We’re beginning to see a big change in the way we do invoicing in business. What used to be a very manual, paper-based process is now becoming automated and digital with the introduction of eInvoicing. What is eInvoicing? To put it simply, it is the electronic sending and receiving of invoices in a structured data format directly between software applications. This isn’t sending a PDF and or sending an email, eInvoicing is software to software and 100% automated. By comparing traditional invoicing and eInvoicing we can see just how efficient eInvoicing can be for both buyers and sellers in the following areas:

• Processing and payment
• Costs
• Visibility, transparency and accuracy of information
• Security

Processing invoices

Traditional invoicing

In traditional invoicing, the process of creating invoices and receiving payments can be lengthy. Often it looks like this:

1. Create the invoice
2. Print and post it (or send via email)
3. Buyer receives and sends it to their accounts team
4. The invoice is downloaded, reviewed and approved
5. The invoice is paid
6. The invoice is archived.

The process involves a lot of manual handling and re-keying of information, causing errors in invoice data, slowing processing and running the risk of invoices being sent to the wrong person or company. Traditional invoicing is also very labour and time intensive, so when staff are working on multiple tasks, the process can be slowed down even further. All these elements can create huge delays in payments and reduce cash flow for sellers, which is especially problematic for smaller businesses. Overall, paper invoices are estimated to take 23 days to process when the process runs smoothly. This can blow out to up to 90 days when they run into errors.

eInvoicing

eInvoicing works a bit differently. It looks like this:

1. The seller finds their purchase order (PO) in their software and creates an invoice. The information is brought across from the PO. The seller sends the invoice electronically from their software. The invoice is sent, almost magically, through Peppol network directly to buyer’s software.
2. The buyer’s software matches the received invoice against the PO for payment authorisation.

The process is streamlined through automation for both the seller and buyer. The issues presented by traditional invoicing are eliminated by significantly reducing redundant manual processing. eInvoicing has been shown to be 60-80% more efficient than paper-based processing greatly reducing payment times. One source calculates the average for processing an eInvoices is just 5 days . By reducing processing times with eInvoicing, sellers receive payment faster and buyers streamline their processes and business operations.

Costs

Traditional invoicing

There are a few different costs that are attributed to the traditional invoicing processing. For both buyers and sellers, the main costs are:

1. Printing: even if using PDFs, invoices may be printed. Costs include paper, ink and even printer maintenance.
2. Labour: you need people to process invoices and this only increases as your business grows.
3. Postage
4. Filing

Overall, costs have been estimated to be $30.87 to process a paper invoice and $27.67 for PDF invoices.

eInvoicing

Costs are much lower when we look at the costs associated with eInvoicing. Many traditional invoicing costs are reduced or eliminated altogether because of reduced manual processing and electronic sending. It’s been calculated that eInvoices are approximately 70% cheaper than traditional invoicing. On top of this, buyers can often stick to the payment terms of their suppliers, reducing late fees and even benefiting from early payment discounts.

Visibility, transparency and accuracy of information

Traditional invoicing

Traditional invoicing can require multiple platforms and software and sometimes complicated physical and electronic filing systems. This can make it very difficult to manage, maintain and retrieve records. This can make reporting harder, which impacts the accuracy of your business performance results and the data used in decision making.

eInvoicing

eInvoicing allows you to use a single piece of software for creating and processing invoices. This makes it much easier for businesses to have visibility and transparency of their payables and receivables. The need for collating information from multiple systems and paper documents is significantly reduced. As well as this, the reduced risk of errors from manual processing increases the accuracy of data.

Security

Traditional invoicing

There are a number of security issues that can occur from traditional invoicing.

• Fake or comprised invoices: details on invoices can be changed or altered without knowledge from either party.
• Billing scams and fraud: invoices can be sent to misleading sources, causing money loss.

This is commonly because the formats the documents are sent in allow them to be easily altered. Plus, sending invoices through mail or email means they’re easily intercepted, sent to the wrong person, or send fraudulently.

eInvoicing

eInvoicing uses the Peppol network, which requires buyers and sellers to have a certified Access Point send and receive invoices. The Peppol network adheres to a secure and reliable framework that all parties must comply with. eInvoices are sent in a pre-defined format which can’t be changed or altered. Archiving using eInvoicing is much easier to track, improving your audit trail. Comparing both traditional invoicing and eInvoicing shows significant efficiencies when using eInvoicing. If you’re interested in finding out how eInvoicing could work for your business, request a call from one of our experts today!

Request a call

Chat with one of our experts

Just fill out your details below and we'll be in touch within one business day.

More than 1.4 billion invoices are sent every year in Australia and New Zealand. With that in mind, it is easy to understand why people, especially those in the Australian Government, see eInvoicing as a game changer.

What is eInvoicing?

eInvoicing enables organisations to send and receive invoices electronically, directly to and from their software. It removes the need for unnecessary data entry and inaccurate OCR scanning. The eInvoicing model is based on four-corners, where corners one and four are the supplier and customer two and three are Access Points. These Access Points connect to each other to exchange eInvoices. You might also hear about Peppol in relation to eInvoicing. Peppol is a standard for eInvoicing, developed by OpenPEPPOL, an international standards body. It defines the eInvoice message format, as well as connection protocols and governance. The Peppol network is also able to exchange more than just eInvoices. Purchase orders are being reviewed and localised for Australia and New Zealand with more expected to be launched in the future.

What are the benefits of eInvoicing?

• Easier invoice processing
• Cost savings
• Faster invoice payments
• Fewer errors
• Exchange of invoices directly to and from software
• Secure
• Available for businesses of every size
• 60–80% more efficient than paper-based processing
• Could save Australia and New Zealand more than $10 billion a year
• The US Government has already seen eInvoicing save them more than US$450 million in processing costs alone.

A round up of developments so far:

• In March 2018, the Australian and New Zealand governments agreed to look at common approaches to eInvoicing under the Single Economic Market (SEM) agenda. This was formalised on the 25th of October 2018 when the Australian Assistant Treasurer and the New Zealand Minister for Small Business signed the Trans-Tasman Electronic Invoicing Arrangement.
• In February 2019, both governments announced their intention to adopt the Pan-European Public Procurement Online (Peppol) interoperability framework for eInvoicing.
• In November 2019, the Australian Government announced that as of the 1st of January 2020, contracts valued up to $1 million will be paid in five days or face interest on late payments, as long as both the seller and the agency use eInvoicing.

What’s in the new eInvoicing legislation?

On the 29th of October 2019, legislation became effective allowing an Australian Peppol authority to be established by the Australian Taxation Office (ATO). The ATO put in their application to OpenPEPPOL to begin the membership process and was announced as a Peppol member on the 31st of October. Around the same time, the Ministry of Business, Innovation and Employment (MBIE) become the New Zealand Peppol Authority. As a result of the new legislation, the ATO and MBIE can now start to certify Access Points in Australia and New Zealand respectively. The ATO has begun working with software and eInvoicing solution providers to get the ball rolling. This is an important development as it means Australian and New Zealand businesses can connect and start to send invoices through the eInvoicing network as soon as Access Points have been certified.

What does this mean for you?

To access the eInvoicing network and start reaping the benefits of eInvoicing, businesses will need an Access Point. Software providers should find their own Access Points, or if your software doesn’t have an Access Point, you can find one directly. You can choose to become an Access Point yourself by going through the certification process with Peppol or you can work with an Access Point provider, such as MessageXchange, to connect you to the eInvoicing network. Working with an Access Point provider is the easiest and quickest way to connect to the network, and in many cases is the most cost efficient. Some Access Points can also translate files into the Peppol eInvoicing format. For software providers: Now is the time to start engaging Access Points to get your customers ready for eInvoicing. For businesses: Speak to your software provider to find out their plans for eInvoicing. If they’re not providing an Access Point, start getting in touch with Access Point service providers to prepare for eInvoicing.

Newsletter

Sign up to get the latest eInvoicing updates

Stay up-to-date with industry news, useful blogs and whitepapers, expert tips and more.