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Why Your Business Needs to Invoice Using the New Peppol Network
Andrew Stubbs • Jun 05, 2022

Here's some good news if your business sends invoices to business or government customers.


Peppol* is on its way.

(That's Peppol, not Peppa.)

Ever had this conversation in your business?


You or one of your team: "Hello, I'm calling to follow up the invoice we emailed to you last month. It hasn't been paid yet."

Customer: "Really? We didn't receive that invoice?"


In addition to the time and expense of following up, the cash flow delays create stress for you and they hurt your business.


Thankfully, the adoption of Peppol will solve this problem.


What is Peppol?


Peppol is an obscure acronym for Pan-European Public Procurement On-Line. What's more important than what it stands for, is what it enables.


Peppol is an international 'eProcurement' framework for the electronic exchange of information. It creates a standard approach for governments and businesses to structure and exchange information such as invoices and other documents. 


What Peppol means for you and your business


Peppol makes electronic ordering, invoicing and shipping between governments and private companies faster, simpler and more secure.


This means your business will get paid faster when dealing with government and larger businesses.


In 2019, Australia and New Zealand adopted this platform for e-invoicing which, when implemented, will make 'we never received your invoice' issues virtually impossible. The new e-invoicing system is more secure than email and provides many other benefits.


Which countries are adopting Peppol?


There are currently 40 OpenPeppol member countries: 32 countries in Europe plus Australia, New Zealand, USA, Canada, China, Japan, Mexico and Singapore.

Each country has a Peppol authority. For example, in Australia that's the Australian Tax Office (ATO).


Is Peppol already in use?


Yes it is. For example, the SuperStream system in Australia-which many businesses are currently using to automate the payment of employee superannuation contributions-is based on the Peppol protocol.


How does e-invoicing work?


The system connects the accounting systems of all businesses and government departments via the secure Peppol network.



Suppliers generate sales invoices in their accounting systems which are sent to Peppol. 


Peppol then sends the information directly into the buyers' accounting systems. This avoids:


  • Non-delivery of invoices
  • Data entry errors
  • Processing delays


What are the cost savings?


Even though some processing at the buyer's end is still required to allocate the invoice according to the organisation's internal requirements, this automation reduces the data processing costs for the buyer.


Deloitte Access Economics calculates that every paper invoice replaced by e-invoicing will save $20. "So what?", you might be thinking?

 

With 1.2 billion invoices processed annually-and 89% of them still being paper-based-that represents $213.6 million in savings.

And who knew paper was still so prevalent?


Why should SMEs be excited about Peppol?


One of the common complaints by SMEs is the 30-day to 60-day payment cycle adopted by many large companies and government departments. This cash flow strain is a significant concern for many SME businesses.


From July 1, 2022, the Australian government has mandated that all Commonwealth government agencies will adopt e-invoicing.


And here's a big stick to drive adoption…


A government agency will be required to pay interest for payments made after a 5-day payment period where the supplier uses e-invoicing.


Governments encouraging big business to get on board


The Australian government is also considering further steps-such as mandatory participation-to encourage big businesses to follow their lead. 


It's likely that delayed payments to suppliers by government agencies and big businesses will attract a lot of negative media attention, as 5-day prompt payment facilitated by Peppol becomes the norm.


With more and more countries adopting Peppol, any business selling internationally will also benefit from e-invoicing.


Is Peppol only relevant to B2B transactions?


Yes. E-invoicing only applies to business-to-business (B2B) transactions. It does not affect business-to-consumer (B2C) sales, locally or internationally.


Who's not excited by Peppol?


Those businesses who delay payment to your business so they can invest your money on the short-term markets, to create additional profit are not excited by Peppol. Why?


By reducing their available investment period from 45 days down to 5 days they have a lot less funds to play with. 


That's a win for small and medium businesses.


But I already send invoices electronically?


Most of the major accounting software programs already allow you to email invoices to your customers, or even allow you to transmit an e-invoice directly into a customer's accounting software, if they use the same app.


It's important to understand that email is inherently insecure for data transmission. It's easily hacked or intercepted. And even though SME accounting software such as Xero allows direct Xero-to-Xero transmission of invoices, government agencies and big businesses do not use apps designed for SMEs, such as Xero.


Peppol provides a universal protocol for exchanging this information, regardless of the accounting software being used.


6 way SMEs benefit from e-invoicing


1. Efficient and accurate processing of data


Provided the data leaving the supplier's computer system is accurate, there is a high probability that the data in the buyer's system will also be accurate. Eliminating human intervention reduces the risk of error.


2. No more information 'lost in transit'


While there is no guarantee, the Peppol protocol is designed to ensure reliability of the data. If there is a delivery failure, you will know immediately and can take action to correct the error.


3. Reduced time waiting for payment


With reliable, prompt processing of sales invoices, the time between invoicing and payment can be significantly reduced which improves the supplier's-your business'-cash flow.


4. Reduced opportunity for fraud


The secure transmission of invoice information reduces the opportunity for interception or the inclusion of false invoices. Electronic matching of invoices with purchase orders will provide additional security for buyers. Of course, internal controls at the supplier and buyer end will still be critical.


5. International coverage


With 40 countries currently part of the Peppol system, the same benefits would be available on foreign transactions.


6. Accounting system agnostic


All accounting software systems will have e-invoicing capability, so there is no need to change systems.


I'm sold on Peppol. What do I do now?


The Peppol registration process is completed within your accounting software. Search for e-invoicing in the Help section of your accounting software, and you'll find the instructions. For example, here is Xero's help article on e-invoicing using Peppol.


Once your system is registered, that's pretty much all you need to do on your end. Of course, the system needs buyers and sellers to be registered..


Contact your customers to advise them that you are now registered for Peppol and encourage them to also join the network.


After all, it's a win-win to have your customers on the system.


Your next steps…


Clearly, e-invoicing is a major step forward for business efficiency. It makes sense for both buyers and sellers, of all sizes.


If you are still unsure about the process for registering or using the Peppol network for e-invoicing, get in touch on and we'll be happy to


By Andrew Stubbs 04 May, 2022
If you're a director of an Australian company-or you plan to be-take 5 minutes now to read this article. All existing directors (and intending directors) of Australian companies need to be aware that the Australian Government has announced the introduction of a new mandatory Director Identification Number (DIN) system. (You'll notice the term director ID is also used for DIN.) This system is the initial step in the Modernising Business Registry (MBR) Program which has been established under the Treasury Laws Amendment Act which was legislated by the Australian Government in 2020. More information on the MBR program can be found here . What is the DIN system trying to achieve? The DIN aims to provide accountability and traceability of a director's relationships over time, across all companies and will provide information on a director's involvement in what may be repeated unlawful activity, including illegal phoenix activity. It should also solve the problem of false or fraudulent director identities. What are the key features? It is mandatory for all directors, foreign directors and alternate directors of Australian companies to hold a DIN. The DIN is a unique 15 digit number. The first 3 digits will be 036 which is the identifier for Australia. The last digit is a check digit to help with accuracy when quoting your DIN. Like your tax file number, you will only be issued with one DIN which you will hold for life - even if you cease acting as a director for any period. To obtain a DIN, you will need to prove your identity so you will not be able to hold multiple DINs. Other office holders (e.g. company secretaries) are not required to register. The director is responsible for updating the DIN records for any changes in personal information within 7 days of the change. The director must apply personally. The process cannot be completed by your accountant, lawyer, spouse or executive assistant. There are significant penalties for non-compliance. How do you apply for a DIN? Directors have 3 options for applying. You can apply online from 1 November 2021. To use this method, you must first establish your identity via myGovID (an app you download on your smart device which is different from myGov). Once set up, your myGovID will make accessing a wide range of government services easier. (It's not just for your DIN application). For information on how to set up a myGovID please go to https://www.mygovid.gov.au/set-up During the DIN application process, you will need additional information such as your tax file number (TFN) and your residential address as per ATO records. It would also be advisable to have other personal details such as bank account details, medicare card or a recent income tax assessment available in case these are required. You can also apply by phone ( 13 62 50 ). During the call, the operator will ask for the identity documents you would have used to obtain your myGovID (passport and driver licence) as well as the additional information listed above. These details will be confirmed with the records held on existing government databases and, assuming the details agree, your DIN will be issued. Or you can apply by mail, but this is not recommended because the process for doing this seems vague ("Write to us") which means you can probably expect a lengthy process of certifying documents and coping with the vagaries of the postal system. One of the other two methods would be a better choice. When will you need to apply for a DIN? Transitional arrangements will allow directors to become familiar with the new requirement. When you need to have a director ID will depend on when you were appointed as a director.
By Andrew Stubbs 07 Apr, 2022
If you're a small business owner, you're always on the lookout for better ways to go about routine tasks to boost growth and underpin reliability. So, yes, you have the will; now, what are the ways? What are those consistent routines you can instill that will have the most benefits? This article looks at the top 6 things you can do to help your business thrive. We're going to cover finances, goals, marketing, technology and you ! So, let's take a look… 1. Your finances are a scorecard … and a predictor Boil it all down and dollars in the bank are the report card on the health of your business operations. Surprising then that so many people don't really pay much attention to how much they've earned, nor how much they're likely to earn. As much as it might feel like a chore, reviewing your sales and financial projections and then using them to ascertain if you need business financing is a discipline worth cultivating . If you suspect that your cash flow is precarious, you should be checking out your options today. First metric to check: your credit score. If it is too low, you need to take steps to shore it up. Next, check in with your bank or finance broker about what loans are available. 2. Goal setting, goal achieving, goal celebrating So, if you're using current and future dollars in the bank to keep score, the next thing is to do something about it. This is where goal setting comes in. If thoughtfully set and persistently pursued, goals help you orientate your willpower and your energy at each moment of the business day. This is the hidden power of goals: giving you a good sense of direction and a way to channel your instincts towards wise objectives. Constantly checking in with your goals makes them a benchmarking tool to keep your business pointed in the right direction. Yes, just having goals helps. Actually achieving a goal helps too, of course! 3. 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Usually, apps are best for keeping an eye on things, boosting effectiveness on the "busy" tasks and enabling you to give your stamp of approval to work that needs your say-so to progress. In general, these are not value-adding tasks, just the value-neutral tasks that get in the way of the value-adding tasks. Now, there is no end of apps out there. So, as always, don't bother looking until you have some idea of what you need. 7. You are the ultimate business tool Health is the single most important aspect to consider for anyone running a business. It's the non-negotiable factor that governs everything else you are capable of. To adapt a quote from Arnold Schwarzenegger, being fit and healthy is "a status symbol. It reflects you worked hard for it; no money can buy it. You cannot borrow it, you cannot inherit it, you cannot steal it". This means that you must get enough sleep every night (most people need 7 hours or more). This means a healthy diet must become your preferred way of eating. This means that you should exercise every single day (except when sick). This means you must give your mind a rest too . Meditation isn't some mystic monkish thing, it's simply the practice of letting your thoughts come and go while you - the observer - stay peaceful and undisturbed by them. Think of it like this, meditating is mediating your mind. Take stock, choose wisely, make small steps in the right direction In this article, we've talked about some improvements you can make to what you're already doing. You don't have to do all of these at once. Start with the one that seems easiest and then stick with it to see if it works. Remember, it's not always about big changes. Often, you can make major improvements in outcome by making small changes to input. Doing the little things better. So take stock, choose wisely and be sure to make those small steps in the right direction for success today, tomorrow and the next day.
By Andrew Stubbs 28 Feb, 2022
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