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  • Benefits of e-invoicing

    Australian small businesses are collectively owed $26 billion in unpaid invoices at any given time. Of all late payments, over 20% result from errors on invoices and over 20% from the invoice being sent to the wrong recipient following manual data entry.

    The Australian Government is committed to delivering e-invoicing. With over 1.2 billion invoices exchanged in Australia annually, savings to our economy are estimated to be $28 billion over 10 years.

    E-invoicing is not mandatory – businesses will be free to take it up if they choose.

    Benefits for businesses

    Below are some of the benefits that business can expect from adopting e-invoicing:

    Improved cash flow and quicker payments

    While e-invoicing brings efficiencies through simplifying and automating the exchange and processing of invoices, the biggest benefits to business will be reduced payment times and improved business cash flow, especially in government purchasing transactions.

    Some states in Australia, such as New South Wales, will be paying businesses in as little as five business days by the end of 2019, as long as their information is correct when using e-invoicing.

    E-invoicing standards will ensure that information quickly reaches its destination to be automatically processed in the business management software. E-invoicing will help connect invoice information and set up business operations for better and quicker payment terms.

    Easier processing and cost savings

    The faster processing and payment of invoices with e-invoicing will result in cost savings.

    It is estimated that it costs businesses $30.87 to process a paper invoice, $27.67 a PDF invoice, and only $9.18 to process an e-invoice. This means it's approximately 70% cheaper to process an e-invoice than traditional paper or PDF invoices, saving businesses time spent manually entering invoices.

    This equates to estimated shared savings (between the sender and receiver) of $21.69 each time e-invoicing replaces a paper invoice and $18.49 when it replaces a PDF invoice.

    The introduction of the common e-invoicing approach will make it easier for businesses on both sides of the Tasman to interact and transact with each other, and with government.

    Fewer errors

    E-invoicing standards will ensure that information exchanged is correct and of high quality. Removing manual handling and the re-keying of information means fewer incorrect or lost invoices.

    Direct and secure

    E-invoices are received directly into the business's financial systems, minimising the risk of fake or compromised invoices.

    The integrity of e-invoicing will streamline interactions between businesses and with government. It will reduce opportunities of billing scams and money loss, as the transaction is part of a secure and reliable framework.

    Available for every business size

    E-Invoicing standards will ensure that all businesses in all sectors can access and benefit from e-invoicing, regardless of their size and the systems they currently use.

    Benefits for digital service providers

    The e-invoicing initiative creates new market opportunities for digital service providers. It enables cost-effective and innovative solutions for different sized businesses.

    The common approach across Australia and New Zealand will also bring consistency in the way e-invoicing standards are incorporated into existing or new software products.

    Benefits for tax professionals

    Tax professionals play a critical role as trusted advisers for small-to-medium sized businesses and are a trusted source of advice on running a business. E-invoicing is an opportunity for tax professionals to differentiate their service offer by providing cutting-edge advice and encouraging their clients towards a digital future.

    It also provides tax professionals with the opportunity to help their clients improve record keeping, meet reporting obligations, get paid quicker and improve their cash flow, ultimately assisting them to meet their business objectives more efficiently.

    Last modified: 21 Feb 2019QC 57984