Options being canvassed by the Treasury in its recently released consultation paper include introducing a requirement that all businesses adopt e-invoicing through a phased approach starting with large businesses.
e-invoicing involves a digital exchange of invoices between a supplier’s and a buyer’s software or systems, and has been tipped to be a more efficient, secure and accurate way of processing invoices.
The government believes the mandatory option will accelerate e-invoicing adoption, ensuring that it becomes part of the broader digitisation of businesses, and bring forward significant benefits associated with e-invoicing, such as time and cost savings.
It also anticipates that major accounting software providers will be able to support e-invoicing by mid-2021, giving over 60 per cent of SMEs smooth access to the new feature.
However, the consultation paper acknowledges that such a mandate would impose significant regulatory cost on businesses, with companies that do not use accounting or business software likely to find it challenging or expensive to adopt e-invoicing.
The consultation paper also considers sanctions for businesses that do not comply with the e-invoicing mandate, which include financial civil penalties or public notices.
The government noted, however, that any mandate would not prohibit businesses from continuing to send and receive non-e-invoices such as paper and PDF invoices.
Other options being considered include mandating adoption for large businesses only, or giving businesses the flexibility to adopt e-invoicing at their own pace.
These options, however, do not appear to be preferred by the government, with the consultation paper noting that such options would be less effective at encouraging broader adoption across the economy.
The consultation comes after the government committed $3.6 million in its October federal budget to facilitate the adoption of e-invoicing across all levels of government, with large government agencies required to be e-invoicing ready by 1 July 2021, followed by all agencies in 2022.
The government believes each e-invoice will deliver up to $20 in cost savings for each paper invoice it replaces, citing research by Deloitte Access Economics that estimates economy-wide benefits of up to $28 billion over 10 years.
The Treasury’s consultation is set to run until 18 January 2021.
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.