eInvoicing – the real explanation
One role of the Commissioner is as registrar of the Australian Business Register (ABR) of ABNs. As we know, the ABR is the centralised register of businesses.
eInvoicing is a digital exchange of the invoice instead of through PDF files. The ATO/Commissioner has been part of an industry-led stakeholder forum (the digital business council) that includes software, business, associations and government.
The eInvoicing framework includes the technical infrastructure – Australia now utilises the world-wide PEPPOL system (customised for Australia) – and standards also designed by Australian stakeholders, and aligned to the international standard.
An eInvoice is created in your software (as you do now) and sent directly to the customer as an encrypted digital file instead of PDF… or that thing called “paper”.
The ATO administers the digital address directory, as it makes sense that digital addresses be stored within the business directory (ABN).
Note: Invoices sent as eInvoices are not seen by government.
Your software looks up the directory to find the digital address to send the eInvoice to.
When you receive an eInvoice, your software should decrypt it, and then put it in an “in tray” for approval before it goes to accounts payable etc.
- faster invoicing
- better data
What should not change?
- Invoice still has to be created; approved by sender and receiver.
- Data still has to be checked.
- Payment still has to be made.
ICB is happy to provide further clarification of what eInvoicing actually is. We note that eInvoicing is simply a standard, centralised digital system for swapping an invoice. We have so many different forms of this already in play, but this hopefully standardises it.
What is eInvoicing?
“Enhanced electronic interaction of invoices”
The Digital Business Council (of which ICB is a council member) has launched the public consultation around the eInvoicing draft framework.
eInvoicing is being considered a critical next step in Australia’s move to a streamlined, integrated, and productive digital economy – providing a significant opportunity for improvement in business efficiency.
To begin the standardisation of an eInvoicing system in Australia, the Digital Business Council established the eInvoicing framework. See Digital Business Council eInvoicing Interoperability Framework for detail.
The ATO Explanation
Read about E-invoicing on the ATO website, or download as a PDF.
The ICB Explanation
eInvoicing captures the electronic invoicing journey that many businesses are already on, and where our commercially available accounting software is taking us.
Today we have different businesses using different types of eInvoicing to produce electronic invoices.
The aim is that, through the establishment of a common standard of interchange, that all businesses (irrespective of which software they use) will be able to create an invoice that is translated into suitably transmittable data. That data will be sent to the recipient’s software, and turned into a purchase order ready for acceptance and/or processing.
Updated: 11 February 2020