The costs associated with paper-based invoicing include the time it takes to process invoices manually, the potential for errors through re-keying information into electronic payment systems, and the risk of paper-based invoices being lost or damaged, making on-time payment impossible.
Digitalising invoicing processes saves time and money. Now, Australia and New Zealand are looking to create trans-Tasman standards for electronic invoicing (e-invoicing), which could save up to $30 billion over the next 10 years.
The new rules around e-invoicing will help businesses send and receive invoices electronically without having to have the same accounting software as each other. The Australian Taxation Office (ATO) is establishing a central facility that will let Australian businesses find the so-called ‘digital address’ of a customer and send them an invoice directly.
E-invoicing reduces deadlines and processing costs, improves productivity, and helps with cash flow control and management of working capital needs. It lets companies see at a glance how much is owing or how much is due, and budget accordingly.
This increased visibility is invaluable for companies looking to manage their cashflow carefully. And, with the data that can be collected, organisations can apply data analytics to gain insights into factors such as how much the business spends with each supplier. This can help provide ammunition to negotiate better pricing or payment terms, and let businesses make smarter purchasing decisions.
E-invoicing can also help improve relationships between suppliers and customers by ensuring bills are paid on time, leveraging early-payment discounts and avoiding late payments.
Furthermore, e-invoices save time. For example, the same person who can manually check 6,000 paper invoices each year could check 90,000 electronic invoices. Employees who no longer have to manually process invoices can direct their focus towards more fulfilling and rewarding tasks.
And, e-invoicing limits the risks of error and strengthens internal control systems. Reduced errors mean that there will be fewer double payments or missed payments, so staff members don’t have to waste time rectifying these situations.
E-invoices also dramatically reduce the risk of falling victim to a false billing scam. More than $4 million has been lost to these scams in Australia this year.
Those benefits provide a compelling reason for organisations to move to e-invoicing regardless of any government mandate. However, with a government mandate on the horizon, it’s important for organisations to understand e-invoicing and begin to prepare.
Implementing e-invoicing involves considerations such as tax compliance, international laws, and data security.
There are five steps businesses should take to adopt a multinational tax-compliant e-invoice solution:
- Scope: businesses need to understand what jurisdictions and stakeholders are involved, and conduct a market review of the solutions available.
- Requirements: some businesses will need a solution that incorporates GST or VAT requirements, for example.
- Validation: it’s essential to ensure that the chosen solution will comply with all regulations in the business’s jurisdiction and won’t leave the business open to non-compliance.
- Implementation: businesses should roll out the solution in a staged approach that includes notifying all customers and training all staff members.
- Review: once the solution is in place, it’s important to review its efficacy regularly to ensure it still complies with all relevant legislation and remains fit for purpose for the organisation.
There are numerous solutions available to help organisations streamline and automate their invoice processes. e-invoicing is the future of supplier relationships, so Australian companies alike need to begin investigating their options sooner rather than later.
Matt Goss, Managing Director ANZ, SAP Concur