Government sets deadline for Commonwealth e-invoicing

The Prime Minister and Treasurer have announced a $A3.6 million push to make electronic invoicing mandatory for all Australia's Commonwealth agencies by July 1, 2022. They also plan to consult on options for mandatory adoption of e-invoicing by businesses.

The announcement is included in an $A800 million Digital Business Plan that was revealed this week.

“The Governments’ Digital Business plan is targeted at building on this digital transformation of Australian businesses to drive productivity and income growth and create jobs,” the Treasurer said.

Like Singapore and New Zealand, Australia is following the Peppol e-invoicing standard to allow invoice exchange directly between different accounting systems via approved access points.

The specifics of how the $A3.6 million is being distributed have not been revealed. The Singapore Government provided subsidies to businesses to offset their costs in connecting to Peppol Access Points.  Costs for business to engage in Peppol e-invoicing vary based on volumes, file formats and connection protocols.

While federal government agencies must adopt e-invoicing by July 1 2020, the announcement does not indicate whether it will be mandatory for all invoices to be submitted via Peppol from that date or traditional invoicing will co-exist.

Lee Bourke, CEO of FileBound Australia can’t see a time in the short or medium term where PEPPOL is mandated for all Commonwealth Government suppliers.

“It certainly makes sense for the larger volume suppliers and we expect it to become a key requirement in large government supply Tenders.  We are already seeing that in our New Zealand partner network,” said Bourke.

“We welcome this initiative.  An initiative like this can provide some significant benefits to organisations but little of that gets realised if it does not get some critical mass.  The timing is a little optimistic however without a little time pressure a lot of the departments and their suppliers could be slow to move. 

“We continue to invest heavily into building PEPPOL capability having formed relationships with a number of PEPPOL access point providers in Australia and in New Zealand. Some of these providers are larger companies with PEPPOL credibility, both locally to ANZ and Internationally as they are leading PEPPOL access point providers in Europe.  Some are local technology companies adding PEPPOL processing capabilities to their current software businesses.

“We have now mastered the technology having developed a capability to transact in the PEPPOL network.  We have also built out FileBound to facilitate a work process approval mechanism for invoices before sending or paying.  In that case we are able to present the PEPPOL e-invoice like a traditional invoice so end users have the best user experience.  They can then do all of the normal tasks they would do with an invoice and when ready we take the invoice data and integrate it into the right place whether that be into an ERP or into the PEPPOL network.

“We are now educating our partner organisations so that we can start enabling their customers and prospects to achieve their PEPPOL targets. The announcement has already triggered activity in this space with the phones starting to ring with organisations looking to understand and seek to exploit the opportunity,” said Bourke.

Esker Australia has been an early participant in the development of the PEPPOL e-invoicing initiative in Australia.

CEO Christophe DuMonet said, "We are pleased to see the new mandate from the Australian Government to drive the adoption of e-invoicing in Australia. As a leader in Accounts Payable automation solutions, we are excited to confirm that all users of Esker AP solutions are PEPPOL ready. Digital transformation in Australia is about to accelerate with e-invoicing. Our dedicated local team is ready to leverage our global experience in Europe, LATAM and Asia to service the needs of Australian organisations.”

George Harb, regional vice president APAC, business ecosystems at OpenText, believes the deadline poses a significant challenge to deliver in under two years.

Businesses must not only ensure they have the technology in place by 2022, but also the necessary e-invoicing skills onboard and ensure e-invoice compliance.

“There's a recognition that faster payment of invoices is a driver for change. So organizations with a desire to have five day payment turnarounds and have that cashflow coming back into the business will help them to make that decision to cross the chasm and, and adopt an e-invoicing solution,” said Harb.

“With this announcement, government departments will probably accelerate their discussions and their decisions around which access point to use. There are there are more than a dozen access points in the Australian market today.

“So, I think that's the first step, and I think it will accelerate but ultimately how quickly they will move within the next six, 12 or 24 months I think is yet to be seen.

“All of the mainstream accounting platforms cater for Peppol. It is all about APIs and ensuring that the data formats coming out of the various platforms into the access points meet the Peppol standards. You would hope that it will work from day one.

“One of the challenges we do see with the adoption of five day payments is for enterprises or even government departments how does it change their behaviour towards cash management? Do they see this as being something that will put a strain on it or do they need to adopt new ways of working to ensure cash management and achieve the five day turnaround for payments or whatever the period that is agreed with the supplier?

“Also, unless you're a pure government-only supply, you must be dealing with enterprises or businesses, which aren't adopting Peppol,” said Harb.