E-invoicing is the next phase in the digital transformation of business transactions. Far more than just sending invoices via email, e-invoicing automates the digital exchange of invoice information, making it easier and faster for businesses to get paid. E-invoicing is so beneficial, the Australian Taxation Office (ATO) has mandated that all Commonwealth government agencies must fully adopt e-invoicing by 1 July 2022.
This rapid adoption by government is likely to stimulate adoption by private-sector businesses. The faster retailers and their suppliers get on board with e-invoicing, the sooner they can start to see the benefits, which can include:
1. Faster payments
The government has committed to paying invoices received via e-invoicing within five days for contracts worth less than AU$1 million. This can be a huge incentive for small business retailers who rely on prompt payments to manage cash flow effectively. The smaller the interval between providing goods and services, and receiving payment, the better for the company.
2. Streamlined processes
Using e-invoicing to manage invoices and payments automatically reduces the amount of manual processing required. By default, this means retailers can save time on these manual tasks which also means financial savings. Studies have found that it costs $30.87 to process a paper invoice, $27.67 a PDF invoice, and only $9.18 to process an e-invoice.
3. Better reporting and analysis
The benefits of e-invoicing can also include improved reporting and analytics, which can help retailers make smarter decisions based on data. And, because the process is largely automated, the risk of errors as a result of manual inputs is dramatically lowered, which means organisations can rely on the accuracy and veracity of the data.
Reports can be generated in an instant and the data includes the number of invoices sent and received, the value of invoices sent and received, and the number of invoices rejected and accepted. Monitoring all of this in one platform that’s accessible from anywhere delivers further time and resource savings.
4. Easier invoice processing
E-invoicing makes it easier to process invoices accurately and removes the need for unnecessary data entry, with the invoice appearing automatically in the software.
5. Direct invoice exchange
Because invoices are automatically exchanged between businesses using e-invoicing software, the risk of invoices being lost or overlooked is minimal. This also means invoices are less likely to be double-paid, and fraudulent invoices can become a thing of the past. This translates to ongoing savings and improved business processes.
6. Improved security
E-invoicing is a more secure way to exchange invoices because security measures such as encryption at rest and in transit are implemented throughout the e-invoicing network, so data remains secure along the way.
7. Better supply chain relationships
E-invoicing speeds up the pace of doing business. For retailers, a strong relationship with suppliers is essential; the better a retailer’s supply chain relationships, the easier it is to compete in a crowded market.
John Delaney is managing director for MessageXchange.