E-invoicing is just starting to build momentum in Australia and New Zealand. In 2019, Australia and New Zealand signed the Trans-Tasman e-invoicing agreement, making it easier for businesses and government to exchange e-invoices, both within and between those two countries. Since then, we’ve seen an increase in government agencies implementing e-invoicing. And the Australian Government has promised to pay e-invoices in 5 days for contracts up to $1 million. They’ve also mandated the use of e-invoicing for all Commonwealth government agencies by the 1st of July 2022.
So, e-invoicing in Australia and New Zealand is increasing. But how are other regions faring?
In 2015, the US government mandated e-invoicing for federal government agencies by the end of 2018. The transition to e-invoicing was expected to bring a range of benefits including savings between $150 million and $250 million.
Aside from Government, the largest adopters of e-invoicing are large enterprises. Some say a major issue in gaining adoption has been a lack of standards and too few e-invoicing service providers. In order to increase uptake, an e-invoicing framework is being created by the Business Payments Coalition (BPC) – a group of organisations and individuals that promote the adoption of electronic business-to-business (B2B) payments.
Mexico has been one of the pioneers in e-invoicing globally. They started their e-invoicing journey in 2004, being one of the first in the world. Even though it wasn’t made mandatory, e-invoicing was largely adopted by businesses and government. In 2010, Mexico managed to achieve 100% adoption by businesses. The volume of digital invoices issued between 2011 and 2017 increased from 1.7 billion to 6.5 billion.
Mexico’s success has led to other countries implementing e-invoicing. The Latin America region sends 36 trillion e-invoices a year and have achieved some of the highest adoption rates of e-invoicing in the world: Chile has over 88% adoption and Brazil has achieved 100% adoption for B2B transactions. The high adoption in the region is due to the mandating of e-invoicing in both public and private sectors.
Many countries who have implemented e-invoicing have seen reduction in fraud and easier tax preparation for businesses. This is in addition to cost reductions from eliminating manual processes.
In 2019, the European Union made it compulsory to send e-invoices between B2G. And if adopted between businesses, it’s expected that e-invoicing in the region will generate savings of €40 billion a year.
Many countries have started to mandate its use both in public and private sectors. For example, Finland has used e-invoicing since 2010 for public sector procurement and now uses e-invoices for 100% of its transactions. Most Finnish businesses have also adopted e-invoicing. And in Italy, e-invoicing was made mandatory for both B2B and B2C transactions in 2019. France is joining them by making e-invoicing compulsory for SMEs and microbusinesses from 2020.
Asia is one of the regions where e-invoicing is expected to grow the most in coming years. Singapore made e-invoicing compulsory in 2008 for B2G transactions. It was the first country outside of the EU to use the Peppol framework, chosen in part to facilitate international trade. Singapore is providing grants to cover up to 50% of implementation costs for enterprises and S$200 for SMEs who join the network.
One of the reasons countries in the region are adopting e-invoicing is to reduce fraud. In 2016, Indonesia required taxpayers to issue invoices electronically in order to notify the enforcing authority. Mongolia, Azerbaijan and Kazakhstan have also implemented e-invoicing to curb the risk of fraud.
It’s an exciting time for e-invoicing as we see a lot of countries, particularly in our region, move more and more towards a digital economy.
If you’re interested in learning how e-invoicing can help your business, request a call back from our team.