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Running a business

Guide to E-Invoicing

Most businesses today use invoices in one form or another for things like billing customers for transactions, collecting tax on sales, and paying suppliers. Until recently, both paper and digital invoices needed to be created manually and sent through channels like email.

eInvoicing is changing the way invoices are created, shared and paid by removing the need for a human to input any data. Even the federal government and the Australian Tax Office (ATO) have started switching Commonwealth government organisations to eInvoicing. 

But what exactly is eInvoicing and how does it work? In this article, we’ll walk through the essentials of eInvoicing, including the benefits, how to set up eInvoices and how accounting software can take care of the hard work for you.

What is an eInvoice?

An eInvoice, or electronic invoice, is a digitally delivered invoice that is produced by invoicing software without the need for human intervention. It can speed up the payment process for suppliers, improves efficiency, and reduces the overall cost of operations. 

Unlike digital PDF or Word invoices, eInvoices don’t need to be manually created by using a template or invoice generator. Instead, they’re automatically generated by eInvoicing software, which means business owners don’t have to spend time creating and processing invoices.



How eInvoicing works 

The availability of an accepted standard and a trustworthy network helps financial information transfer across different systems and makes eInvoicing possible. As in many other nations, the standard used in Australia is National Insurance European Public Procurement Online (Peppol).

Peppol has been working to standardise the technology behind international electronic procurement. The goal for the standard is to streamline the corporate procurement process by allowing companies to engage electronically with other entities. In Australia, the Peppol authority is the ATO.

It is essential that when launching eInvoicing, you connect your software to the Peppol network. Here, service providers authorised by the ATO will deliver your eInvoices securely. The ATO manages the system, but they cannot access your invoices



Benefits of eInvoices 

eInvoicing has many advantages for buyers and suppliers, including less manual work, fewer disputes, and improved cash flow. Here are benefits that eInvoicing has to offer:

Faster payments 

eInvoicing makes payment as easy as possible for customers. Many eInvoicing solutions include a ‘pay now’ option, which means the customer can pay their invoice with the click of a button. 

On top of this, eInvoices transfers invoice data directly from computer to computer. This means there’s no middleman involved in getting the invoice from biller to sender, speeding up the payment process.

Improved security 

eInvoices are inherently more secure than paper or PDF invoices because they are sent directly from one accounting system to another, rather than through a separate channel like email. With Peppol, data is transferred through a network of approved service providers called 'access points'. This makes eInvoicing using the Peppol framework far more secure than invoicing via email or mail.

As a result, there is a reduced risk of phishing scams, fraud, and ransomware attacks. In addition, a built-in address database helps ensure that deliveries go to the correct recipient. 

Automation 

Because eInvoices are automatically generated, you don’t need to spend time manually creating and sending invoices each week or month. This can be a huge time-saver, particularly for business owners with a high volume of customers or orders that require separate invoices.

Increased efficiency 

At least 90% of invoices in Australia are still created manually — whether entirely or partly. Manual invoicing requires a lot of time and effort. Suppliers must maintain records, generate invoices, and send them. This forces buyers to manually organise, scan, and rekey data into their own database or software. 

With an eInvoice, however, the client just needs to approve the information already entered. As a result, approving a prearranged payment is as simple as clicking a button. 

Lower risk of errors 

To be valid and tax-compliant, an invoice must contain specific information such as:

  • Contact information for both your business and your customer
  • An itemised list of the products or services provided
  • An invoice ID or invoice number
  • Payment terms and due dates
  • The total amount due, including any applicable tax like GST

This is a lot to think about and needing a human to input all the necessary details creates the potential for errors.

With eInvoices, businesses can automatically exchange invoices between their accounting systems, removing the need for manual data and minimising the chance of errors.



Grow Your Business with QuickBooks

How to set up eInvoices 

If you're looking to transition to eInvoicing, the ATO recommends that you begin by registering with the Peppol eInvoicing network

You can accomplish this by using an eInvoicing service provider, an existing accounting software built for eInvoicing, or a digital solution listed on the product registry that offers low cost or free services. 

If you're unsure what is best for your business, contact your business advisor or accountant for assistance. 

The ATO also provides several resources designed to aid small and medium to large businesses in making the switch to electronic invoicing.



Streamlining eInvoicing with QuickBooks 

As more businesses and governments encourage the use of electronic invoices, it’s a good idea to get ahead of the curve and start taking advantage of eInvoices sooner rather than later. With benefits like time savings, faster payment, reduced risk of errors and greater security, it’s easy to see why eInvoicing is fast becoming the method of choice for businesses to get paid.

Why not get ahead of the game and reap the benefits of eInvoices now?

QuickBooks supports seamlessly sending and receiving eInvoices via a third-party solution that integrates QuickBooks with Peppol eInvoicing. You also have the option to create custom, professional invoices directly in QuickBooks, set up custom payment schedules and track multiple invoices to get paid faster and streamline the way you receive money. 

QuickBooks gives you the tools to make customised professional invoices, create custom payment schedules, and track many different invoices simultaneously. Get a free 30-day trial of QuickBooks' invoicing software.


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