eInvoicing

If your business issues PDF invoices by email, you might have thought that’s pretty much eInvoicing.

Understandable, because PDF invoices are digital files and email is electronic mail. Paper isn’t used anywhere in the process.

But it’s wrong. eInvoicing is about as different from PDF invoicing as online banking is from writing cheques.

eInvoicing is the transfer of invoice data from one system to another via access point providers. In New Zealand and Australia, and in a growing list of other jurisdictions, it relies on a standard known as Peppol.

One of the big differences between a PDF invoice and an eInvoice is that the organisation receiving an eInvoice gets important data along with that is automatically captured by its accounting or ERP system. This instantly removes the overhead and costs associated with keying in and confirming things like PO numbers and bank accounts. Processing a PDF invoice is estimated to cost businesses $23, while an eInvoice will be less than $10.

eInvoicing has loads of other advantages, too, not least amongst them the undertaking from NZ government departments to settle eInvoices within 10 days.

For years corporates and multinationals have used Electronic Data Interchange (EDI) to exchange large volumes of invoice data, thus avoiding the processing overheads of paper and PDF invoices.

The EDI technology they relied on was typically bespoke and in most cases uneconomic for smaller companies. Plus, despite the establishment of industry-specific standards over the years, there was no government-mandated standard that all businesses could use.

For New Zealand, that all changed in February 2019 when the government announced it would adopt the Pan-European Public Procurement Online (Peppol) procurement document exchange standards. Peppol paves the way for all businesses, no matter how small, to exchange eInvoices with customers and suppliers. It levels the playing field by letting organisations of all shapes and sizes benefit from the faster payments, improved cashflow, reduced processing costs, improved security and financial visibility that come with eInvoicing.

Invoice payments to a supplier can be delayed for two main reasons. The first has to do with the business making the payment. It might be short of cash, struggling with a lockdown or unable for any number of other reasons to settle an invoice quickly.

The second is about process – the time it takes the customer to complete its accounting steps and get an invoice into its next scheduled payment run.

eInvoicing can’t do much about the first reason, but it has a powerful effect on the second. eInvoicing delivers invoice data straight into a business’ approval process for prompt approval and then into the accounting system ready for payment. All the overhead of scanning invoices or keying in data, making corrections and chasing emails or paper for approval is reduced or removed altogether, cutting the invoice payment cycle from weeks to days. That’s one of the reasons that New Zealand Government agencies have undertaken to pay invoices received as an eInvoice within 10 days, a big improvement from the 30-90 day payment cycle that most government suppliers expect.

Interested in faster payments and how we can help your business move to eInvoicing? Chat to our specialists today.