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  • E-invoicing

    Electronic invoicing is a broad term that covers the exchange of invoices between a supplier and a buyer in an electronic format – for example, emailing an invoice in portable document format (PDF).

    However, when we talk about e-invoicing (or digital invoicing), we mean the automated direct exchange of invoices between the supplier's and buyer's software systems.

    E-invoicing relies on open standards and technology solutions to exchange invoices seamlessly, without manual input. It removes the need to create paper-based or PDF invoices, scan, post or email them, or manually enter them.

    E-invoices can be sent directly to a customer’s software system, even if the buyer and supplier are using different systems. It’s secure, safe and reliable.

    Find out about:

    Trans-Tasman e-invoicing agreement

    In March 2018, the Prime Minister of Australia and the Prime Minister of New Zealand agreed to take practical action on adopting common approaches to e-invoicing as a means to progress the Single Economic Market agenda. This agreement was formalised on 25 October 2018 by signing an international arrangement.

    This initiative will build on the work of Australia’s Digital Business Council and the ATO in developing a framework of standards and guidelines for e-invoicing based on international standards. These open standards will allow the New Zealand and Australian business systems to ‘speak’ to each other, resulting in fewer errors during a business transaction.

    A federal level steering committee and the trans-Tasman e-invoicing working group were established to lead the way in standardising e-invoicing across government and the business sector in Australia and New Zealand.

    The working group is a representative group of federal and state government agencies in Australia and New Zealand.

    See also:

    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.

    Getting ready for e-invoicing

    Find out how you can get ready for e-invoicing:

    Businesses

    To find out your next steps towards e-invoicing, start by contacting your software provider to see if you are digitally ready.

    Ask your software provider about how they will offer e-invoicing and what you need to do. For example, you may need to update to your existing software, or an additional service.

    Also remember to:

    • find out what support they will offer you in making the transition
    • subscribe to their communications – for example, email, newsletter and web updates.

    Digital service providers

    To provide e-invoicing services, such as being an access point or a digital capability publisher, you will need to be accredited.

    More information about the e-invoicing framework and interim accreditation is available on the ATO software developer siteExternal Link.

    Tax professionals

    As a tax professional, start talking to your clients about e-invoicing and how it will benefit them.

    Keep an eye on any upcoming engagements for tax professionals to gain more information and understanding of e-invoicing.

    Last modified: 04 Mar 2019QC 57901