Published on the 25/08/2022 | Written by Heather Wright

Lessons from the early adopters…

Local organisations say they’re already reaping benefits from eInvoicing, as governments on both sides of the Tasman push the digital invoicing process with promises of productivity and efficiency gains and faster payments, along with security, ESG and environmental benefits. 

eInvoicing is a standardised way to send and receive invoices via the secure Peppol network, with the exchange of the invoice occurring directly between the buyer’s and supplier’s respective accounting systems via accredited access points and no email used to transmit the data or rekeying of data into portals required. 

“Technically there isn’t a lot of complexity here. It’s a people problem.”

“Not only does that remove much of the manual data entry and the potential errors and delays traditionally associated with invoices, the elimination of email really is important in terms of how it removes the opportunity for payment redirection scams,” Adam Reece, Australian Taxation Office (ATO) relationship manager says. 

In Australia, more than 20,000 SMEs along with big name enterprises including BOC Gas, Bunnings, Woolworths and CommBank, are on the network, which launched last year. eInvoicing was mandated for federal agencies from July, with many state and local governments also making the move. 

In New Zealand, central government agencies were required to be capable of receiving eInvoices by 31 March 2022, and the government says just over 6,000 local businesses are registered to receive eInvoices.

eInvoicing initially started as a productivity drive – in Australia more than 1.2 billion invoices are sent each year and a 2016 study showed email and PDF invoices cost around $28 per invoice to be processed at both ends. eInvoicing in comparison cost $9 per invoice. Multiplied out, that’s about $28 billion in savings  to Australian over 10 years.

In New Zealand, where a more modest 280 million business-to-business invoices are exchanged each year, the savings are estimated at $4.4 billion over 10 years. 

But while cost savings and productivity gains may have been initial drivers, security is quickly coming into its own as a major benefit, particularly with the growth of payment redirection scams. 

In 2020, AU$128 million was lost to false billing scams in Australia. That number soared to well over $200 million last year, and is on track for another increase this year. Around 60 percent of the dollar value is lost by SMBs.

It’s those smaller businesses where many are hoping to see big gains.

Karen Lay-Brew, a strategic advisor to the ATO’s eInvoicing Australia, notes Peppol eInvoicing can help get to the masses of small businesses that enterprises transact with. 

While EDI is used by enterprises and large entities, the closed EDI-type frameworks can prove challenging for some small businesses.

“We want to create an open market to ensure all businesses especially SMEs can participate in digital trading and there are some closed EDI type frameworks that can make that a bit of a challenge for some small businesses,” Reece says.

“We hope Peppol will help overcome that challenge.”

Many of the accounting offerings used by small businesses are already Peppol enabled, including MYOB, Intuit, Reckon and Xero (which is also an accredited access provider – more on that later!).

Crucially, eInvoicing only works if both the invoice sender and receiver are registered and connected to the Peppol network. Registration is usually handled through your software and is, according to those in the know, ‘pretty quick and easy’. An online webinar last week demo’d the process, coming in at around two minutes.

But not all systems are Peppol ready, particularly at the high end of town. Some are still moving to enable eInvoicing, others are partnering up to provide the service and others, well, they’re just watching on at the moment. 

Reece advocates checking in with software providers to see what their road map is, and says there are also free and low-cost options that companies can use to start eInvoicing that, while not as deeply connected into business systems, may provide another option.

The eInvoicing-enabled softtware connects to accredited Peppol access points. Thirty-five providers have already been certified in Australia, with 32 certified for NZ. Companies on the eInvoicing network are listed in a Peppol directory making it easier to find and connect to other parties.

The Main Roads, Devonport City Council, BOC experience

Prashant Singh, project manager for Main Roads WA, which was the first government department to go live in WA with eInvoicing, says the why of moving to eInvoicing was very clear for Main Roads.

“Paying the suppliers on time without any delay is a very important aspect for any govt agency or any agency or private or public sector, because small or medium suppliers are most impacted with the cash flow situations.

“It has direct impact to our finances and our economy as well.”

Main Roads, which maintains WA’s roads and has a budget of around $3 billion, handles almost 60,000 invoices a year. It uses Oracle ERP cloud and other processes which sit outside the ERP, including Kofax for OCR and workflow, for its ‘very complex’ invoicing ecosystem. 

Singh says the organisation began its eInvoicing project last November and went live with Peppol in July and paid its first invoice in four hours and is now saving two days of processing invoices.

“When we did this work we realised we can get away with all the OCR processes, all the validation processes. It’s cost effective and it’s more secure which is absolutely critically especially when you are talking about the recent increase in cyber attacks. 

“Most financial people and systems get inundated with bogus information or cyber security links sent as an invoice.”

For Devonport City Council, which was the first council in Australia to go live with eInvoicing and uses Technology One for its ERP system, the project came as part of a larger accounts payable automation project. 

Jeffrey Griffith, Devonport City Council deputy general manager says “Unquestionably implementing AP automation and leveraging eInvoicing really does deliver savings. It is very costly to process invoices the way organisations have typically done over years, but since going live we have substantially reduced our cost for processing invoices.”

For BOC Gas, the move to eInvoicing was also integrated as part of a wider integration process project. An EDI project had seen the provider streamline many of their processes and moving to Peppol ‘was a very natural extension’, Lay-Brew says. 

“Having done a lot of the process automation work, the amount of Capex required to implement Peppol eInvoicing  was a relatively modest sum,” she says.

But, she notes, it’s not a case of an implementation, followed by the flip of a switch and everything moved on to the new system. 

“Be clear about how you are going to tackle the eInvoicing journey because this is not a turn on and flip everybody over overnight. It is a journey, so be clear about who you are targeting [to onboard], how you are going to target and work closely with them.”

In Bunnings case, they targeted 30-day credit term tradies first for the move. Woolworths targeted expense customers working on a particular system. 

At Main Roads, Singh notes that one month into eInvoicing, its user base is below one percent. 

Which brings us to another point: Expect to be continuing to offer dual – or multi – options for some time to come. 

“It’s like when email was taking off – you received things in the post and by email,” says Simon Foster Xero’s GM, product for eInvoicing.

“There is absolutely a change process. Technically there isn’t a lot of complexity here. It is a people problem, a change management problem.”