The Australian government has made some important announcements recently regarding e-invoicing. In the 2021-22 Budget, the government committed $15.3 million to increase the use of e-invoicing, guaranteeing accelerated payment terms.

This article will dive deeper into what e-invoicing is and how all types of businesses can benefit from it.


What is e-invoicing?

Over 1.2 billion Business to Business (B2B) and Business to Government (B2G) invoices are exchanged every year, which are mostly sent as paper invoices or PDF invoices attached to emails. According to the ATO, the average price for processing a paper invoice is $30.87, while a PDF invoice costs $27.67 on average. The reason these methods are costly is because they need to be entered manually and require validation.

Through e-invoicing, processes can be automated, and invoice data can be quickly exchanged between the systems of the suppliers and buyers. E-invoicing can reduce processing costs to $9.18, which is 66% cheaper than the cost of processing a PDF invoice.

Australia adopted the Peppol framework (Pan-European Public Procurement Online), a globally recognised standard and process for exchanging e-invoices and e-orders currently used in 39 countries worldwide. Buyers and suppliers must send their invoices through their systems to a certified Peppol Access Point (PAP), which will verify the data and then send it on to the receivers’ certified PAP and into their system.

In other words, data will be shared almost instantly, removing the need for manual data entry or validation.


How businesses can benefit from e-invoicing

According to the Australian Government, e-invoicing can help the economy save $28 billion over 10 years. The following are some of the key benefits of e-invoices.


Automatically connects you to other buyers and suppliers

By using e-invoicing, you become automatically connected with every other buyer and supplier in the network. This will enable you to automate invoice processing.


Highly secure and prevents the risk of invoice fraud

PDF invoices can be easily manipulated and intercepted. With e-invoicing, the bank account and sender details are validated prior to transmitting the data. The network is highly secure, and only accredited PAP providers can exchange documents. Peppol follows strict security protocols to prevent hackers and implement multi-factor authentication and data encryption.


Improves cash flow management

Late payments can negatively affect a business. Meanwhile, buyers can miss out on discounts for early payments due to slow processing or lost invoices. With e-invoicing, the whole process is accelerated, bringing significant benefits for both the business and customers. The Australian Federal Government and other Australian Government agencies guarantee 5-day payment terms for e-invoices.


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