How Does E-Invoicing Work?
Have you sent or received an E-invoice for your business? Do you want to know what they are and how they benefit your business? Read this article to find out.
Electronic invoicing otherwise referred to as E-invoicing is the process of electronically sending information between suppliers and customers. The invoice format is readable by both software and humans. These are automatically entered into your accounting software. The time efficiencies produced from this process ensures that the entire workflow is smooth and easy for small businesses.
Essentially, one business can send an E-invoice through their accounting platform (e.g. Xero, Intuit or MYOB being the three largest in AU market) to another business. Therefore removes the need to create paper-based or PDF invoices, scan, post, emailing or manually entering them. If you want to take advantage of E-invoicing speak to a business lawyer.
Trans-Tasman E-Invoicing Agreement
The government is investing in improving the adoption of E-invoicing. They recently agreed with the New Zealand government by establishing the Australia New Zealand Electronic Invoicing Board (ANZEIB). The Board intends to strengthen e-procurement practices, digital identity and company director identification. In addition, they both intend to adopt the Pan-European Public Procurement Online (PEPPOL) framework for e-invoicing. This increases the opportunities for businesses to operate globally. The timeline for this project is by mid-2019 so all eyes will be on whether they can make that deadline.
Benefits of E-invoicing
Unpaid invoices account for over $26 billion. Above all, over 20% are errors on invoices & over 20% from invoice being sent to the wrong recipient.
Below are the benefits for businesses:
Improved Cash Flow & Quicker Payments
Information quickly and automatically reaching its destination (software). As a result, better and quicker payment terms.
Easier Processing & Cost Savings
Faster processing and payment of invoices result in cost savings. For instance, it is approximately 70% cheaper to process an E-invoice than traditional paper or PDF invoices.
Information is correct and of highest quality thereby removing manual handling. As a result, fewer incorrect or lost invoices.
Direct & Secure
As the E-invoices are processed directly into the accounting software it minimises the risk of fake or corrupted invoices. Because the framework is reliable and secure it dramatically reduces the likelihood of billing scams.
Available for Every Business Size
Businesses in all sectors can access and benefit from E-invoicing, irrespective of their size and the systems they use.
The government and accounting software platforms are heavily investing in E-invoicing. As a result of this businesses will work seamlessly, efficiently and also get paid on time. This is extremely vital for businesses to stay on top of their business financials. If you would like to find out more feel free to reach out to the commercial lawyers available on LawPath’s directory.
Unsure where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.
Abhinav is a legal intern at Lawpath as part of the content team. Currently in his 3rd year studying a Bachelor of Laws at Macquarie University (Major in Banking, Corporate, Finance & Securities Law). He is keen to learn more about Mergers & Acquisitions in the future.