More businesses are getting on board with eInvoicing, a new way to exchange invoices electronically between accounting systems. It promises to make the whole invoicing and billing process faster, more efficient and more secure – especially for the 90 per cent of Australian businesses still processing invoices manually.
But to see these benefits, we first need more people to join the network. And a new government proposal may offer the solution. Consultation on a Business eInvoicing Right (BER) ends soon, and we’ll potentially be one step closer to making widespread use a reality. The BER is a new approach to driving eInvoicing adoption and it’s worth exploring why it’s so promising.
So, what exactly is being proposed?
As part of the right put forward by the federal government, small businesses selling to larger enterprises could legally demand that these companies send them an eInvoice. The BER would have a staged rollout, with the first step requiring big companies to send eInvoices if requested by their smaller counterparts. This would then progressively roll out to medium and eventually small businesses in mid-2025
Tell me, what’s so promising about this proposal?
The BER would shift the balance to give small businesses more weight and, in turn, increase eInvoicing adoption. Currently, most of the efficiency gained in the eInvoicing network is by those who are using it to receive bills. That poses a challenge for a trading network like Peppol because both senders and receivers are needed to make the entire process work. This is because Peppol is a little like sending an email – it doesn’t matter whether you’re using Gmail or Outlook; both the sender and receiver need an email address for it to work.
Historically, large buyers have used their market power to force their smaller suppliers to deliver electronic invoices via expensive and clunky custom-built systems (usually at a major implementation cost to the supplier). This effectively locks small businesses out of the equation as they simply can’t afford to meet these requirements.
How could BER help solve this imbalance and get more senders on the network?
As the BER proposes, we can help get more senders on the network by legislating that large suppliers must send eInvoices if asked by a Peppol registered business (that could be you!). By placing power in the hands in the smaller end of town – like our Xero customers – they could overcome the traditional challenges of working with large enterprises. This quickly solves any questions about whether small businesses will see the promised benefits of eInvoicing.
What does all of this mean for me as a small business owner?
According to Xero research, 63 per cent of small businesses deal with being paid late and nearly a quarter delay paying themselves or suppliers as a result. eInvoicing can make a big difference to this by reducing the roadblocks to paying others.
The BER requirement to send eInvoices to customers is proposed to apply to small businesses from mid-2025. The good news is that by this time the network will have already grown well beyond the scale it needs, meaning that eInvoicing should already be the default way of trading. Email and paper invoices will go the way of landlines and VHS tapes.
So, what’s next for Xero and eInvoicing?
Here at Xero, we’re all in on eInvoicing. We’ve enabled eInvoicing for our customers and included it in the existing subscription fee so it’s an easy switch to make. But we’ve also gone a step further and enabled our own enterprise finance system, so that our suppliers can send us eInvoices. eInvoicing is the next stop on the small business digitisation journey and will bring many benefits to Australian businesses, small and large, as well as broader economic flow on.
We look forward to seeing more Australian enterprises join us in implementing Peppol and for small businesses to reap the benefits of digitisation this year. If BER progresses, this could quickly ramp up and help us see the rewards faster. There’s an exciting road ahead.