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Government seeks consultation to support the adoption of e-invoicing for SMEs

Small businesses doing business with large corporations may legally demand that their trading partners and clients use electronic invoicing (e-invoicing) under the government’s Business e-Invoicing Right (BER).

The government last week initiated a consultation on creating a BER that would make it legal for a company to use electronic invoices if a client requests it. 

In addition to the BER, the government is soliciting stakeholders’ input on other steps to help businesses adopt e-Invoicing by linking it with existing business processes.

A BER can help businesses adopt e-Invoicing by assuring them that they could use it with their trading partners if they invest in it. 

Matt Lewis, the e-Invoicing spokesperson for the Association of Digital Service Providers Australia New Zealand (DSPANZ), welcomed the government’s announcement, saying it will help increase e-Invoicing adoption across Australia.

“e-Invoicing is transformational for Australian businesses, particularly small businesses, as it increases cash flow and facilitates five-day payment terms. It is also more secure and reduces the chance of invoice fraud. 

“DSPANZ also supports the proposed phased approach to introducing BER that begins with large businesses.

“The BER will improve the e-Invoicing system by allowing those enabled to be discoverable. This announcement sends a strong message that the government is serious about supporting e-Invoicing and the multiple benefits e-Invoicing brings to businesses,” he said.

A potential cost saver

e-Invoicing will allow for the immediate digital exchange of invoices between each party’s accounting software systems, removing the need for manual data entry.

 This will help in improved turnaround times, increased cash flow, improved security, more efficient processing, and increased visibility into the invoicing process.

Every year, more than 1.2 billion invoices are exchanged in Australia, with around 90 per cent of invoice processing still being partially or entirely manual. 

By substituting eInvoice with a paper or email invoice, the businesses involved in the transaction can save up to $20 in costs. 

Since businesses can only use e-Invoicing if their trading partners also use it, widespread adoption of e-Invoicing will help unlock the enormous potential benefits for Australian small businesses.

Reckon CEO Sam Allert, an Australian accounting software provider commented on the e-Invoicing opportunity. He said that the widespread use of e-Invoicing could simplify processes and help small businesses get paid faster.

“The Federal Government and ATO recognise this as demonstrated with their funding drive to accelerate digital transformation across the business sector, as do we,” said Allert.

“Businesses have been rapidly digitising their processes over the last few years, and the COVID-19 pandemic has only accelerated this.

“In terms of costs savings, the ATO has estimated that it costs an average of $30 to process a paper invoice and $28 to process an emailed PDF invoice.

“ With e-Invoicing coming in at less than $10.50 per invoice, e-Invoicing will be up to three times more cost-effective.

“Late invoices are a chief concern for Australian businesses and significantly impact their cash flow and financial security.” 

Research from the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) estimates that 53 per cent of invoices are paid late and are an average of 23 days overdue.

Allert further noted that “Overdue invoices are worth $115 billion, or $52,000 for every small business in Australia, according to the ASBFEO. 

“We believe that the introduction of eInvoicing will help mitigate these late payments and long turnaround times, boosting cash flow and income security for Australian businesses.”

Strong government support

In the 2020-21 Budget, as part of the Job Maker Digital Business Plan, the government invested $3.6 million to facilitate e-Invoicing adoption across the public sector. 

It is a move to drive adoption by businesses that supply to governments and others in their supply chains. 

Currently, all Commonwealth agencies are on target to accept e-invoices by 1 July 2022, with more than 80 per cent of Commonwealth invoices being able to be received electronically. 

As part of the Digital Economy Strategy, the government invested an additional $15.3 million in the 2021-22 Budget to increase the value of e-Invoicing for businesses, boost business awareness, and accelerate e-Invoicing adoption. 

e-Invoicing is still in its early stages of rollout in Australia. Stakeholder consultations in 2020-21 found that, while the government’s considerable support to accelerate business use, business awareness and adoption of e-Invoicing still remain low.

Submit your responses

Businesses can submit responses to this consultation up until 25 February 2022. Interested parties are invited to comment on this consultation.

Here are the submission guidelines for further information.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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