E-Invoicing is the direct digital exchange of invoices between the financial systems of sellers and buyers. It is forecast to save New Zealand businesses billions of dollars in transactional costs each year.
It replaces the need to create paper-based or PDF invoices that have to be posted or emailed, then either scanned or manually entered into the finance system. This will enable the faster delivery, processing and payment of invoices, which supports better cash flow and growth for small businesses.
The Government is encouraging all agencies to adopt e-Invoicing. It will help those agencies that have been set a target of paying 95% of all domestic invoices within 10 business days, as well as enabling the streamlining of processes across government.
There are many benefits to using e-Invoicing including:
- Reduced errors - removing the manual handling of invoices and re-keying of information reduces the potential for data entry errors.
- Security - e-Invoices are exchanged directly between financial systems so organisations can be confident they have not been be tampered with.
- Consistency - receiving invoicing data in a consistent way assists data capture and downstream analysis, enabling more accurate forecasting and planning.
- Traceability - the delivery of the e-Invoice can be tracked directly into the financial system, where it will be waiting ready for approval and payment.
- Improved customer relations - fewer errors require less follow up. This will help build an organisation’s reputation as being ‘good to work with’.
New Zealand uses the global standards based framework – Peppol. The common format allows all businesses to access e-Invoicing, regardless of their size and financial system they use. This is different to the traditional EDI (Electronic Data Interchange) systems which tend to be customer specific and not easily accessible to smaller businesses.
E-Invoicing is enabled through service providers – like text messages are enabled by cell phone providers. Agencies can choose from a number of accredited New Zealand and international service providers that act as access points, connecting businesses to the Peppol network. A list of accredited service providers can be found on the ‘Getting started with e-Invoicing’ page on the New Zealand Business Number (NZBN) website.
Software providers are also adding e-Invoicing capability to the products they offer, making it easier to access and benefit from e-Invoicing.
NZBNs are used to route the e-Invoice to the correct recipient. Where there is no available field to include an NZBN, service providers may be able to offer an alternative solution.
To get started, agencies need to consider the existing e-Invoicing capability of their finance system, integration with the wider business and the ability of their accounting software providers to support it. For some, this can be as easy as a few clicks to update their systems, for others it will be a more complex connection.
The Peppol framework will also enable the direct digital exchange of other e-Procurement documentation including e-Ordering, e-Catalogue and e-Dispatch, and these are being readied for implementation in mid-2020.
For additional information about e-Invoicing visit the New Zealand Business Number (NZBN) website.