KPMG believes the government’s push towards mandating e-invoicing adoption — beginning with large businesses — has failed to factor in the compliance burden faced by large businesses who are now required to participate in the Payment Times Reporting Scheme.
It has called the government to hold off from adopting a mandatory approach until at least 2023, following the conclusion of the legislative post-implementation review of the Payment Times Reporting Scheme.
KPMG also believes that small and medium-sized businesses are likely to see an increase in compliance costs at a time when few businesses are able to fund necessary system changes.
“In KPMG’s experience, some businesses may not have the funds to invest in e-invoicing even when there is a positive return over time,” said KPMG in its submission to the Treasury.
“This is particularly relevant during the current COVID-19 pandemic, where profitability concerns and unplanned IT investment may have depleted funding that would have usually been used to fund e-invoicing compliance.
“For SMEs with limited resources in relation to their invoicing and purchasing functions, mandatory Peppol e-invoicing may cause an initial increase in compliance costs and delays to their invoicing and payment cycle.”
However, the big four firm has acknowledged that Australia faces a tight window to implement e-invoicing as international adoption rises, starting with the European Union’s push towards mandatory adoption by 2025.
“While it seems the move to e-invoicing has a degree of inevitability, the government will need to ensure compliance costs and red tape are minimised and any push to mandate e-invoicing comes at the right time to limit regulatory burden,” KPMG said.
It has now urged the government to first consider a non-regulatory approach by rolling out education programs to increase awareness among businesses, or offering financial incentives to cover the costs of implementation.
However, the Treasury believes a voluntary approach will not yield the potential time and cost-saving benefits of e-invoicing because of a lack of broad participation across businesses.
Should the government choose to go down the mandatory route, KPMG believes it should adopt a five-year timeframe — similar to the EU’s approach — to allow businesses to prepare and make necessary system upgrades.
KPMG’s stance comes as the professional accounting bodies, including Chartered Accountants Australia New Zealand, CPA Australia and the Institute of Public Accountants, have urged the government to resist mandating e-invoicing in light of the current economic conditions.
The professional bodies believe a mandatory approach will come as an unnecessary distraction for businesses at a time when many are trying to protect their day-to-day solvency.
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.