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eInvoicing: Transforming the way invoices are processed and paid

The emergence of eInvoicing around the world is looking to be one the major changes impacting the way that organisations do business with each other. Raoul D'Cruz (Director - Tax and Legal, Deloitte Australia) interviewed Mark Stockwell (ATO Director for eInvoicing) and Bruce Billson (Australian Small Business and Family Enterprise Ombudsman) to discuss the latest on eInvoicing in Australia.

Broadly, eInvoicing (electronic invoicing) is the digital exchange of invoice data between a buyer and suppliers software systems through an encrypted network. One such network is called PEPPOL. What does PEPPOL mean? Peppol refers to “Pan-European Public Procurement Online” and has been described as follows:

“Peppol is a set of artifacts and specifications enabling cross-border eProcurement. The use of Peppol is governed by a multi-lateral agreement structure which is owned and maintained by OpenPeppol.

Peppol is not an e-Procurement platform but instead provides a set of technical specifications that can be implemented in existing eProcurement solutions and eBusiness exchange services to make them interoperable between disparate systems across Europe.”


It has been estimated that around 1.2 billion invoices are exchanged each year in Australia. Through conventional methods, Bruce Bilson notes that around one in five go to the wrong person and about one third have inaccurate information on them. By digitizing invoices and sending them over a secure channel, a business can; reduce these mistakes, reduce manual work, achieve costs savings estimated at $20 per emailed invoice for an average business and improve an organisation’s overall cyber security risk profile.

The eInvoicing phenomenon is taking many forms around the world, with the PEPPOL framework forming the core network for a number of eInvoicing regimes being implemented in various jurisdictions. This interview discusses eInvoicing and some of the key developments in Australia to date.

A full version of the interview transcript is available below:

Raoul D’Cruz: Hi I'm Raoul D'Cruz from the tax and legal practice at Deloitte here in Australia. eInvoicing is transforming the way that business and government entities process invoices and payments here in Australia as well as around the globe.

In Australia, we have seen a mandatory obligation to adopt eInvoicing for Commonwealth entities from 1 July 2022 and we are in the process of seeing other state and territory governments making commitments to implement eInvoicing across Australia. Private enterprises and government entities alike are being impacted by this change in the way we do business. Today I'm interviewing Mark Stockwell, the ATO director for eInvoicing, and Bruce Billson, the Australian Small Business and Family Enterprise Ombudsman, to discuss eInvoicing in Australia. Mark and Bruce, thank you for joining us today. 

There are a number of key stakeholders within private and public businesses who are still wrapping their heads around the concept of eInvoicing, with some still thinking that because they send an invoice over email, they’re already eInvoicing enabled. Are you able to provide us with an overview of eInvoicing and what this entails?

Mark Stockwell: Sure can there Raoul. You're right on the money there with many businesses think they're eInvoicing when we've got a new definition for them. They’re used to over many years using EDI or electronic data exchange portals or maybe they're used to sending PDFs through the email system. These are things that are standard practice for most businesses today. However, a feature of these processes is the manual intervention, and that's the criteria we assess against, where the supplier needs to probably enter information into the portal of their customer, or they might need to create a PDF or an invoice and attach it to an email and send that off for payment. So, it's a very manual process that's been around for quite a few years, and hence what we're talking about today is introducing a new concept. It's a new way of doing invoicing here in Australia. It's a standardized approach so that when you're sending invoice data between a buyer and suppliers software systems, you're able to do so irrespective of what system you're actually using. So, it's based upon an international standard and small business will only need to use their own software to trade with all their different customers, no longer needing to log into various portals, doing different processes, different passwords, etc. and therefore they're also not having to chase up lost or missing emails. And because the data between the two solutions travels through an encrypted network, it's much more secure than the existing email system.

Bruce Billson: Mark is spot on Raoul. There are 1.2 billion invoices exchanged each year in Australia. The research says through conventional methods, about one in five lands with the wrong person, about a third have inaccurate information on them and it's more expensive. So, this is a really positive, transformational opportunity for small and family businesses who frankly didn't get into business to send invoices to some other spark in their life. But they know that processing invoices is a central part of the business of running a business, and eInvoicing makes that so much simpler, so much more cost-effective, and so much more secure.

Raoul D’Cruz: For the benefit of everyone who is new to eInvoicing, would you be able to provide your view of the impact of eInvoicing on small businesses and other businesses in general? Perhaps, Mark, you first.

Mark Stockwell: For me, it's largely about efficiency and being more resilient. So eInvoicing is a great practical example of where our businesses can become more digitized and attain the benefits that automation provides, that software provides to our business. Many small businesses worry about the cost of anything that might be new like this. And what I want to bust that myth upfront is about whether the cost is low or minimal. Most of those software solutions in the market today, have very low fees or no fees at all. Also, in the market, there are a number of free portals available for businesses that've not yet moved to a digitized platform and may want to test the system themselves in a free, easy-to-use way. So, for me, it's about the efficiency of the business and making themselves more resilient.

Bruce Billson: From a small business perspective, I mean, I've been championing the more timely payment of invoices as a real objective that we all need to work toward. We know cash flow is fundamental to business survival and eInvoicing enables a more timely payment of those invoices. That's got to be in the interest of small business. Secondly, you know, we know digital engagement has been really important to business resilience, survival and I suppose adaptation during COVID. But it's not just about technology to find and delight customers in new ways. It's about streamlining and making more efficient the business of running the business. So, time poor, small, and family business owners and leaders can spend more time on what really is the spark in their business and is the real revenue generator. And that's the passion for what got them involved in that enterprise in the first place.

Raoul D’Cruz: It is estimated that businesses can achieve cost savings of up to $20 per invoice by adopting eInvoicing. Where do you see these savings coming from and what are the benefits of eInvoicing in general?

Mark Stockwell: The saving you referred to there Raoul is really based upon some modelling that's been done and that's looking at the average business, like we do recognize that businesses do have unique behaviours in how they operate, but on the average business, we're seeing productivity savings It highlights there are significant savings to be had for small business here. And we've done further modelling, which suggests that equates to about 11 days of time saving or the cost equivalent thereof, that a business can save on an annual basis. So, it's not insignificant. And where do these savings come from? It's really about taking, minimizing or taking away as much of the manual intervention that currently exists in the invoicing process today. So, if you think about, you know, data entry checking, printing, doing some reconciliation, all these functions take time and cost associated with that. So that's the general processing. But on top of that, you’ve also got, where the big costs do come in is if it happens to be a misplaced or lost email, which has the PDF obviously attached to it, that delays payment and therefore the timely back and forth between the bar and suppliers where it churns up a lot of time and, you know, lost effort but for no good reason.

Raoul D’Cruz: And Bruce, do you have any comments as well on this point?
Bruce Billson: Look, Mark's nailed it completely Raoul. I mean the research by the digital services community in Australia points to conventional email costing around $31 and that's a paper-processed invoice, I should say. For a PDF attached to an email, it’s about $28 per transaction. An eInvoice is a little over $9, so that's an enormous opportunity. And given the amount of invoicing in the Australian economy, that's over $25 billion over a decade of potential benefit to the Australian economy. So, it's worth doing and Mark's touched on the cost of rework of an error or the invoice perhaps landing in the wrong hands. SAP has done some work, probably with the larger end of the small and medium-sized business community. They were talking about operational savings of about 40 grand a year. Now that is based on about 160, 170 invoices a month. But that's how they've washed that through and point to those savings in a real material sense. The thing that's not in those numbers, which I would highlight though as vitally important, is the resilience and the cyber security advantages of the encrypted network over which eInvoicing operates.
Now we know that if a small business is subject to a cyber-attack or what we've seen are these invoice substitution scams, Raoul, that's where you know, a perpetrator will grab an invoice, substitute other banking details, send it through, looks incredibly legit. I mean, it really hard for people to recognize any difference unless they knew what the BSB and account numbers were of their counterparty, and they substituted in their own details. Now that an attack of that kind on a small business can bring that business to its knees. And so that is a further advantage here. That risk, that loss of revenue, that vulnerability in a digital sense is greatly lessened by the use of the encrypted network through Peppol and through eInvoicing, so many operational but also a strategic advantage in bolstering cyber protections.

Raoul D’Cruz: How is adoption currently tracking in Australia? Is there anything that you think should be done to improve uptake in eInvoicing by businesses or government? And do you see or think that any market segments might be slower to adopt than others?

Mark Stockwell: Look what I'm seeing so far is some really good positive news Raoul. So, in the federal government space, I'll cover that first is that we've largely now met a mandate that government asks us to be enabled to receive eInvoices by 1 July this year. Federal agencies we’re all enabled. We're in the early stages of that implementation and we're just bedding in some of the processes to process the invoice when they're received from our suppliers. But we're in a really good spot. 

The other advantage of when you're supplying to a large federal government agency is we're also paying in five days. So, I think that's a fantastic incentive for our suppliers to actually get on board, get your invoices sent through to us, and we can pay in a very speedy way. So that's where the federals are, we’re in a very well positioned in terms of supporting our supply chain in the states government sector, very good news to come from New South Wales and South Australia, particularly. They've nearly have got all their agencies also fully enabled, enabled to receive invoices from their supply chains as well. So, this fantastic work that's been happening in those two states. But in saying that most of the other states and territories are in different phases or different stages of their implementation as we speak. So, you'll get to see more of those states come on board shortly. So, if you're a supplier to government in some way, just check in when they're available, if they're not already implemented, and you'll be able to get the benefits of dealing with government through an e-invoice. 

In the corporate Australia area, though they're a bit like large government, they're big business, they've got a little bit more complex arrangements they have to put in place and so they're working through implementation plans as we speak as well. I've got some fantastic news to share with people in that we've seen some of the early large corporates now starting to trade with their customers. Big names like Bunnings, Woolworths, BOC Gas. Now all these are pretty well household names, and we expect to see several large, sorry, big announcements over the coming months as more and more of these large corporates also come on board. And what they're doing is both sending and receiving with different supply chains to actually get the benefits, not even for themselves, but for their customers and making that supply chain more resilient when dealing with them. So, I'm pretty happy where things are progressing. Obviously, large business takes a little bit longer because of the complexity and the number of changes they have to make to their systems. But now that the software is largely here, there's no excuse why people can't take it on board.

Raoul D’Cruz: Thank you Mark, and acknowledging that this ecosystem, you know, impacts so many different players in different sizes, private enterprise has an incredibly important role as part of this. Bruce, where are you seeing the eInvoicing adoption journey for private enterprise?

Bruce Billson: Well, I'm encouraged by particularly larger corporates that many of whom traditionally have had their own proprietary systems. You want to deal with them, you are obliged to get in among their particular system. And I can understand that. I mean, that'll work well for efficiency of the big corporate. But if you and I were a supplier to a number of these businesses, we could face ourselves having to navigate multiple proprietary systems just as a part of us doing our business. So that complexity for us, it's almost transferred from the big corporate onto the smaller business to adapt and play by what is the preference of the larger counterparty. 

With Peppol, with eInvoicing, we're actually seeing a, you know, an ecumenical way of doing this so that it's inclusive, it's accessible, it's being adopted across a range of enterprises. Mark and his team have driven good engagement and you know, we've got tens of thousands of businesses now registering to be part of it, governments leading. That's terrific. Big corporates are leading. That's terrific. Even local government are getting involved Raoul where they know they've got a number of local businesses that are part of the goods and services supply chain that they work with small business friendly councils is a program running in a number of states and some are seeing this as part of that commitment. 

But I also want to put a shout out to the digital service platforms. I mean, those very familiar cloud based accounting package providers, you know, whether it's Xero, MYOB, Intuit, Reckon, those people have come those service providers have come forward to embed the capability in the BAU, business as usual accounting packages and other features that are part of those programs to really help small and family businesses get on board with you know an initiative that's regionally significant, you know, you're dealing with Singapore and others, they're all part of this eInvoicing community. So, you know, kudos to many. The momentum is building. Trusted advisers are encouraging their small and family business clients to engage. I think that's terrific. And there again, we're seeing trusted advisers providing an important prompt and encouragement and some path finding on how to do it. Pleasingly, the research and again acknowledging SAP for their research, early concerns about cost and complexity maybe being a hesitation in reality though, when people have actually embarked on the eInvoicing journey, those concerns have drained away, and the people are saying so much more straightforward to be a part of this digital transformation in invoicing in Australia.

Raoul D’Cruz: Thank you Bruce. We are aware of eInvoicing, adoption and operation, requiring investment by entities to fully stand up the invoicing capability. So, whether their systems are with Xero, Intuit, Reckon, SAP, Oracle, MYOB, Workday or any other accounting or reporting systems, it seems like the eInvoicing adoption journey is unique and requires dedicated planning for each entity. What do you see as the major challenges to adoption?
Mark Stockwell: Look, I’m happy to kick off with that answer Raoul. So those accounting software packages you mentioned there before are now in the market. What people need to be aware of, though, is there any difference in the terms of cost to actually for those subscription to those people who already use accounting packages and is there any fee when you need to connect with the secure network. So, but the good news I'm going to share with people today is there are little, or no costs associated with the majority of small business packages out there. But what I do urge people to do is just do your due diligence and just check with your provider if there are any costs associated with that. But I think most people will be very pleasantly surprised. So that's really great news upfront. 

Another barrier we're now seeing as people start to come into eInvoicing and as you call out, people are different businesses are unique, is about what I call is the change transformation for that business, because you're moving from a paper paradigm to now a digital paradigm. So, you just need to review your current processes, your reconciliation, you’re checking how you've done that previously, and what needs to change to be in a more digitized world, which generally is more efficient, so there's some steps you no longer have to do.
You just need to understand what they are. So, you please make sure people do the due diligence around that and making sure if it's if you're not a sole trader, obviously there’s staff that need to be trained to make sure they're aware of the change. Now, that's more business, the medium business. 
At the large business end there has been a shift in terms of government procurement. I mentioned before about how we're paying in five days and it's obviously very attractive to our supply chain. But one of the things we did do with that procurement, because initially we had a threshold of $1 million contract for large business when they're dealing with federal government. What we've done since one July is actually remove that threshold. So really, regardless of what size your contract is with the government, we're able to now pay in five days. Obviously, that puts pressure on us in terms of reconciling, making sure everything's in place before we make that payment. But that's what we're going through at the moment. Just reviewing those. Now, what it means, though, is some existing contracts may need to be renegotiated or the new contract will commence with these new terms as that new contract comes in, but again, you'll be dealing with your government agency and so it's just working through with them as to when those new terms come into effect.
Raoul D’Cruz: Understood. Thank you. And Bruce, any comments from your perspective on the challenges to adoption for private enterprise?

Bruce Billson: I think the private sector and I suppose policymakers recognize that good business pays. It pays in a timely way and if we can remove friction points and needless causes of delay, that's in everybody's interests and that's why this is such an important microeconomic reform for the Australian economy. We know even the early adopters; the Xero research points to more than three quarters having felt that they've secured real benefits already. Now that number I expect will increase as more people join the eInvoicing journey. 
The network effect to have more businesses conducting transactions through eInvoicing mechanisms, the more benefit will arise and that's something that the network effect will take hold of. But even those early adopters, Raoul, are seeing good benefit in being engaged and we've talked earlier about the efficiency, the security, even the environmental benefits of seeing eInvoicing as part of an enterprise's digital engagement journey.

Raoul D’Cruz: I think what we can take away from today is that eInvoicing is going to have a significant impact on the way we do business in Australia and the way we do business as a player in the global economy. Do you have any final thoughts or comments you'd like to convey today on the adoption of eInvoicing in Australia?

Mark Stockwell: I'm happy to kick off with my final thoughts. It's really, the final answer is don't delay. As you heard the software now is available particularly for all small businesses and most of the software for medium and large businesses is ready. There is a network, secure network in place, ready for people to start transmitting their information through. So, I'd say don't delay. Find out about eInvoicing in your package. If you don't have a package at the moment, investigate those which are fit for purpose for your business and start getting some of those productivity benefits that will bring to you. Not only that, but also, it's another step-in digitization of business and you're bringing about therefore greater resilience, and more productivity, which is ultimately what digitization will bring for yourselves. Lastly, my last point is about security. And please look to minimize your exposure to those email scams that Bruce spoke about. By using eInvoicing, you're removing the need to have emails in your in your business and therefore, that goes a long way to mitigating against that awful scam environment.

Bruce Billson: Mark’s spot on. What business is not interested in addressing cost pressures, cash flow concerns, supply chain relationships, adaptation, and adjustment to COVID and other unexpected impacts on their businesses as part of that suite of challenges and cyber?

eInvoicing represents a real meaningful strategy, one that's actionable. You can put it into action, you can implement it. It's not rocket science. It's an important and really tangible and achievable step in a, digital engagement journey and as the network effect grows, more people will be looking for it, more people will be welcoming it and I think the recognition of the benefits will be more widespread so my encouragement, get amongst it.

Raoul D’Cruz: Mark and Bruce, thank you both very much for your time today and we look forward to speaking again soon.

Bruce Billson: Thanks Raoul. Happy to be your wingman. Mark, thank you.
Mark Stockwell: Thank you very much Bruce.