How eInvoicing works and why it’s essential for business survival
To help the Australian economy recover faster from the impact of COVID-19, the federal government has highlighted critical areas for improvement and developed new mandates so both government agencies and suppliers can evolve and reap the benefits of digital transformation.
One of the most impactful of these is the mandate that electronic invoicing (eInvoicing) must be implemented by all government agencies by July 2022. This is designed to help agencies and suppliers improve processes and cashflow. For organisations to successfully implement eInvoicing, it's essential to understand how it works.
eInvoicing lets organisations process invoices faster with automated, accurate workflows. Essentially, it means that users can pay suppliers sooner and manage business cashflow more precisely. The benefits are substantial and, to achieve them, organisations need to understand how eInvoicing works and why they should embrace it.
eInvoicing lets organisations send and receive invoices electronically, directly into the organisation's accounting software. It eliminates the need for manual invoicing processes, both paper-based and emails with PDF attachments of invoices.
Australia follows the Peppol interoperability framework for eInvoicing to generate, transmit and process invoices digitally. eInvoicing is noted as being a part of digital transformation initiatives for the Australian economy that will deliver opportunities and benefits for organisations.
The reasons for implementing eInvoicing centre on unlocking many benefits for all stakeholders by automating previously manual processes.
The three main benefits it can provide government agencies include:
Alignment with broader government strategies
Implementing eInvoicing can tie into government strategies and initiatives, especially those around supporting businesses, because eInvoicing makes it easier to do business with suppliers.
Since eInvoicing will be compulsory for government agencies, implementing it sooner rather than later will help the agency achieve mandated milestones.
Automating invoice processing reduces manual intervention. This lowers the cost and time of processing each invoice and limits the potential for human errors and incorrect payments.
Improved supplier experience
Traditionally, if a payment wasn't received by the due date, the supplier was forced to contact the government agency to determine why. eInvoicing can ensure agencies pay their suppliers faster by automating processes, and it can provide progress transparency.
The system can flag any inconsistencies or inaccuracies with invoices so they can be rectified as soon as possible, and lets suppliers track their payments.
The three main benefits eInvoicing can provide suppliers include:
eInvoicing costs less than $10 for businesses to process, instead of paper invoices that cost an average of $30 or a PDF, which costs $27. eInvoicing can save businesses many thousands of dollars each year.
Because eInvoicing is automated, approval processes can be completed faster. Traditionally, invoices would require an employee to cross-reference details of invoices and purchase orders (POs); however, with an automated system, this can be done in a matter of seconds, giving employees back valuable time in their day.
Government e-invoices are mandated to be paid within five days, which provides businesses with a clear timeline for budgeting purposes. Should any delays occur, suppliers can use the system to track the invoice's progress and, if necessary, contact the relevant parties to move the process along.
eInvoicing will play an essential role in the future of Australian businesses and the adoption of digital initiatives that improve processes, productivity and cashflow. The government mandate is a massive step towards Australia's digital future, providing government agencies, their suppliers, and the Australian economy with significant benefits.