Published on the 08/11/2024 | Written by Heather Wright

Govt, and Xero, push electronic option…

eInvoicing has been given a boost with the New Zealand government increasing pressure on government agencies to accelerate adoption of the technology – and speed up payment of invoices – while Xero has driven eInvoicing registrations with bulk registering of customers.

From January 2026 government agencies that send or receive more than 2,000 domestic invoices a year must have eInvoicing systems in place and will be required to pay all domestic eInvoices within five business days.

“There are significant productivity gains from adopting eInvoicing.”

Meanwhile, both Australia and New Zealand are adopting the Peppol International (PINT) A-NZ specification for electronic invoicing and credit notes this month, replacing an older standard.

eInvoicing, which enables secure sending and receiving of invoices directly between accounting systems, has been held up as one option to help Australian and New Zealand businesses reduce the risk of invoice scams and improve their cash flow.

Australians reported AU$16.2 million in losses from payment redirection scams – which often involved faked invoices – in 2023, while Cert NZ noted that ‘unauthorised access’ (when an attacker gets access to an account without permission) and pay up front scams cost Kiwis $8.2 million in 2022 – with $4.6 million of that from unauthorised access scams.

In New Zealand, research from the Ministry of Business Innovation and Employment (MIBIE) found respondents believed security was a key benefit of eInvoicing. Users of the technology also highlighted the benefits of invoices not getting lost and time saving.

While security is now seen as a key driver for eInvoicing, it started as a productivity drive – in New Zealand more than 280 million business to business invoices are exchanged each year, while in Australia the number soars to more than 1.2 billion with a 2016 study suggesting eInvoicing could bring cost savings of $9 per invoice – or $28 billion in savings to Australian businesses over 10 years. In New Zealand the savings are estimated at $4.4 billion over 10 years.

But despite both countries having adopted the Peppol (Pan-European Public Procurement Online) interoperability framework – a standardised method for exchanging invoices used by countries around the world – uptake has been slow.

New Zealand’s Ministry of Business Innovation and Employment (MBIE) says 23,569 businesses were registered as of September to receive eInvoices, including well known brands such as Spark, Bunnings, Woolworths, Westpac and KPMG and 26 of 32 central government agencies.

Andrew Bayly, New Zealand minister for small business and manufacturing, says lifting New Zealand’s economic productivity and improving public sector efficiency means adopting smarter ways of working, including technologies such as eInvoicing.

Government agencies are a large client for many Kiwi businesses supplying everything from stationery and furniture to services including software, security and research. Around 1.6 million invoices are sent and received by the 33 central government agencies each year, with the total number for all 135 government agencies ‘likely many more millions’ Bayly says.

“Prompt payment is especially important for small businesses which have limited cash reserves – an unpaid or late invoice can be the different between being able to pay staff on time or not,” he says, noting the importance of government agencies paying invoices quickly given 97 percent of all Kiwi businesses are small businesses.

“There are also significant productivity gains from adopting eInvoicing, instead of paper or emailed PDF invoices. eInvoicing allows invoices to be processed digitally, reducing instances of human error and fraud.”

In Australia, the May 2024 federal budget included an AU$23.3 million investment over four years to support the Australian Taxation Office in overseeing the e-invoicing network.

There, the use of electronic invoicing is mandatory for Commonwealth Agencies, with state and territory governments also implementing or piloting eInvoicing.

The Australian Tax Office says it is also  working to raise awareness of eInvoicing and its benefits among local government.

But adoption challenges persist.

In August, New Zealand’s eInvoicing Adoption Leaders Group (eALG) noted a spike in eInvoicing registrations as a result of Xero bulk registering a portion of its customers. Between Xero and MYOB most small businesses already have access to eInvoicing.

However, many large businesses will need to prioritise enablement. Several members of the eALG, which is made up of CFOs and senior leaders from Kiwi organisations aiming to drive wider uptake of electronic invoicing, noted during the meeting their progress in integrating eInvoicing into procurement processes and systems, but also noted challenging with uptake externally.

While some suppliers were ‘extremely positive’ as the technology was enabling them to speed up working capital cycles and improve business health, a lack of standardisation of fields on the government customer side was increasing the time and intervention required prioritising compliance with mandates in other countries of operation, such as Malaysia.

One member organisation noted it was live with eInvoicing for AP, but had so far only received electronic invoices from one supplier.

An eALG member survey found businesses support eInvoicing and understand the benefits, but wanted certainty that the government eInvoicing ‘strongly’ and that other businesses will invest.

“With certainty in dates/timeframes and collective uptake, businesses can prioritise investment in eInvoicing ahead of competing business priorities,” the eALG said in response to questions from small business and manufacturing minister, Andrew Bayly.

Seventeen of the 22 respondents to the survey also suggested the government look at introducing stronger industry requirements for exchanging eInvoices with government and/or other businesses.

Businesses have also noted the difficulting in getting investment approval for eInvoicing without definitive compliance requirements as a driver.