E-invoicing remains relatively unknown and not yet widely adopted within the Australian small business community, despite its accuracy, efficiency and security, with more than one-third (36%) completely unfamiliar with the system, according to a new global survey by Xero.
When asked for the definition of e-invoicing, only 35% were able to correctly identify it as sending the invoice directly to their customer’s accounting software (or receiving an invoice directly from a
supplier’s software). Nearly half (47%) incorrectly define e-invoicing as sending a PDF of the invoice or sending a link to the invoice via email.
“While invoice management is key to healthy cash flow, it can be overwhelming for time-poor small
business owners and sole traders,” Xero Australia and Asia managing director, Joseph Lyons said.
“E-invoicing allows businesses and government departments to electronically exchange invoices between accounting software systems, without manual data entry. This has the potential to facilitate faster payment times, help boost cash flow and reduce stress for small business owners.”
Although e-invoicing is still a relatively new concept in Australia, it forms an important part of the
digital transformation journey and a majority (78%) of respondents would see clear benefits of
adopting e-invoicing including saving time on manual data entry (48%), facilitating faster payment times (36%) and greater accuracy than manual invoicing (33%).
The use of e-invoicing is growing following the Australian government’s mandate for federal agencies to make the transition by July 2022, but some small businesses and sole traders are looking for more incentives to jump on board.
More than two in five (43%) respondents who don’t currently use e-invoicing say they would be open to adopting e-invoicing if incentivised by free training for business owners and their staff (53%) and e-invoicing government grants (50%).
Late payments cause stress
Almost two-thirds (63%) of Australian small businesses and sole traders say they deal with customers or clients paying late, which causes stress for the owners and others in the business (35%). Additionally, nearly one in four small business owners (24%) have to delay payments to themselves and 23% to their own creditors or suppliers because of the knock-on effect of being paid late by customers.
More than two in five (45%) respondents find the entire invoicing process stressful, with the average small business spending two business days (12.4 hours) every month on invoice management alone. Just under one third (30%) spend more than five hours solely creating invoices, while more than one in five (22%) spend the same amount of time either chasing late payments or 19% correcting errors in invoices.
“E-invoicing holds huge potential for small businesses and sole traders, arming them with one of the
tools they need to thrive and, in turn, helping bring the promise of a strong recovery across the country. But for this vital shift to take off, we’ll need to see widespread adoption beyond small
business,” Lyons said.
“For the network to grow, it’s crucial that both government and big business play their role in
enabling this to occur. It’s promising to see the steps governments, both federal and state, are already taking.”