The imminent adoption of e-invoicing by New Zealand central government agencies and Australian federal government agencies is creating new opportunities for Australian and New Zealand organisations, with small and medium-sized businesses able to save around $40,000 per year.
From 31 March, New Zealand’s central government agencies were required to receive invoices in an electronic format. This is the first step to making business to government e-invoicing mandatory in the country. Meanwhile, Australian federal agencies must fully adopt e-invoicing by 1 July.
Government adoption of e-invoicing will speed up payment cycles for organisations that do business with government agencies. This will get cashback to these businesses much faster, allowing them to reinvest in strategic opportunities.
However, businesses that also choose to adopt e-invoicing will have numerous advantages over those that don’t, including administrative savings of around $40,000 per year. This is due to faster and more accurate payments, invoicing automation, reduced handling, reduced risk of fraud and errors, and easier reporting while creating a more robust audit trail for regulatory compliance.
Traditionally, invoicing has been a necessary but time-consuming reality of doing business, involving manual tasks like sending and receiving paper documents through a variety of channels, and chasing payments. Because of the administrative overhead this creates, invoicing usually requires one or more full-time employees to manage. This is resourcing that businesses could otherwise direct towards innovation and service improvement.
An electronic invoice eliminates the need for paper and automates the entire invoicing process, facilitating easier payments and reducing administrative tasks. By making invoices easier to pay or automating them entirely, businesses receive payments sooner, leading to more predictable cash flows and income forecasting. E-invoicing also provides better visibility of payments and makes data more accessible for reporting purposes. This can reduce wasted time and double handling of tasks that become significantly faster, easier, and more accurate via automation.
The ability to quickly invoice and get paid is the key to managing liquidity for any business. Certainty around payments feeds into a company’s ability to make informed financial decisions and lets them react faster to time-sensitive business investments without taking on a line of credit.
Any method that encourages faster payments back to a business will enhance long-term forecasting and speed up business investment cycles. A streamlined overview of payments and their status provides real-time visibility, making largescale payments easier to report on, and helping to mitigate the risk of fraud.
With e-invoicing, invoice settlement is on average seven times faster than traditional invoicing methods. Eliminating supporting tasks like reminder emails and phone calls further contributes to time made available for more important activities. In Australia and New Zealand, e-invoicing reduces costs from $26-$30 per invoice to around $10. This is because suppliers no longer need to print invoices, or even email a PDF. Buyers don’t need to scan or manually enter invoices into payment platforms to pay their invoices and can automate ongoing payments more easily. The Australian Taxation Office (ATO) credits e-invoicing as being more reliable, secure, and resulting in fewer errors.
Many businesses are seeking new ways to build greater levels of resilience and stabilise their cash flows, particularly during the current volatility in the economic landscape. E-invoicing is rapidly gaining attention as a solution to cashflow issues and in helping develop more robust invoicing processes and reporting. This will not only help protect businesses now but also create assurance into what is still a very uncertain future.