Two of Australia’s leading accounting groups are calling on the federal government to move away from a proposal to make electronic invoicing mandatory for all businesses at a time when many operators are still trying to survive or recover from the pandemic.
CPA Australia and Chartered Accountants Australia and New Zealand (CA ANZ) argue that while there are many benefits to e-invoicing, a move to make the practice compulsory this year would be ill-timed and force businesses to focus on non-essential regulations while they are still “trying to protect their day-to-day solvency”.
In a joint submission to the government’s consultation on the proposal, seen by SmartCompany, the groups argue the government should create incentives for businesses to adopt e-invoicing, but not compel them to do so.
Introducing new mandatory requirements in this area would be an “unnecessary distraction” for businesses at this time, say the groups, while more time is also needed to assess the effectiveness of e-invoicing software products.
“E-invoicing was only launched at the beginning of 2020, a year which has been dominated by businesses trying to survive the pandemic and lockdowns,” the groups said.
“Further, there has been limited promotion by the government of the benefits of e-invoicing, which varies by business — with businesses having low invoice volumes likely to experience marginal benefits at best.”
The groups recommended the government consider introducing incentives for businesses to adopt e-invoicing in a similar manner to the Singaporean government, which offered a grant of $195 (S$200) to eligible businesses that took up an e-invoicing solution, as well as a ‘resilience bonus’ payment of up to $9,750 (S$10,000) for eligible businesses in the food services and retail sectors that adopt e-invoicing and other digital products.
The federal government began consulting on options for the mandatory adoption of e-invoicing by businesses in November 2020, and the consultation period ended on January 18.
Work has been underway to advance e-invoicing in Australia for several years, with small business associations, including the Council of Small Business Organisations Australia, playing a key role.
The government implemented the Pan European Public Procurement Online (Peppol) framework for e-invoicing in 2019, and appointed the Australian Taxation Office as the Australian Peppol Authority to administer the framework. The Peppol framework is used by 34 countries.
In the 2020 federal budget, handed down in October, the government announced that all Commonwealth government agencies will be required to be able to access Peppol invoices by July 1, 2022, with larger agencies to establish this capability by July 2021.
According to Deloitte research cited by Treasury, e-invoicing can deliver cost savings of $20 per invoice each time an electronic invoice replaces a paper one.
More than 1.2 billion invoices are exchanged in Australia each year and 89% of SMEs continue to process invoices manually, according to the Treasury.
However, in their submission, CPA Australia and CA ANZ say a large portion of their memberships, which total more than 280,000 professional accountants, is unaware of Peppol e-invoicing.
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Speaking to SmartCompany, Gavan Ord, CPA Australia’s manager of business and investment policy, confirmed that CPA Australia is an advocate for e-invoicing. It’s objection to the practice becoming mandatory relates to timing.
“Timing is everything and now is not the time for this proposal,” he says.
The focus for many in the SME community is on survival and recovery, says Ord, and these businesses have “limited capacity to implement new policies and regulatory requirements” at this time.
“After the year that’s been, imposing new, non-essential requirements on business is a bit like telling someone who just survived a heart attack to go for a jog,” says Ord.
“While exercise could be beneficial, it’s probably best to let them catch their breath first.”