This indicated posting appears in The Mandarin and advises that the New South Wales government agencies will be required to adopt e-invoicing by the end of 2022. Many U.S. readers will know that the U.S. federal government gave a similar directive through the OMB back in 2015, with the M-15-19 directive that required adoption by the end of 2018 according to the following rules:
- Migration to a designated Federal Shared Service Provider (FSSP) and adoption of the FSSP electronic invoicing solution
- Use of an OMB approved electronic invoicing solution that aligns with agency mission and support requirements, or
- Cessation of any investments in new electronic invoicing solutions.
We do not have information as to the actual adoption rates but assume relatively broad given the mandate. The use of e-invoicing brings benefits to both sides through reduced processing costs (eliminating a lot of paper) as well as potentially faster payments on the supplier side.
‘All New South Wales government agencies will be required to adopt e-invoicing for goods and services worth up to $1 million, from January 1, 2022….Digital and customer service minister Victor Dominello on Tuesday said payment times, paperwork, manual errors and a ‘significant amount’ of money would be reduced as a result of the new rule….“This is great news for SMEs, who are the backbone of the economy. There is an estimated shared saving of around $20 each time e-invoicing replaces a paper invoice and around $17 each time it replaces a pdf invoice,” he said….“Based on the 4.2 million invoices across NSW government in 2019, a shared saving between the suppliers and NSW government is estimated to be $71 million. This means the government can spend more time helping customers and businesses can focus on their operations.” ‘
As we have advised before on these pages and through member research, late payments are a particular issue for smaller businesses, who struggle with cash flow, something that has become more of an existential threat than usual during the pandemic. So the NSW government mandate has a clear goal of supporting smaller suppliers .
The posting also suggests that the federal government in Australia has a similar effort underway.
‘Under the state government’s Faster Payments Policy, departments must pay eligible small businesses within five business days for their goods or services….Finance and small business minister Damien Tudehope said mandated e-invoicing would enhance the payments policy by ‘ensuring that the accounts payable teams in government agencies receive invoices within minutes’….“One of the biggest issues for small businesses across NSW is cashflow and we want to take steps to ensure that properly rendered invoices reach and are actioned by the right teams as quickly as possible,” he said….At the federal level, all government agencies will be required to adopt e-invoicing by July this year. The recent federal budget also committed $15.3 million help SMEs build their digital capacity and drive business uptake of e-invoicing.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
