-profit.
Peppol works through what is called a four-corner model, which is described as follows:
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Corner 1 – Preparation. Supplier enters information into their software or system.
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Corner 2 – Supplier’s access point sends the invoice through the Peppol system.
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Corner 3 – Buyer’s access point receives the invoice.
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Corner 4 – Processing. Buyer actions payment of the invoice.
The Australian Taxation Office (ATO) is the Australian Peppol Authority (APA) and is responsible for implementing Peppol e-invoicing in Australia.
For the end user – in many cases these are small and medium businesses– access to the Peppol system can come through many different accredited service providers, including MYOB, who integrate the system in their own software. This makes it easy to take advantage of the benefits that e-invoicing can bring.
Benefits of e-invoicing
There are a huge number of benefits of e-invoicing. Here we discuss the top six.
1. Cost savings
Research provided in Deloitte Access Economics 2016, “The Economic Impact of E-invoicing”, estimated each time a paper invoice is replaced by an e-invoice, there is a $20 cost saving to the businesses involved. This includes savings from errors, chasing invoice payments, fraud and scamming.
2. Uplift of general business efficiency
Up to 90 percent of invoices are still created manually (fully or partly) in Australia. And the problem with manual invoicing is that it’s time consuming and resource heavy.
Suppliers have to keep the data, prepare the invoices and email them. Buyers then have to manually sort, scan and rekey information into their own software or systems.
But with e-invoicing, the systems talk to each other. There’s no need to print, re-key, email or post invoices.
3. Faster payments
The ease of e-invoicing means faster invoicing and faster payments. There’s less risk of errors meaning less time spent redoing or resending invoices that were incorrect or sent to the wrong address or recipient.
This system has helped the Commonwealth Government to implement a five-day payment policy.
4. Improved security
E-invoices are exchanged with a system that is far more secure than email.
This reduces the risk of email scams, frauds and ransomware attacks. And, there is a built-in database of addresses that reduces the risk of deliveries going awry.
5. Efficiencies through compatibility
Because e-invoicing uses an open standard to exchange information, businesses are able to use their own software or systems with that of other businesses. This allows choice, while still building in important data exchange efficiencies.
6. More data-driven decisions and actions
E-invoicing delivers faster, more accurate and more complete data to your business. And that means that you can make faster, more accurate and more complete decisions in terms of your cashflow, invoicing, procurement and operation management.
Mandatory e-invoicing – who does this apply to?
The ATO has mandated that all Australian Federal Government agencies must have implemented and be using e-invoicing by 1 July 2022.
At this stage, the APA is also strongly encouraging all levels of business to adopt e-invoicing as well, though it’s not currently mandatory.
It seems e-invoices are becoming the future of invoicing, and Australian software providers will likely be delivering more and more products that integrate e-invoicing throughout 2022 and beyond.
How to identify accredited e-invoicing service providers
It’s a fairly straight-forward process to identify accredited e-invoicing service providers by checking the relevant ATO webpage. The page is acknowledged by the ATO not to be fully comprehensive, but it’s a great place to start.
If your software provider isn’t listed on the site, you can also simply give them a call to find out your e-invoicing options.
You can also easily identify other Australian entities that are registered on the Peppol network.
The ATO has established a webpage that walks you through the steps, including directing you to a directory of Australian entities that are registered with Peppol.
You can also find out more information about Peppol-registered entities, including the access point they’re using by running a Peppol participant search.
Is MYOB an accredited e-invoicing service provider?
Yes, MYOB is an accredited e-invoicing service provider. The e-invoicing feature lets you exchange invoices directly using your accounting software.
This means no paper, no emails, no manual handling, less errors and more time and costs savings to you.
MYOB’s new e-invoicing feature will be rolled out to Australian businesses in mid-April.
You can start e-invoicing with three easy steps:
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Register with an e-invoice provider
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Make sure your ABN is up to date in your MYOB user profile
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Add your clients’ ABN to their contact details
Once that’s complete, you’re ready to receive all the benefits that this new tech can bring to your business by generating and sending e-invoices as your standard invoicing method.
Source: MYOB March 2022
Reproduced with the permission of MYOB. This article by Renae Smith was originally published at https://www.myob.com/au/blog/e-invoicing/
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