What is e-Invoicing?
e-Invoicing is the digital exchange of invoice information directly between buyers’ and suppliers’ financial systems, even if these systems are different.
The transfer of invoice information is made possible by using enabled software or an access point provider who use common international standards (Peppol), allowing different systems to ‘speak’ to each other.
Check out our video to learn how e-Invoicing will help Kiwi businesses
How it works
- A supplier’s financial system generates an invoice for the buyer.
- The invoice information passes through the e-Invoicing network, where information — such as GST number, NZ Business Number (NZBN) and bank account number — is checked and confirmed.
NZ Business Number(external link) — NZBN
- The invoice information is passed to the buyer’s financial system where it is reconciled against purchase details and is ready to be paid. (The NZBN is used to ensure the e-Invoice is directed to the right buyer.)
Access point providers (secure gateways) connect businesses to the e-Invoicing network.
With e-Invoicing, businesses no longer need to generate paper-based or PDF invoices that have to be printed, posted or emailed, and buyers no longer need to manually enter these into their financial system. It improves accuracy and security, reduces process time and speeds up payments.
The benefits of e-Invoicing for businesses include:
- Faster payment and improved cash flow
- Reduced processing costs
- Direct and secure information
- Improved financial visibility
- Connect to any system.
Faster payment and improved cash flow
e-Invoices are sent electronically into the recipient’s financial system. As they pass through the secure standardised network the information is validated, which reduces potential delays, makes payments faster and improves cash flow.
Reduced processing costs
It costs businesses around $26 to process a paper invoice and $23 for an emailed PDF invoice. In contrast, it costs less than $10 to process an e-Invoice. The difference is due to the time saved not having to manually handle each invoice. This could save New Zealand businesses $4.4 billion over 10 years.
e-Invoicing saves time and money by not having to:
- re-key or scan invoices
- make corrections
- chase missing information.
You still need to apply your internal assurance processes before paying your invoices, but the time saved in administration can let you focus on growing your business.
Direct and secure
e-Invoices are impossible to lose, minimise the risk of fake or compromised invoices, and reduce the chance of paper or PDF invoices being intercepted. Sender and receiver details are validated, audit logs kept, and strict protocols are followed to ensure invoices remain secure while they are sent across the network. This increases confidence that the invoice being paid is genuine.
Improving financial visibility
e-Invoicing allows for a lot of detail on each invoice, and better visibility through the invoicing process. This supports analysis, forecasting, planning and budgeting, enabling more accurate financial management.
Connect to any system
e-Invoicing allows you to connect to any financial system on the network. This network interoperability is one of the key benefits in making e-Invoicing a success. Unlike bespoke electronic data interchange (EDI) solutions, that require you to set up different solutions with each buyer, e-Invoicing allows you to connect to all buyers from your invoicing system through an open network.
Available to all businesses
All businesses and government agencies can access and benefit from e-Invoicing, regardless of their size and the systems they use.
The e-Invoicing framework can be accessed in different ways. Many large businesses use their own ‘in-house’ solutions. Smaller businesses can engage their accounting or financial software provider, or one of the free e-Invoicing solutions.
Some medium to large businesses might want direct access to the network through an access point provider.
Use this calculator to learn about the financial benefits e-Invoicing can provide for your business.