Why e-invoicing is finally set to take off

- By Collaborative Media & Publishing
Big businesses may have to implement e-invoicing under a government proposal that would ultimately cut B2B payment costs and reduce fraud, as well as pave the way for more integrated payment solutions.

The proposal, contained in a Treasury consultation paper[1], would introduce a Business E-invoicing Right (BER), allowing businesses to ask other businesses to send them e-invoices using the established Peppol framework.

It would mark a major change from the current system, where businesses tend to email PDF invoices to each other, increasing the risk of fraud and human error.

E-invoicing, which occurs when invoices are sent securely between each business' accounting systems, could cut approximately $20 in processing costs per invoice, according to Deloitte Access Economics[2].

"It's about how e-invoicing can speed up and improve cash flow for businesses," says BPAY Group Chief Customer Officer Keith Brown.

"And in the current world of invoice scams and fraud, there's risk reductions for both sides, because it can't be disintermediated. You know who you're paying and you know what you're paying for."

Yet only about 10,000 of 2.4 million businesses in Australia currently have the capability to process them[3], despite the Australian government first announcing its e-invoicing plans in early-2019.

Government and accounting software providers are building the foundation

While the benefits are significant, many businesses have been reticent to take on the short-term cost of upgrading their systems for e-invoicing or adding to processing costs.

"Governments are driving a lot of this and that will help take up," Brown says.

The government committed $15.3 million in the Budget to increase awareness and promote greater adoption, with a range of State and Federal governments now making it mandatory across their departments.

The NSW government made it mandatory for all government agencies from January 1 this year while all Commonwealth agencies will adopt e-invoicing by July 1. Earlier this year, Main Roads WA was also reportedly working on the Western Australian government’s first e-invoicing pilot project.

"The accounting packages and the ERP packages are also starting to promote it to their customers and that's also helping drive adoption. But while transmission of data and invoices is key, the payment on the back of it is just as important," says Brown.

Major small business accounting software packages such as Xero and MYOB now support e-invoicing at relatively low (or no extra) cost through third-party Peppol access point providers.

“It has been brilliant to see more businesses across Australia register to the Peppol network and start to embrace e-invoicing,” Xero Head of e-invoicing, Simon Foster, says.

“Currently, all Xero customers are able to send – this means there are more than one million small businesses across the country that are enabled to send e-invoices to their customers just by logging into Xero. The Australian Peppol network also now has 12,000 registered ABNs that can receive e-invoices from their suppliers.”

Osko integration to enable faster e-invoicing payments

E-invoicing can deliver an invoice quickly and securely but it's only half of the process – it still has to be paid securely and efficiently.

Popular payment methods such as BPAY are also inbuilt into most accounting packages, which adds security and allows for easier reconciliation thanks to a reference number.

E-invoicing payments could be directly linked with BPAY (which has a range of APIs to make connecting easier), and instant payment service Osko.

Brown says work is underway to add a field to Osko, which would identify the particular transaction as an e-invoice payment.

"The capability exists and it's being rolled out to market," he says.

One potential avenue is for small businesses to use their ABNs as a payID (with an additional field identifier) in their e-invoices. This would enable real-time payments that are also easily reconciled.

The seamless integration offered by e-invoicing for businesses mirrors the benefits of BPAY View for consumers.

"In some ways, we've been working in the space for over 20 years with BPAY View," Brown says.

"You click 'Pay' and everything's pre-populated and off it goes – it's the ideal process. E-invoicing is a step up from that in terms of business-to-business payments."
 
[1] Supporting business adoption of eInvoicing | Treasury.gov.au. (2022, March 01). Retrieved from https://treasury.gov.au/consultation/c2021-185457
[2] Deloitte Access Economics, 2016, “The Economic Impact of E-Invoicing”.
[3] Australian Bureau of Statistics (ABS) 8165.0 Counts of Australian Businesses, including Entries and Exits.

Published by BPAY Pty Ltd (ABN 69 079 137 518) email: marketing@bpay.com.au. The BPAY Scheme is managed by BPAY Pty Limited.  When you use BPAY payment products, the BPAY Scheme is paid fees relating to processing costs and BPAY Scheme membership.  Contact your financial institution to see if it offers BPAY payment products and to get the Product Disclosure Statement.  Any financial product advice provided by BPAY Pty Limited in relation to BPAY payment products is general advice only and has been prepared without taking into account your objectives, financial situation or needs.  Before acting on such advice, you should review the Product Disclosure.

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