eInvoicing in New Zealand and Australia – Everything You Need to Know

Widely used in Europe, the Peppol framework was adopted by Australia and New Zealand in 2019. The reasons were simple, to make sure that despite the location of these countries, they could still keep in lock-step with international trading partners and to take advantage of the benefits the Peppol network provides, primarily in the area of eInvoicing.

With economies that have taken a hit in the past couple of years, both Australia and New Zealand are counting on the efficiencies of eInvoicing to give their economies a shot in the arm through faster payments and reduced costs. Australia has mandated that the entire government sector implement eInvoicing through Peppol by July 2022 as part of the JobMaker Plan.

Peppol Authorities in both Australia and New Zealand indicate that the countries are serious about adoption, with early adopters from the private sector already gaining an advantage over the 90% of small- and medium-sized businesses that continue to process paper-based invoices. 

The current landscape

Australia

According to an Australian Treasury assessment from 2021, 90% of businesses continued to fully or partly use manual processes when invoicing. While the situation has improved, we can still safely say that the majority of businesses, especially SMEs, are not taking full advantage of eInvoicing capabilities.
Currently, there are over 33,000 Australian entities registered in the global Peppol directory, with the B2B sector following in the footsteps of government agencies. In fact, over the 2022-23 financial year, Australia had the third largest growth (both in relative and absolute terms) of Peppol participants in the world.
As Peppol expands, Australian public and private sector businesses are poised to benefit, making good on the 2020 governmental estimates that predicted $28 billion saved over the next 10 years.

New Zealand

Unlike other countries, New Zealand has not put many hard regulations on public sector authorities or private businesses to start transacting through eInvoices. Central government agencies were required to be able to receive invoices electronically from March 31, 2022, but outside of that, New Zealand’s Peppol Authority, The Ministry of Business, Innovation and Employment (MBIE), has relied on simply promoting the many benefits of eInvoicing as a way to achieve the target of a 90% eInvoice rate from business to Central Government by July 2026.

So far, things seem to be working — in the past year, the Peppol network has gained over 10,000 new registered participants. This places New Zealand in the top 10 countries with the highest absolute growth, and the top 5 for the highest relative growth of participants in the world.

To make sure of the smooth exchange of electronic business documents across the eDelivery network, a set of specifications have been developed, called the Peppol interoperability framework, it is made up of both governance and architecture components.

Governance – This component involves the different agreements and policies that deal with the relationship between OpenPeppol, the Peppol Authorities, and the Peppol service providers, detailing compliance, data, and reporting.

Architecture – This component details the technical policies and specifications required to provide end-users with the interoperability needed to interact on the network.

Within this framework are the following pillars:

As mentioned in the first couple of paragraphs, the Australian and New Zealand governments have been working to encourage eInvoicing through Peppol in their respective countries, initially linking themselves through the Trans-Tasman Electronic Invoicing Arrangement, signed on October 25, 2018. In the words of the Australian Government:

The objective of the Arrangement is to create and maintain a common Australia and New Zealand e‑Invoicing approach in order to improve productivity and reduce the costs of doing business for both government and industry through an interoperable single digital economic market.

In February of 2019, Australian and New Zealand jointly announced the adoption of the Peppol eDelivery network for eInvoicing, and soon after, the Australian Tax Office and the New Zealand Ministry of Business confirmed that they would become Peppol Authorities with the following remit:

Although Peppol is a “connect once, reach all” eDelivery network , there are still some localized differences, mandated by regional Peppol Authorities. While this can present another hurdle for ERP vendors or Peppol Access Point providers, one positive is that accreditation with the Australian Peppol Authority (Australian Taxation Office) is mutually recognized by the New Zealand Peppol Authority (Ministry of Business, Innovation and Employment), meaning companies in both regions can easily access Peppol eInvoicing on the same terms.

As you can see, although Peppol only came to Australia and New Zealand in 2019, the countries are already positioning themselves as leaders in the region, with localized specifications and a clear plan to encourage use.

So what exactly are the benefits for businesses in Australia and New Zealand using Peppol to conduct eInvoicing?

Reduced costs – By the New Zealand Government’s estimates, 280 million B2B invoices exchanged annually, conducted through eInvoicing will bring business savings of $4.4 billion (NZD) over 10 years. These figures are extrapolated from research undertaken to determine the costs of sending and processing invoices through paper, PDF, and networks such as Peppol. Australian and New Zealand estimates are slightly different but tell a consistent story (NZD figures are converted to AUD for comparison):

Faster payments and improved cash flow – eInvoices are sent directly into the recipient’s financial system, validated by the network. Delays are reduced and payments are received faster by the businesses that need them. Research from Deloitte says that on average, buyers are paying up to 7 days faster when using eInvoicing. Joanne Stanyer of Xero backs up this point: “Our data shows it takes an average of 24 days for an invoice to be paid. And the average business is paid nine days late. eInvoicing is about getting better payments to help small businesses with their cash flow”.

Greater security on the network and a reduction in invoice fraud – Peppol’s security systems and standards authenticate participants, in Australia and New Zealand’s case, their Peppol IDs are linked to their business numbers. What’s more, automated systems can pick up irregularities that humans can miss, and provide greater technical security than email. This is much needed in a world where billions of dollars are lost each year to invoice fraud, some of which comes from intercepted emails. 

Better quality of data – Part of the costs to do with manual processing are down to speed, but also the inevitable errors and incomplete data that can come with paper or email-based invoicing. Peppol’s standards demand that data is entered correctly and consistently, meaning that fewer clarifications are needed, missing information doesn’t need to be chased up, and a business’s record keeping becomes more accurate.

Connect once, reach all – Peppol allows you to seamlessly connect to any financial system on the network, whether that is a business down the road or one on the other side of the world. Gone are the days where separate solutions need to be set up with each of your business parties; Peppol gives you one network for international electronic document exchange.
At this point, we’d like to note that we have focused on eInvoicing in this article as it is both the most common document type that is transferred over the Peppol network and the one that the Australian and New Zealand governments are focusing on. However, Peppol has a wider application; it can also be used for e-orders, e-advance shipping notes, eInvoices, eCatalogues, Invoice Message Responses, and other business e-documents. These document types make up a smaller part of the Peppol network, but will no doubt become more widely used with the network’s continued expansion.

The ability to settle payments faster is not only a key feature of the Peppol network, it is also being used to lure other businesses to use the framework. From 1 January 2020, the Australian government committed to a 5-day payment deadline for contracts up to AUD$1 million, where the government agency and supplier are both using Peppol. Similarly, New Zealand offered a 10-day payment term.

Usually dependent on the size of your business, there are three ways to get started with eInvoicing:

If you are considering points two or three, Tickstar has you covered:

Integrate Peppol directly into your current accounting system by becoming an Access Point

If you are looking to become your own Peppol Access Point, there is an accreditation process you need to go through, detailed in our other blog post, Peppol Access Points – Setting Up Your Own Versus Working with Tickstar. We understand the problems that businesses face, which is why we offer a white-label service. Peppol will publish you as an official Access Point, but we take away the difficulties involved in terms of development, hosting, maintenance, and the time-consuming process of obtaining accreditations. 

Access a ready-to-use Peppol Access Point as a Service solution

For big and small companies, Tickstar´s Peppol Access Point as a Service means you can simply contact us and be ready to use the Peppol network in a matter of days. We handle the hosting and support involved in running an Access Point, while you take advantage of our up-to-date certifications and compliance with every Peppol Authority throughout the world. 

As for those reading who are ERP providers themselves, easily integrating Tickstar’s Peppol Access Point into your product can give you an advantage over competitors in the short term, and make sure that you don’t lose customers to competitors that offer Peppol services as part of their ERP systems in the long term.

When looking for an Access Point or SMP provider, you can sign up with anyone in the world that is accredited. As an end user, this means you can find the service provider that really suits your needs. 

We are proud to be listed by the Australian Government as one of the accredited service providers for Australian eInvoicing. Working with Peppol since 2012, Tickstar is a Peppol infrastructure service provider that works with small businesses, large multinationals, and the governments of Singapore and the Netherlands. Our commitment to being at the forefront of offering interoperable and reliable Peppol infrastructure, combined with around-the-clock support means that your organization will always get the best value for money.
Go to our website to see more, or contact us to schedule a call or a demo.