Most small businesses still send invoices as PDF files attached to an email. The customer opens the file, reads the numbers and types them into their own accounts. An eInvoice removes that manual step. The invoice data moves straight from one business’s software to the other’s.
Australia uses an international network called Peppol to make this work. The Australian Taxation Office oversees it here. This article explains what eInvoicing is, what it is not and how a small business can get started. It is general information to help you decide if it suits your business.
What eInvoicing actually is
The ATO describes eInvoicing as the digital exchange of invoice information between a supplier’s software and a buyer’s software. The exchange happens over the secure Peppol network. The ATO says this is faster, more accurate and more secure than emailing PDF invoices. Neither side needs to print, post, scan or retype anything.
The government’s small business eInvoicing resource is clear on one point. Sending a PDF by email or mail is not eInvoicing, even though it is electronic. A true eInvoice is sent as data that the receiving software can read on its own. That is what removes the double handling.
How the Peppol network works
Peppol is the international standard for eInvoicing and is used in more than 40 countries. A business connects to the network once through software that supports eInvoicing. It can then trade with any other Peppol participant, regardless of which software they use. The ATO says that covers more than 400,000 Australian businesses.
eInvoices are directed to the right recipient using the Australian Business Number. That is why you cannot send or receive an eInvoice without an ABN. It also means eInvoicing is for trade between businesses and with government. You cannot use it to bill everyday consumers.
In 2019 the Australian Government set up the Australian Peppol Authority within the ATO. The authority governs and regulates eInvoicing in Australia and sets rules for the digital service providers on the network. The ATO states that eInvoicing is not a compliance or revenue measure. It also says the ATO cannot see the content of invoices and does not receive copies.
Why small businesses are taking it up
Late payments, invoice security problems and processing costs are common issues for small businesses. The small business eInvoicing resource says eInvoicing can help reduce them. Faster processing and quicker payment times can improve cash flow. For many owners, that alone makes it worth a look.
Security is a real benefit as well. A PDF sitting in an inbox can be forwarded, copied or edited by anyone who gets hold of it. The ATO describes the Peppol network as secure, and it is governed by rules for the providers that connect to it. That gives both sides more confidence about where an invoice came from.
Governments across Australia are adopting Peppol eInvoicing too. If you supply government agencies, being set up can make your invoices simpler for them to handle. It also prepares you for larger business customers who already use it. You only need to connect once to reach all of them.
Steadier cash flow gives a business more room to plan. Some owners use surplus funds to build savings outside the business. If that is on your mind, our guide on investing in shares as a business owner covers some points to think about first. Speak with a licensed financial adviser before making investment decisions.
How to get started
The small business eInvoicing resource sets out a simple path. Many small businesses can start with the accounting or invoicing software they already use. Others will need to install software that supports eInvoicing. Your bookkeeper or accountant can help you check.
- Review how you send and receive invoices now, and plan how you will tell customers and suppliers about any changes.
- Check if your software is listed on the eInvoicing Ready product register, or ask your bookkeeper or accountant.
- Install suitable software if needed, then register for eInvoicing by following your software provider’s steps.
- Confirm your customer records are complete, including each customer’s ABN.
Registering with the Peppol network should be a quick process, according to the government resource. It also notes there are free and low cost options available. Ask your software provider if eInvoicing is included in your current plan. If it is, you may already be close to ready.
Getting your customer records in order is an easy step to overlook. Every eInvoice relies on the correct ABN to reach the right business. Go through your customer list and fill in any gaps before you send your first one. A clean list also helps with every other part of your accounts.
What changes for the person doing the books
The biggest change is for whoever handles accounts in your business. Bills from suppliers who use eInvoicing arrive in your software ready to check and approve. There is no scanning and no copying figures across by hand. That cuts the chance of a typing mistake turning into a wrong payment.
Sending works the same way in reverse. You create the invoice in your software as usual, and it goes to your customer’s software over the network. You will still have customers who are not connected yet. For them, you can keep sending invoices the way you do now while the network grows.
Fitting eInvoicing into the rest of your online business
eInvoicing is one piece of running a business online. Customers still need to find you before they buy, so your website and listings matter too. Our article on Google Business Profile features covers tools many local businesses miss. If you are still planning your site, our article on getting professional advice before going online covers what to think about first.
Less retyping also means less time hunched over invoices at the end of the week. If admin still keeps you at the desk for long stretches, the right chair makes a difference. Our guide to ergonomics when buying office chairs explains what to look for. Small changes like these add up over a working year.
Frequently asked questions
Is emailing a PDF invoice the same as eInvoicing?
No. The government’s small business resource says sending a PDF by email or mail is not eInvoicing. An eInvoice moves as data from your software straight into your customer’s software over the Peppol network.
Can I send eInvoices to my retail customers?
No. You cannot send or receive an eInvoice without an ABN. The system is built for trade between businesses and between businesses and government.
Does the ATO see my invoices?
No. The ATO says it cannot see the content of eInvoices and does not receive copies. Its role through the Australian Peppol Authority is to govern and regulate the network.
Does eInvoicing cost money?
It depends on your software. The government resource notes there are free and low cost options available. Check with your current software provider first.
This article is general information only and is not financial, tax or accounting advice. Speak with your accountant or bookkeeper about your own situation.