Is your business located in Australia? Electronic invoicing can save you valuable time and provide a convenient method to exchange information between you and your customer. This is why we've compiled this short guide to e-invoicing, its perks, and how to get started.
Electronic invoicing - explained
Electronic invoicing is a great tool in ensuring your invoices get paid in a timely fashion to avoid cash flow issues. The idea is for information between customer and supplier to be transferred electronically. Following the electronic data interchange, an electronic invoice document is issued. This is usually readable by yourself and machines, to enable automatic entry of the invoice data into the buyer's and seller's respective accounting software.
Standards for e-invoicing in Australia
In Australia, electronic invoicing standards are part of the Digital Business Plan. The document states goals for e-invoicing, including over 80% of invoices to be received electronically by July 2021, e-invoicing to be mandatory for agencies from July 2022, and government investigations into mandatory e-invoicing for businesses. In order for a countrywide e-invoicing system to work, there has to be a common standard which will be Peppol.
The perks of electronic invoicing
There is a number of advantages to electronic invoices compared to paper invoices. We have listed a few:
- It is more secure - without the involvement of easily hacked email inboxes and with only the buyer, supplier, and software provider being able to access e-invoices, this system is highly secure
- It saves money - Automated online invoices is far more cost-effective than manual processing of all the invoices in your company
- It is faster - Outstanding invoices get paid faster - for example, the Australian Government agencies are now paying e-invoices within five days (and interest for late payments!) and some state governments offer faster payment terms when using e-invoicing standards
- It is more accurate - e-invoicing minimizes the risk of human error and saves valuable time on corrections - also, using a common electronic billing standard means that all required information needs to be available before an e-invoice gets sent
How to get started?
- In the first step, find out whether the software you currently use for accounting is compatible with electronic invoicing. If not, you may have to change the accounting system/ invoicing software.
- Next, you have to review the process for invoicing you are currently using. Identify how many individual invoices are incoming and outgoing and talk to your biggest clients and trading partners about potentially switching.