What is e-invoicing?
E-invoicing allows businesses to electronically exchange invoices between accounting software, without the need for manual data entry.
This will mean if you are working with a supplier using E-invoicing, their invoice will automatically appear in your Accounting software. In Xero it will come in as a Draft Bill, allowing you to still apply your own internal checks to review and approve the invoice, ensuring it is correct.
The Government estimates that the introduction of E-invoicing will save businesses approx $28 billion over 10 years.
According to the Government an invoice currently costs a business between $25 and $30 to process (calculate, record, send, file, receipt payment etc).
The introduction of E-invoicing is predicted to reduce this cost to less than $10 which is a significant overall saving given businesses exchange over 1.2 billion invoices a year in Australia.
Other than cost benefits to businesses and increases in productivity, the other benefits are expected to be:
- less errors – the data will be verified and imported directly into your accounting software removing any manual re-keying and need to chase up missing information
- more reliable and secure – there is an increasing number of scams targeting invoicing by intercepting invoices sent by email and changing bank details
- reduced payment times and better business cashflow
When will e-invoicing start?
Essentially we’re not sure yet.
Government have started rolling this out at both a state and federal level.
NSW State Government has mandated all government agencies adopt e-invoicing by 1st January 2022 but at this stage this won’t be mandatory for their private enterprise suppliers.
The Federal Government has also committed to faster payment times for e-invoicing as a way to encourage businesses to get on board.
Beyond this, the Government haven’t set any timeframes for businesses to adopt e-invoicing.
If you are using Xero software you can setup and register for e-invoicing now. Click here for more info.
However e-invoices can only be sent to other businesses who are using e-invoice compatible software and who have registered to receive e-invoices so realistically there’s probably not a lot of benefits right now.
So for now, unless you are supplying directly to Government, it’s a hold and watch this space.
tips and tricks to get ready for e-invoicing
Depending on where you are with your digitalisation journey, there’s probably a few things you can be doing now to get ready:
- if you’re not already using your accounting software to prepare and issue invoices it’s time to review this process
- consider using one of the automated receipt/invoice processing software like Dext, Hubdoc or MYOB capture to streamline your record keeping
- implement automatic invoice reminder processes for following up your outstanding customer accounts by using more of the powerful features in your Accounting software
- updating your supplier details including contact details and payment terms to ensure your database is correct in your accounting / invoicing software
- talk with your suppliers and customers about your initiatives to streamline your processes and make working with your more efficient
Our team have worked with many clients to streamline their processes and adopt new technology – if you’re struggling with where to start let us know and we can help!