You might think eInvoicing is what happens when you email invoices from your accounting system but there is much more to it, including a number of benefits for your business.
Here is our quick guide to the benefits of eInvoicing.
What is eInvoicing?
eInvoicing is a secure payment method designed to streamline payments between businesses and their suppliers, contractors or clients, using existing small business accounting software
eInvoicing allows invoice information to be digitally transferred directly between a buyer’s and supplier’s accounting systems, even if these systems are different.
This removes the need to generate manual invoices or enter invoices for payment into your financial system.
Importantly, as eInvoicing is done via a secure network, it reduces the likelihood of invoice scams.
What do you need to get started?
Many business accounting software providers are building eInvoicing into their products and may include free or low-cost solutions depending on your invoicing needs.
To start eInvoicing, your accounting software (and that of your recipient) needs to be connected to the Peppol network (eProcurement framework as well as main secured network used in many countries and adopted in Australia) where eInvoices are delivered securely by Australian Taxation Office (ATO) approved service providers. The ATO administers the network but can’t access or view your invoices.
Your software provider will provide instructions on how to connect to the network.
If you send or receive invoices using accounting software such as MYOB or Xero you should check with your software provider to see if they are eInvoicing enabled and follow their steps to get started.
If your accounting software can’t eInvoice, you can start eInvoicing now by either:
- connecting your software to an add-on eInvoicing product, or
- purchasing accounting software that can eInvoice.
The benefits of eInvoicing
Reduces the likelihood of invoice scams
eInvoicing reduces the risk of scams and fraud as:
- eInvoices are sent via a secure network by ATO-approved service providers (the ATO administers the network, but can’t access or view your invoices).
- An Australian Business Number (ABN) is used to deliver invoices to the right business, with less risk of fake or compromised invoices, which were the most prominent scams reported by business in 2023.
Saves time
eInvoicing can save you time by not having to re-key or scan invoices, fix errors or chase up overdue or lost invoices.
Your invoice data will also be more accurate and complete as key details are checked before the eInvoice is sent.
Faster payments
eInvoicing means fewer errors and lost invoices, avoiding unnecessary delays in getting paid.
Federal government agencies are paying eligible eInvoices within five working days.
Cost savings
Research shows it costs businesses around $30 to process a paper invoice and $27 for an emailed PDF invoice, but it costs less than $10 to process an eInvoice.
Your actual savings will depend on your processes, how many invoices you send and the time saved in managing your invoicing.
Increased visibility of your finances
eInvoicing provides better visibility throughout the invoicing process which can help you better manage your cash flow, planning and budgeting, helping you more accurately manage your business financials.
Connect once, trade with many
Australia has adopted Peppol, an international standard, that allows digital invoices to be exchanged between different software or systems.
Once you’re connected to the Peppol network, you can exchange eInvoices with any business on the network that is also connected, regardless of their size or software.
Next Steps in eInvoicing
If you think eInvoicing might work for you, getting started is easy:
- Check with your software provider to see if your software is eInvoicing enabled and follow their steps to get started. If you don’t use software, there are free and low-cost options available to help you start eInvoicing now.
- Talk to your trading partners to see if they’re already connected. If not, encourage them to connect and start exchanging eInvoices with you.
More information
- Visit the ATO website for more information on eInvoicing for business.
- Government leads the way to shorter payment times
- How to turn excuses into payments
- Providing credit to customers
