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Government takes lead on e-invoicing with 5-day payment terms


The government has committed to paying businesses within five business days or pay interest on any late payments as it looks to take the lead on e-invoicing.

By Jotham Lian 9 minute read

Minister for Finance Mathias Cormann has announced that from 1 January 2020, the Australian government would adopt five-day payment terms on contracts where both the government and the business are using the e-invoicing framework.

The five-day e-invoicing payment policy will apply to contracts valued up to $1 million, where a supplier and a Commonwealth agency both use the internationally established framework for delivering and receiving invoices in an electronic form.

The change comes as e-invoicing adoption progresses, with the government recently passing legislation to enable Australia to implement the internationally recognised framework for e-invoicing.

While e-invoicing is a broad term that gets confused with an electronic invoice like a PDF, the new solution is an automated direct exchange of invoices between the supplier’s and buyer’s software systems, even if they are different.

“The Department of Finance and Services Australia will be the first Commonwealth agencies to accept e-invoices from 1 January 2020, with other agencies implementing the capability over the course of the year,” Senator Cormann said.

“We encourage state governments and the business community to follow our lead using the new framework for e-invoicing.”

Australian Small Business and Family Enterprise Ombudsman Kate Carnell said the announcement was a “game changer”, calling for all levels of government and big businesses to follow.

“This is a game changer for e-invoicing small businesses that are directly engaged in a contract with a federal government agency,” Ms Carnell said.

“The next step would be to apply this to businesses right down the supply chain.”

The benefits

Research from Deloitte Access Economics has found that e-invoicing could result in economy-wide benefits of up to $28 billion over 10 years.

Apart from the obvious cost benefits, Ms Carnell believes the introduction of e-invoicing will improve cash flow for businesses, noting how small businesses often struggle with late payments.

“Our Small Business Counts report shows that late payments continue to hamper small business viability, with half of all small businesses reporting late payments on 40 per cent of their invoices,” Ms Carnell said.

“This policy will improve cash flow for small businesses so they have the confidence and the capital to reinvest.

“We encourage small and family businesses to adopt e-invoicing and make the most of the benefits that flow from that, including reduced administration costs and fewer processing and handling errors.”

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Jotham Lian

Jotham Lian


Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

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