Your Guide to e-invoicing

 

What is an e-invoice?

Electronic invoicing (or e-Invoicing) is the automated digital exchange of invoice information between suppliers’ and buyers’ software through a secure network. An electronic invoice is a PDF or similar document that contains information about the products and services you have sold. It has all your company’s contact details, including name, address, phone number and email address. Often these documents are generated automatically by accounting software on receipt of payment from your customer.

Australia has adopted the Peppol framework as the common standard for e-Invoicing.

Peppol e-Invoicing is a new channel that is a more efficient, accurate and secure way to transact with your suppliers and buyers than PDF and email.

What is not considered an e-invoice?

An electronic invoice does not include any signature or handwritten annotations that are required for certain tax purposes. For this reason, it may be necessary to issue paper invoices in some circumstances if required by law.

Comparison of invoice types:

Here’s a quick overview of the main differences between print, PDF (including other image files) and electronic invoices.

Print invoice

Paper invoices are most often created digitally then printed and sent by post to the counterpart. It takes time for the invoice to reach the recipient, and there is no traceability of the delivery.

Pro’s
  • No system/process changes
Con’s
  • Labour-intensive
  • Expensive
  • Slow payment cycle
  • Low track and traceability
  • Low data quality and visibility
  • Not accepted by many organizations
  • Not environmentally friendly

PDF invoice

Invoices exchanged over email as PDF, Word or other image files are a first step away from a paper-based invoice flow. However, these are not e-invoices because data must be manually keyed in or captured using OCR.

Pro’s
  • First step towards digitalisation
  • Cost-effective
Con’s
  • Not secure
  • Low traceability
  • Emails can get lost or sent to spam
  • Manual or scan and capture entry
  • Low data quality and visibility
  • Often printed for processing and filing

 

E-invoice

An e-invoice is issued, transmitted, received and processed electronically. E-invoicing is an integrated solution that enables a fully automated flow from one company’s ERP system to another.

Pro’s
  • Secure
  • Real-time delivery and processing
  • Touchless operations
  • High data quality
  • Track and traceability
  • Better cash flow and lower DSO
  • High ROI
  • Environmentally friendly

What are the advantages of e-invoicing?

It is an easy way to save time and money. By saving paper, postage costs etc., you can reduce your company’s carbon footprint as well as its general cost levels. You will also be able to view invoices in real time and process them immediately.

  • Touchless operations: E-invoicing enables the automation of time-consuming and error-prone tasks like data entry, matching and approvals so you can reallocate staff to higher-value initiatives.
  • No Errors – that there is no need to print or handle an invoice after it has been sent. This also eliminates the possibility of data entry errors.
  • Track and traceability – E-invoices offer a high degree of track and traceability You can follow the progress of each invoice through every stage of the process, from creation to payment.
  • Real-time delivery and processing: The efficiency and speed of e-invoicing can help save time in the customer payment process.
  • Improved cash flow: Reducing your company’s reliance on paper invoices, it will reduce costs associated with sending an invoice (postage etc.) as well as clearing them after they have been received. This is because you will be able to process them immediately, rather than having to wait for payment before you can do so.
  • Paperless Invoicing – No printing costs, no shipping costs and filing time is eliminated because e-invoices are digitally stored on your system or the vendor’s system.
  • Legal Compliances: e-invoicing fulfils legal requirements like the AU regulation on invoices and payment terms, it helps to reduce fraud risk
  • Remote work-ready – With an e-invoice, employees don’t need to be in the office to access and process invoices.

Ready to start e-invoicing?

If you are ready to move to e-invoicing, ask yourself these questions:

What are the advantages of e-invoicing for my company? Is now the right time to start e-invoicing? Who should be involved in this decision process and how can I convince them that we need to change our current way of doing things? How will it impact on other business processes, like cash flow management or supplier?

Once you have answered this then simply get an accounting software like Xero and start e-invoicing…

If you need some help in putting together a strategy for e-invoicing speak with one our experts at iKeep.

Comments

Post a Comment

Popular posts from this blog

It’s 2024 fringe benefits tax (FBT) time!

  As the 2024 fringe benefits tax (FBT) period approaches, it’s essential to note key dates and obligations. Employers who have provided fringe benefits to their employees or their associates between April 1, 2023, and March 31, 2024, are required to lodge and pay their 2024 FBT returns promptly.  Notable dates to remember include: The conclusion of the 2024 FBT year on March 31, 2024. The deadline for lodging FBT returns and settling any outstanding liabilities to avoid penalties and interest is May 21. For electronic lodgments through tax practitioners, the due date for lodging and payment is June 25. Employers new to lodging with a tax practitioner must ensure inclusion on their FBT client list by May 21 to be eligible for the June lodgment and payment timeline. Even if no FBT return is necessary, registered employers must inform the Australian Taxation crucial, the ATO recognizes exceptional circumstances and encourages proactive communication for those experie...
Read more

Managing Cashflow for Small Business

  Any business owner will tell you that managing business cashflow can be a real juggling act. Cashflow is one of the most common problems that cause business owners to lose sleep. Gaining control of your small business’ cashflow will go a long way to improving your peace of mind and reducing stress. So  how Can a Business Improve its Cashflow ? Identify Identifying certain triggers in particular sales and payments will make a significant difference to cashflow management. Analysing outgoing payments and noting when they regularly occur will go a long way to ensure strong cashflow. Some of the key areas to consider are: Payroll for staff Supplier payment terms and conditions Australian Tax Office Utilities Finance including bank fees and loans Rent Payment to suppliers Customer payments including refund policies There are number of business costs that must be accounted for to help create better cashflow management for your small business. Becoming aw...
Read more

Federal Court Decision on Employer’s Failure to Pay Annual Leave Entitlements

  The Federal Court of Australia recently ruled on a case involving an employer’s failure to pay a worker’s accrued annual leave entitlements upon termination, underscoring the importance of compliance with the Fair Work Act 2009 (Cth) and the severe repercussions of non-compliance. Case Background The case focused on the worker’s claims that the employer had dismissed him for exercising his “workplace rights,” imposed unreasonable working hours, and failed to pay his accrued entitlements upon termination. The court found the employer in breach of section 90(2) of the Fair Work Act for not paying the worker the amount equivalent to his accrued but untaken annual leave when his employment ended on December 9, 2021. The owed amount of $8,022.82 was paid only on March 30, 2022, nearly three months after the termination. Seriousness of Breaching the NES The court emphasized the seriousness of breaching the National Employment Standards (NES), stating that “any breach of the NES...
Read more