In this blog post, we will cover the e-invoicing in Australia and how SAP helps governments and private businesses comply with the requirements using SAP Document Compliance.
What is e-Invoicing?
e-Invoicing is the automated digital exchange of invoice information directly between a buyer’s and supplier’s accounting systems. This is entirely different from a PDF invoice which is an electronic/human-readable format of the actual invoice. An e-invoice is in a machine-readable format which can be directly and automatically processed by an accounting system. On the other hand, a PDF invoice is a digital format of an invoice which still needs manual processes for it to be processed in the system. To understand more about e-invoicing, please refer to the Australian Taxation Office (ATO) website.
Why use e-Invoicing?
There are many benefits to gain from using e-invoicing. It saves processing costs for both transacting parties since it eliminates the paper invoice and streamlines the processes for invoices. Invoice information is consistently recorded since it is generated from the source system and recorded in the receiving system in the same format. The e-invoicing network is secure. Network participants are required to be authenticated and approved. Most importantly, it impacts liquidity management in Australia. The Australian Government is supporting small business, with contracts up to $1 million where both the buyer and supplier use PEPPOL e-invoicing system, by paying e-invoices within five (5) days, paying interest on any late payments. Remember, cash is king. The faster you get your cash inflows, the better cash position for the business.
The Australian government requires e-invoicing for all government agencies by 1 July 2022, with over 80% of invoices being able to be received electronically by 1 July 2021. The deadline is fast approaching. We can foresee that a mandatory adoption of e-invoicing in the country is imminent for all enterprises.
How does e-invoicing work?
The e-invoicing processes work within the PEPPOL network.
Peppol uses a four-corner model in which business partners are assigned to sender or receiver access points (like SAP). The business partners’ addresses (URL) and capabilities are stored in the Service Metadata Publishers (SMP).
- For each transaction, the sender access point requests the information from the Peppol network about the business partner that shall receive the electronic document.
- The sending access point locates the SMP where the document receiver has registered its endpoint.
- Based on the document type the SMP provides the endpoint’s URL.
- Finally the sending access point sends the document to the receiving access point, that sends back a message delivery notification.
Image and text from help sap portal
Imagine an invoice that is generated from a sender’s system. It is sending that e-invoice to its customer which has a corresponding Peppol participant ID. Companies in Australia have corresponding Australian Business Numbers (ABN) which is used as their ID in the PEPPOL network. The e-invoice (XML file) is transmitted from the sender access point to the receiver access point through the PEPPOL network. The e-invoice is then processed in the receiver’s system.
SAP Document Compliance
SAP Document Compliance is SAP’s strategic solution in addressing the electronic document requirements all over the world. It supports more than twenty countries and various electronic document types. There is a global trend of going digital especially with the impact COVID-19 and it includes government and other enterprises. SAP’s Document Compliance runs on a robust document compliance network which is scalable and ready to address new country-specific requirements as we see more countries embracing digital transformation.
In Australia, SAP has recently released the SAP Note 3020436 – eDocument Australia – eInvoice: Installation Overview to comply with e-invoicing requirements. The installation, configuration, and other details can be found in this note. Mark this note as your favourite and watch this note for more updates.