E-invoicing, Online Banking And Payment. Technology And Business
Credit: E-invoicing, Online banking and payment. TEchnology and business concept.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has welcomed the federal government’s move to pay e-invoices within five days or pay interest on late payments.
The five day e-invoicing payment policy applies to contracts valued up to $1 million, where both the lead contractor and federal government agency both use e-invoicing.
“This is a game-changer for e-invoicing small businesses that are directly engaged in a contract with a federal government agency,” Carnell said.
For the ASBFEO, the next step would be to apply the policy to businesses right down the supply chain.
“Our Small Business Counts report shows that late payments continue to hamper small business viability, with half of all small businesses reporting late payments on 40 per cent of their invoices. This policy will improve cashflow for small businesses so they have the confidence and the capital to re-invest,” Carnell said.
The ASBFEO is encouraging small and family businesses to adopt e-invoicing and make the most of the benefits that flow from that, including reduced administration costs and fewer processing and handling errors.
The Ombudsman noted that around 1.2 billion invoices are exchanged in Australia every year. Research showed it costs about $30 to process a paper invoice and about $9 per e-invoice, a significant saving.
The cited data also noted that around 20 per cent of traditional invoices are sent to the wrong person and about 30 per cent contain incorrect information – thus delaying payment.
Carnell noted that the research shows the Australian economy would benefit to the tune of $28 billion over a decade, if all businesses switched to e-invoicing.
“This federal government e-invoicing payment initiative sets a benchmark for all states, teritories and big business to follow,” Carnell said.