The difference e-invoicing can make
In the latest edition of the Best Run Podcast brought to you by SAP, Mike Vorias the Regional Director of the Office of CFO Solutions from SAP APJ and Swapnil Narkhede the Program Director from the New South Wales Department of Customer Service joined me for a discussion around digitising your business with e-invoicing and what you need to know about this important topic.
What is e-invoicing?
Mike started off the conversation to explain that e-invoicing is a digital exchange of invoice information between suppliers and buyers. It is done electronically, and it is not the same as sending attachments or PDF-based invoices. It is in a structured format. The purpose of e-invoicing is to provide a level playing field for everybody that plays in the supply chain, within the invoicing process. This includes small and large organisations.
Swapnil added that it's not restricted to any particular type of organisation, it's across the entire business landscape. It's just a direct exchange of invoice related information between a supplier system and buyer system. And because of that, it helps enable quite a lot of automation and eventually, faster payments.
Swapnil suggested that the benefits of invoice automation include faster payments and improved cash flow, as well as increased efficiency and reduced administrative costs. It is not restricted to any particular type of organisation, and can be used across the entire business landscape.
Where to Start with e-invoicing?
Mike added that e-invoicing is an easy process that can be started by talking to your technology partner and registering on the e-invoicing platform. You will then be able to send and receive invoices electronically.
Swapnil added that after you've confirmed that your accounting system is e-invoicing enabled, the next step is to register with a platform and start sending and receiving invoices electronically. This process is simple and straightforward, and most platforms offer helpful tutorials and guides.
What is e-invoicing week?
Swapnil explained the main purpose of e-invoicing week that is on this week in Australia, is to create awareness of e-invoicing within the Australian business community, with the intent of encouraging Australian businesses to adopt e-invoicing. This will be facilitated by a number of events and communications being released through various channels, with the Australian Tax Office (ATO) playing a leading role.
E-invoicing has been shown to have a number of benefits for businesses, including reducing administrative costs, improving cash flow and increasing efficiency. As such, there is a growing demand for e-invoicing in Australia and businesses that adopt it early stand to reap the greatest rewards.
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Comparing e-invoicing to the traditional invoicing methods
Swapnil explained that paper-based invoices involve the supplier issuing an invoice and printing it out to put in an envelope and send through snail mail. On the receiver's side, they will have to receive it and address it to a particular contact. E-invoicing is a more efficient way of exchanging invoice data between suppliers, accounting financial management systems and buyers' accounting financial management systems. It is faster, more secure and can be processed and paid faster.
Mike added that from a macro perspective, it is estimated that over a 10-year period, $2.8 billion is lost in productivity due to the manual processing of invoices. This is a significant amount of money that could be put back into the economy if this process were automated. Research and surveys show that small businesses can save $40,000 a year by making the switch to electronic invoicing. Other benefits include increased sustainability and faster payment times.
Costs of moving to e-invoicing
Mike added that the biggest cost for small businesses when implementing PEPPOL or e-invoicing is change management - getting customers and suppliers on board with the new system. The technology needed to support this framework is already built into many software packages, so the cost is mainly in terms of time and resources needed to implement the change.
Swapnil mentioned that from a cost perspective, it depends on the business needs. Some businesses may need to use a premium e-invoicing service, while others may be able to use a built-in e-invoicing service within their accounting software. The price of an e-invoicing service can vary depending on the provider and the features offered.
Changing the Way Business is Done in the Future
On the topic of how e-invoicing will impact businesses, Swapnil explained that e-invoicing will become much simpler with the advent of routed networks. Suppliers will no longer have to find out where they have to send an invoice, but instead the invoice will be automatically sent through to the intended recipient. This will save time and hassle for both suppliers and businesses.
The supplier experience would be greatly improved with the invoicing and invoice response functionality built into it. They would not only be able to send the invoice directly from their accounting software, but they can also see the status of the invoice within that system itself. This would provide a one-stop shop for the supplier, making it easier and more efficient for them to send invoices and check on the status.
Closing Thoughts
Swapnil explained that e-invoicing is a no brainer for businesses, as it is more efficient and can lead to faster payments. The New South Wales government acknowledges that some small businesses may not have accounting software, but encourages them to try out e-invoicing to experience its benefits.
The Supplier Hub Invoice portal is a service that allows suppliers to New South Wales government agencies to enter invoices. In the backend, these invoices are received as e-invoices. The portal will offer productivity benefits of $28 billion over the next 10 years.