Building the capability of local councils to support small businesses: eInvoicing

In 2022–23 the focus for our Small Business Friendly Council (SBFC) Connect forums is Charter Capability Building.

All councils who signed our SBFC Charter after September 2020 have committed to initiate processes to make sure they pay their small business suppliers within 14 calendar days. This commitment follows the Victorian Government committing to pay small businesses within 10 business days.

Our engagement with economic development teams has told us that some councils are finding it challenging to meet the 14-day payment time. Reasons include adapting legacy processes and IT systems to enable faster payments and resourcing challenges.

This is why we chose to explore eInvoicing for our first Charter Capability Building forum with local councils in 2022–23. We timed our event to take place during eInvoicing Week 2022 (15–21 August), which offers a range of events, presentations and workshops where you can learn more about the benefits of eInvoicing.

Why payment times matter

We often see small businesses not being paid for their work. Or being paid far too late.

We know that:

• approximately 53 per cent of all Australian small business invoices were paid late by 23 days on average
• people in small business tell us that they don’t want to chase up overdue invoices with government because they fear they will have a black mark against their name and lose that next contract.

Cashflow is king. Removing barriers to small business owners getting paid is particularly critical right now, as many are struggling to service deferred debts accrued over the pandemic that are now payable, including rent payments and tax obligations.

eInvoicing

The guest speaker at our forum was Bryce Gray, eInvoicing adoption lead for state, territory and local government at the ATO. Bryce explained that eInvoicing is the digital exchange of invoice information between a buyer’s and supplier’s accounting system via a secure and reliable network.

Bryce talked us through how it works, and how local councils can adopt eInvoicing and support their local small businesses in making the move too.

Outcomes

So how can your council benefit from eInvoicing?

• Invoice data is cleaner and standardised, and entry and processing is simplified, quick and automated
• The time, cost and human error that comes with manually handling and emailing PDF invoices is eliminated
• Your council can achieve greater accuracy and timeliness when it comes to financial and budget reporting
• You and your suppliers trade in a secure environment, protected from payment redirection scams (which cost Australians $227 million in 2021)
• By making things quicker and easier for the small businesses that supply you with goods and services, you can improve your business relationships

Australia has adopted the international eProcurement framework Peppol as the common standard for eInvoicing. The ATO administers the framework but by law, cannot access or view invoice data.

“…there was the need for an open market so that all businesses, especially those small ones, can participate in digital trading equally, so they’re not at the behest of those large and powerful companies and having to use their systems that they decree.” – Bryce Gray

How your council can get on board

Becoming enabled involves:

• identifying how your council currently receives, processes and pays invoices
• identifying problems that eInvoicing can address – from difficulty paying on time to having to repeatedly address invoicing errors
• finding out about eInvoicing options by talking with your software and digital service providers and visiting the ATO’s website for more information, including:
  • a list of all 35 Peppol access points that are accredited in Australia
  • ‘eInvoicing ready’ options – a register of software that has easy pathways to become eInvoicing enabled
• choosing the right option and connecting to the Peppol network
• onboarding your trading partners.

The ATO can also connect you to their Community of Practice where you can exchange knowledge and share experiences with other local councils, and access free templates and guides. To get connected, email the ATO.

How you can support small businesses to make the move

The ATO website has information that can help you to support your local small businesses to adopt eInvoicing – including advice on getting started. You can also encourage business owners to speak with their software providers for specific guidance tailored for their users.

“it’s about encouraging the businesses in your region to also become enabled and helping and supporting them.” – Bryce Gray

More information

To learn more by visiting the ATO website or emailing eInvoicing@ato.gov.au.