If you knew you could get massive efficiency gains from the investment of just a few minutes, you’d obviously take the plunge. That’s exactly what eInvoicing offers — and it’s not the only business benefit.
SmartCompany spoke to Mark Stockwell, Director of eInvoicing at the ATO, Sam Allert, CEO of Reckon, and Alexi Boyd, CEO of the Council of Small Business Organisations Australia (COSBOA), to find out how eInvoicing is changing the game for SMEs.
A lot of business owners think they’re already sending eInvoices, because they’re using accounting software or attaching PDFs to emails. But eInvoicing is an altogether different kettle of fish.
Stockwell compares it to the way information is sent instantly and seamlessly between mobile phones regardless of which provider and telecommunications network you use. In the same way, eInvoicing is a “direct exchange between the buyer and the seller’s accounting system, irrespective of what system you use,” he says.
He makes a strong case in favour of eInvoicing, pointing out that it’s faster and more efficient for both sides, more accurate, and more secure as well. It only takes about three to five minutes to set up, and it’s free through some accounting software providers, including Reckon.
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As makers of accounting and payroll software, Allert and his team are huge supporters of anything that will help drive efficiencies and improve cashflow accuracy. Especially since “staggering numbers of process fraud and risk accuracy issues” are costing individual small businesses thousands of dollars a year.
Meanwhile, the ATO has seen a proliferation of email scams in the past few years. In 2020, they cost Australian businesses “about $128 million”, Stockwell says. In 2021, it was “over $200 million”, and this year “it’s looking worse — so it’s not something that’s going away”.
Unfortunately, 40% of small businesses are destroyed by their first cyberattack, Boyd says. Switching to eInvoicing is one way to minimise your exposure to this risk, as “it’s immensely more secure than sending invoices through the emailing system.”
After all, you don’t leave your business with the doors and windows unlocked and the door open, she says, “so we should have that same attitude towards our digital journey.”
Boyd used to run a bookkeeping practice and is therefore strongly in favour of anything that saves time on onerous reporting requirements, invoicing, expenses and receipts “and all those fiddly bits of paper”.
“If you can minimise that, you can spend more time working on growing your business, innovating, changing, pivoting,” she says. “It’s really about finding those efficiencies, and this one is handed to you on a silver platter.”
But it’s not just about having more time to spend on your business, because “most small business owners are doing their admin and bookkeeping and accounting after hours,” Allert says. “So how about we say: this is going to give you more time to spend with your family, or your friends, or to play sport or go for a walk.
“If you get 10 invoices a week or 50 invoices a week from your suppliers, if you’ve got to re-key them all, then that’s time that you’ve got to put in there [on top of that] accuracy risk.”
More than half of the 1.2 billion invoices that get sent in Australia each year aren’t paid on time, Allert says, citing research by the Australian Small Business and Family Enterprise Ombudsman.
“They estimate that 53% of invoices are paid late and often 23 days overdue,” he says. “So then, on a dollar value, that’s worth $115 billion of delayed cashflow to the Australian economy and small businesses. And for every small business — obviously taking a massive average — that’s $52,000 a year of delayed payments and poorer cash flow.”
Sending invoices via email or post means someone on the other end “has to open it and then choose to enter it into their accounting system”, he explains. Whereas “if you’re eInvoicing compliant and your suppliers are [too], it’s automatically hitting your system. And then you just approve when to pay for it.”
The good news is the federal government is working to reverse this trend, with its payment times reporting register and mandate that Commonwealth agencies must pay SME invoices within five days. The only catch? It has to be an eInvoice.
At Reckon we are more than just accounting software, we aim to help small businesses build the foundation to grow and succeed – easy and affordable compliance is an essential part of this.
