9 Reasons To Start With E-invoicing & PEPPOL In New Zealand

The rules and requirements for e-invoicing in New Zealand are having an accredited PEPPOL access point and a New Zealand Business Number (NZBN). They were formalized with Australia on 25 October 2018 under the Trans-Tasman Electronic Invoicing Arrangement.

Paper invoices are error-prone and labor-intensive. Aside from that, it does not promote a green environment, and the processing cost is expensive.

As a result, many businesses are digitizing their invoicing processes to save a significant amount of time and money.

New Zealand and Australia are working together to develop trans-Tasman e-invoicing standards. The purpose is to simplify businesses in both nations and collaborate with enterprises worldwide.

This article will cover the rules and requirements for e-invoicing, how SMEs and large enterprises can send e-invoice, and the benefits of e-invoicing in New Zealand.


PEPPOL & E-invoicing in NZ

E-invoicing in New Zealand is a means of generating and issuing a digital invoice for all transactions. It aims to automate exchanging transaction records.

An invoice is a document showing taxable sales activities. Similarly, it serves as a system for storing financial records for easy recovery and taxation.

Electronic invoices are transferred from one accounting system to the next through special software programs. In New Zealand, the government accredited e-invoicing applications and connected to PEPPOL, an internationally recognized access point provider.

PEPPOL was introduced in New Zealand in 2019, following talks between the Ministry of Business, Innovation, and Employment (MBIE), the Australian Taxation Office (ATO), and significant stakeholders in the e-invoicing business.

As a result, New Zealand is part of a global network connecting 38 nations in the world. More so, the adoption of PEPPOL makes international e-invoicing possible and sets the ground for a fully electronic B2B trading in the country.


9 Reasons to start e-invoicing in New Zealand

E-invoicing makes business operations smoother, faster, and safer in New Zealand because it requires less manual processing, unlike in paper invoicing.

Let us look at some of the advantages of e-invoicing for businesses in New Zealand.


1. Reduced administrative tasks

The electronic invoicing system reduces the need for manual activities, like data entry and the manual follow-up required to ensure you receive the invoice.

As a result, business administrators have more time to focus on more critical business activities.


2. Reduced cost of operations

According to statistics, the cost of processing a paper invoice is more than $30 and around $28 for a PDF invoice.

In contrast, processing an electronic invoice costs less than $10. Because of its cost-effectiveness, business owners can now save more on operation costs and enjoy more effective sales management.


3. Promotes financial transparency

A lot of details are retained on e-invoices since they are stored digitally. As a result, it supports financial managers in reconciling transactions and accounting accurately.

In addition, it improves analysis, forecasting, planning, and budgeting, allowing for more precise financial management.


4. Reduction in manual processing errors

Electronic invoices are processed with minimal human intervention. As such, the risk of human error in data entry or misplacement in transit reduces significantly.

Consequently, e-invoicing ensures an increase in data quality.


5. Enhanced record-keeping

Because of the simplified nature of e-invoicing, firms will be able to efficiently keep records which will help them file taxes and auditing.

Also, the streamlined system of e-invoicing results in a shorter accounts receivable period and thus improves cash flow.


6. Digital transformation

Invoicing is critical to successful sales transactions in all businesses. A business owner can efficiently resolve customer transactions, manage sales records, and pay taxes with an invoice.

However, with the introduction of the digital invoicing system, businesses would be inclined to incorporate digital processes in other aspects of their business to make sales transactions easier.


7. Reduced tax fraud

E-invoicing reduces the chances of tax fraud because it is transferred from system to system by following strict regulations.

E-invoice data is usually cross-checked against the data in the system to detect any discrepancies.

Doing that eliminates the chance that an e-invoice will be intercepted via email.


8. Direct and secure

When an e-invoice is issued, the system will check if the transaction information correlates with the buyer and sender.

After that, the audited invoice is stored in a central storage following strict protocols. Finally, the invoice is sent electronically across networks for reference purposes from this storage.

As a result, it is difficult to misplace e-Invoices, issue a fake copy, or intercept the transfer.


9. Global business connection

The e-invoicing mandate in New Zealand complies with the international blueprint so that businesses can send invoices overseas.


Why is the e-invoicing requirement implemented?

E-invoicing enables fast and direct data exchange between the accounting systems of buyers and sellers in New Zealand. It ensures that small and medium enterprises get paid on time.

In addition, the e-invoicing requirement is part of the NZ government’s Single Economic Market (SEM) agenda. The plan aims to create a streamlined business environment with Australia.

Equally, the electronic invoicing mandate is related to the “Supplied Pay On-Time or Pay Interest” policy in New Zealand.

Since the 1st of January 2020, the policy has introduced a five-day payment term on all transactions where PEPPOL’s e-invoicing capacity is applicable.

Consequently, all participating agencies promised to pay e-invoices for up to $1 million within ten days or fewer.

If the agencies fail to follow their word, they will be required to pay interest.

Finally, the e-invoicing strategy helps suppliers get paid on time, improves their cash flow, and lowers the cost of conducting business with the Commonwealth.


Is e-invoicing mandatory?

Businesses of all sizes can start using e-invoices in New Zealand.  While there is no mandatory period for small businesses, large enterprises and central government agencies must begin receiving e-invoices by 31 March 2022.

Small businesses can use electronic invoices when they wish, provided:

  • They have PEPPOL-enabled accounting software, and
  • Their supplier agrees to receive the invoice in digital format

Adopting e-invoicing usually costs no money for small businesses. That’s because they have access to small-scale accounting software offering the service for free in New Zealand.

Equally, the cost of operation is based on the volume of invoices processed.

However, e-invoicing is mandatory for large businesses and governments because they receive more invoices. And, by digitizing the invoicing system, the New Zealand government aims to save $4.4 billion over ten years.

Like B2B transactions, the New Zealand government aims for 90% of Business to Government (B2G) transactions to be e-invoices by July 2026.


What are the e-invoicing requirements in New Zealand?

Companies must have an accredited PEPPOL access point and a New Zealand Business Number (NZBN) to use e-invoice in New Zealand.

The NZBN is automatically assigned when you register your business. If you don’t have one, you can always apply for an NZBN or retrieve the existing number on the official New Zealand Network.


How to send e-invoices in New Zealand

Getting started with e-invoices in New Zealand is easy if you run small and medium businesses. Once your account system supports e-invoicing, you can integrate your financial system with one of the listed e-invoicing enabled providers.

The next step is to start sending e-invoices from your accounting system.

Sending e-invoices requires a few complex steps for large businesses and government agencies.


Getting started with e-invoicing in New Zealand for small businesses

Step one

Check with your accounting software provider if your accounting system can process e-invoices.

If it cannot, you can consider replacing it with an account payable system that can process e-invoices.

You can also consider rebuilding the existing system or complimenting it with an add-on that allows you to process e-invoices.


Step two

The next step is to select an accredited PEPPOL access point provider to sync e-invoicing into your financial accounting software.

Storecove is an excellent PEPPOL enabled e-invoicing integration software in New Zealand. The support will help you determine how you’ll access the e-invoicing network.


Step 3

Now that your accounting system can start issuing e-invoices, inform your suppliers about the new system and encourage them to adopt e-invoicing.

With that, you can begin to transfer electronic invoices seamlessly.


Conclusion

The e-invoicing requirements and rules facilitate the easy transfer of financial transaction data between buyers and sellers in New Zealand.

In addition, e-invoicing eliminates manual data entry, secures the transfer of sensitive financial data, reduces task fraud and the cost of processing invoices.

To start sending e-invoices, businesses of all sizes need to connect their financial system with an e-invoicing software supporting PEPPOL integration. You can get started with Storecove’s PEPPOL accredited e-invoicing solution here.


More information about PEPPOL in New Zealand?

Do you want to know more about PEPPOL in New Zealand?

Call us on: +31 (0) 20 261 17 91 or send an e-mail to: helpdesk@storecove.nl


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