eInvoicing needs a large volume of participants to truly be effective – and it’s government and the big end of town that can make this happen.
Before the internet, there were letters and landlines. Then came email – a fast and revolutionary way to communicate online. The catch? Both senders and receivers needed an email address to partake. Today, you might be surprised to learn that Australian businesses are facing a similar situation; only with a different form of technology. eInvoicing is a new way to exchange invoices directly between accounting software, removing the need for manual processing and with added time savings, accuracy and security benefits. Like email was to letters, eInvoicing is the future of how businesses will exchange trade documents such as invoices. However, in order for it to take off, government and big business need to get on board.
According to research by Xero, almost half (48 percent) of small business respondents would consider registering for the Peppol network (the secure platform through which eInvoices are exchanged) if government agencies such as ASIC, the ATO and state transport agencies did the same. A similar amount (46 percent) would likely register for eInvoicing if their frequent big business suppliers (e.g. Telstra, Officeworks, Woolworths) sent eInvoices directly to their accounting system.
While some larger players, like Bunnings, are already actively leveraging eInvoicing, this data captures just how vital they are as a catalyst for positive change. After all, like any network, eInvoicing needs a large volume of participants to truly be effective – and it’s government and the big end of town that can make this happen.
What’s in it for them? The benefits aren’t just for small businesses. eInvoicing is a faster, more efficient and highly secure way to exchange invoices for everyone involved. This reduces the administrative burden and errors in the accounts payable and receivable process. The ATO predicts eInvoicing represents a $28 billion opportunity within Australia’s business digitisation journey – the key to building a more robust and resilient economy.
As with other forms of digitisation, eInvoicing goes a long way in boosting productivity and helping small business’ bottom line. Each time an eInvoice replaces a paper or PDF one, it saves the sender up to $20 – which can add up fast.
It can also help speed up the payments process to minimise late payment times. This is a critical component of supporting healthier cash flow for small business owners – especially in today’s economic environment. In fact, several state and Federal government agencies have already committed to faster payment terms for eInvoices; others (including enterprises) could follow suit, based on the more streamlined process to manage an eInvoice compared to an emailed invoice. What’s more, the majority (63 percent) of small businesses said they would adopt eInvoicing if it helped them get paid faster. This can be a reality – if it has enough support.
Past Xero research has shown technology has a huge impact on small business performance and bottom line. This is even more so for eInvoicing, which can bolster cash flow. Like any change, however, there needs to be help available to make this switch. Most small businesses are still confused about what eInvoicing actually is (62 percent) and say that not enough of their customers or suppliers use it (27 percent). By leveraging the influence and reach of big business and government, this can change.
So how do these sectors have the power to influence the market? The sheer volume of eInvoices they would send could cut red tape, speed up payment times, and increase cybersecurity for small businesses. As the research shows, enterprises could enable their systems to receive eInvoices (and offer faster payment terms) as well as send their own bills via the new system. This streamlines the process on both sides, with Bunnings already proving this to be an effective way of bolstering registrations and network usage.
Meanwhile, government can lead the charge by replacing multi-step processes like ASIC annual review fees, ATO payment plan statements and state vehicle registration fees, with eInvoices sent directly into the software of registered small businesses. We’ve already seen this done to great effect in digital economies overseas.
For example, Singapore is driving eInvoicing adoption by introducing a number of complementary grants. Thanks to strong incentives from government, the country has seen healthy uptake across businesses big and small. New Zealand government agencies are taking note. By 2026, their aim is for 90 percent of all receiving invoices to be eInvoices. These initiatives are exactly what we need to see more of across Asia Pacific – something which Xero is actively pushing for. In Australia, we recently joined forces with the NSW Small Business Commission to host an eInvoicing event as part of Small Business Month in November. This was an opportunity for influential enterprises and state government representatives to share experiences and learn about the initiative, all to drive uptake and usage.
There’s powerful potential for what can be achieved with the input of the broader business landscape in harnessing eInvoicing to the fullest. Ultimately, the more government and enterprises champion eInvoicing, the more we – as a nation – stand to gain.
Joseph Lyons is the Managing Director – APAC at Xero. He is responsible for driving Xero’s next phase of growth and overseeing the businesses across Australia, New Zealand and Asia.