Next financial year will mark a new age for e-invoicing in government

By Melissa Coade

Friday May 13, 2022

APS staff must switch to e-invoicing
All commonwealth agencies are required to have e-invoicing enabled by 1 July, 2022. (Monkey Business/Adobe)

The ATO’s Bruce Rossel has discussed the role of e-invoicing adoption across departments and agencies as part of a ‘modern digital economy’ vision for Australia. 

All commonwealth agencies will be required to have electronic invoicing (e-invoicing) enabled by 1 July, 2022.  

Rossel, who is a relationship manager for the national tax agency, said a software-agnostic framework known as Peppol meant trading partners could share digital documents easily. 

“Invoice data comes up as an invoice to be paid straight into the [agency’s] accounting system. That’s why it’s such a big deal,” he said.

The network was a safer alternative to sending documents as email attachments, Rossel added, with convenient functions to pull data and generate invoices.

“E-Invoicing is direct exchange of invoice or financial transaction information between a buyer’s and the seller’s software system.

“It doesn’t matter what software that your supplier is using. If you’re buying, you’re able to exchange that data through an interoperable network called Peppol,” Rossel explained.

The ATO was established as the Australian government’s Peppol authority in 2019, when the eProcurement framework was adopted. 

The Peppol framework is compatible with existing eProcurement and eBusiness solutions, and includes governance assurance measures. Its network is an eDelivery network for the exchange of data between different systems.

“This is ultimately about small businesses. It’s about getting SMEs in Australia digitised and to experience the benefits of going digital, as well as the efficiency and productivity and security benefits,” Rossel said.

“As a part of an incentive to do that, the commonwealth government will pay eligible invoices received within five days.”

The ATO’s efforts to bring government departments and agencies along on what Rossel called a ‘financial transformation journey’ are all with a view to better security, efficiency and data accuracy. It also underpins some of the early stages of a wider digital economy strategy announced in the 2021 budget

A total of 50 government agencies are now on board out of a wider 98 who will need to move to enable e-invoicing before 1 July mandate. Another six commonwealth corporations — who are not subject to the requirements — have also opted to participate in the scheme.

“I’m very confident that I’ll get the other agencies on board in the next few weeks. There’s a lot of movement in a very short period of time because the government is taking this initiative very seriously,” Rossel said.

“My team has been working very closely with a number of government agencies to support them to select a service provider, to understand the benefits of e-invoicing, to communicate that to their suppliers, and to internal staff,” he said. 

Of the 1.2 billion invoices estimated to be exchanged in Australia each year, the ATO believes about 90% of these invoices are manually generated and at greater expense.

Rossel’s cautionary message to government organisations is that being able to process digital invoices also requires the right culture and process settings to honour payments within the five-day timeline. He said government line managers, contract managers and accounts teams would need to be involved in the change management to see this new process adopted. A failure to pay on time means interest on the payment will accrue. 

“It’s one thing to connect to the [Peppol] network, it’s another thing to have your business processes to support that condensed payment time, because standard government payment terms are 20 days.

“To then go to five days requires business process change to support it, and also cultural and behavioural change,” he said. 

Rossel made his remarks as part of a roundtable forum hosted by the Technology in Government (TIG) conference on Wednesday. He was joined by Mark Hawthorn from Kofax Australia, who helped explain how enabling e-invoicing could increase public value.


READ MORE:

NSW government agencies required to use e-invoicing from 2022

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