Post Pandemic Resurgence of eInvoicing Although the eInvoicing initiative actually kicked-off in January 2020 here in Australia, it fell by the...
Get eInvoicing Ready: Exploring Australia's Digital Transformation
I am deeply interested in learning more about eInvoicing and its adoption across Australia. Are you and your trading partners eInvoicing ready?
I had the opportunity to sit down with Karen Lay-Brew, Strategic Advisor to the eInvoicing project at the ATO, as well as attend the launch of the first eInvoicing Hub in Australia - here’s everything I learned, and more!
The most common myth regarding eInvoicing is that the ATO can read the data and receive a copy of all eInvoices, this is simply not true.
The reason the ATO is driving this initiative is not because they want to read the data, it is all about making Australian business more competitive through the efficiencies offered through digital adoption as part of the overall Australia's Digital Economy Strategy. They have been chosen by the Australian Government for this role due to their experience in delivering similar digital initiatives such as Single Touch Payroll. The ATO’s role in eInvoicing is to ensure that software providers offering eInvoicing products meet the technical and security specifications.
I am deeply interested in learning more about eInvoicing and its adoption across Australia. After a few events, some great conversations and a lot of learning, I want to share what I learned with you.
Before we jump in, we are hosting a webinar with Samantha Coloe, Assistant Director -eInvoicing with the ATO on 21 September ‘23. Join us and learn for yourself!
eInvoicing Hub Launch
Sharon Claydon, Federal Member opened proceedings at the eInvoicing hub launch in Newcastle and identified why Newcastle and the Hunter was the perfect place for such an innovative initiative.
Not knowing the history of Newcastle, I soon realised how the closure of BHP Steelworks in 1999 was thought to be Australia's “largest deindustrialization event”
At its peak, Steelworks employed about 12,000 people and produced millions of tonnes of steel each year for use around Australia and overseas.
It was suggested that Newcastle would become a ghost town as a result of the BHP Steelworks closure but fast forward 24 years the Newcastle economy generates an estimated $42.809 billion in output. Newcastle represents 32.1% of the $133.568 billion output generated in Hunter Region - HROC, 3% of the $1.412 trillion output generated in New South Wales, and 0.9% of the $4.680 trillion output generated in Australia. The largest contributor to annual economic output in Newcastle is Manufacturing, which represents 14.8 percent of total output. The area in Newcastle generating the most output is Newcastle - Cooks Hill, and the largest industry here is Financial & Insurance Services.
Mark Stockwell, ATO Director of eInvoicing explained why the government chose to use PEPPOL for eInvoicing and nominated the ATO as Australia's PEPPOL Authority based on their experience with delivering similar digital initiatives, such as Single Touch Payroll.
Mark explained the ATO’s role as the Australian PEPPOL Authority is to ensure the eInvoicing standard is implemented consistently by all digital service providers in the eInvoicing network.
In other countries who have adopted PEPPOL for eInvoicing have different authorities for example the the PEPPOL authority for New Zealand is the Ministry for Business Innovation and Employment and the UK have chosen the National Health Service.
Mark also made a point that the ATO are not reading the data that is sent across the PEPPOL network.
Samantha Coloe, Assistant Director for eInvoicing at the ATO highlighted that 1.2 billion AP documents are sent business to business in Australia and that 89% of small to medium businesses are still processing AP documents manually.
Obviously, this involves a cost to a business by entering data manually and Samantha explained how this cost can be reduced from $27.67 to $9.18 by choosing eInvoicing and providing significant savings to the Australian economy.
Another knock-on effect of entering data manually is how this can impact paying suppliers on time and the subsequent knock-on effect that has to the whole supply chain.
The ATO estimates that collectively small businesses are owed $26 billion in unpaid invoices at any one time. On time and faster payment are one of the key benefits of eInvoicing, together with increasing productivity and reducing risk of cyber scams perpetuated through email.
Another potential cost to Australian business by not using eInvoicing is that businesses are exposing themselves to potential cyber security threats with the ACCC reporting that payment redirection scams have cost Australian business $224 million in 2022.
We also learned from 2 companies about their collective experience regarding eInvoicing. Daniel Whittle, Digital Manager at BOC South Pacific and Mitch Hindle, Head of Billing and Credit - ANZ & SG at Hudson Recruitment both shared their experience on how they have adopted eInvoicing and the benefits provided.
Between Hudson Recruitment and BOC Gas, they send out over 5,000 tax invoices a week to their customers. Mitch Hindle explained the major positive impact eInvoicing has had on cash flow for Hudson. By using eInvoicing they removed potential delays in transmitting invoices as eInvoicing allows the recipient to ingest the data automatically into their system and ensures the data was complete and accurate, therefore speeding up the approval process for payment.
Conversation with Karen, Strategic Advisor at the ATO
Karen Lay-Brew explained to me how the ATO is continuing to raise awareness of eInvoicing with its aim to encourage adoption. She said they recently pivoted their strategy to work with and educate specific industries in addition to the broader communication approaches. The first two industries they approached to benefit from eInvoicing were the recruitment and energy sectors. The next industry identified to benefit from eInvoicing is material suppliers to the construction industry.
Material suppliers to the construction industry will be a key focus as there are already great successes being seen with Bunnings and their customers who have adopted eInvoicing and are reaping the benefits of its use, and the high number of transactions and SMEs in this industry that would benefit from eInvoicing.
The ATO will continue to look for opportunities to work with new industry groups and continue to hold education events to improve the uptake of eInvoicing to help make the Australian economy healthier through the adoption of digital measures such as eInvoicing.
A number of other industries are being considered including professional services, such as accounting firms with KPMG already onboard.
Are you and your trading partners eInvoicing ready?
To understand if the accounting or ERP software you use is enabled to send or receive eInvoices you can start by reviewing the list of software vendors who are eInvoicing ready.
Lastly, join us for our upcoming webinar : eInvoicing 101 - Benefits for the Australian Economy