e-Invoice is a digital invoice exchange between the financial systems of sellers and buyers. Thanks to eInvoice, businesses in New Zealand are expected to save billions of dollars in transaction costs each year. Small businesses get better cash flow with the use of eInvoice. The New Zealand government is encouraging all institutions to adopt eInvoicing. In this respect, the government will assist institutions that aim to pay 95% of all domestic invoices within ten working days. It will also ensure the regulation of processes across the public.
Some of the benefits of eInvoicing:
– Faster payment and improved cash flow
– Reduced processing costs
– Direct and secure information
– Improved financial visibility
– Connect to any system
New Zealand uses Peppol, the eInvoicing model based on international standards. The general format allows all businesses to access eInvoice, regardless of their size and the financial system they use.
e-Invoicing enables through service providers. Agencies choose from a range of accredited New Zealand and international service providers that act as access points connecting businesses to the Peppol network. The ‘Getting Started with e-Invoicing’ page on the New Zealand Business Number (NZBN) website has a list of accredited service providers.
New Zealand implements since mid-2020 these transformation solutions, which enable the direct digital exchange of eInvoice alongside other ePurchase documents consisting of eOrder, eCatalog, and eWaybill.
How does eInvoice work?
An eInvoice information passes through the eInvoice network where information such as GST number, NZ Business Number (NZBN), and bank account number are checked and approved.
New Zealand Business Number (NZBN)
The eInvoice information transmits to the buyer’s financial system, where it agrees with the purchase details and ready to pay. The NZBN is used to ensure that the eInvoice routes to the correct recipient. Access point providers (secure gateways) connect businesses to the eInvoicing network.
With more than 280 million B2B invoices in New Zealand each year, it is estimated that the New Zealand economy will save $4.4 billion over ten years. While eInvoicing is currently optional, it is likely to become mandatory for government agencies soon.
The e-Invoice framework can access in different ways. Many large businesses use their own “in-house” solutions. Small businesses can use accounting or financial software providers or one of their free eInvoice solutions. Some medium to large businesses may require direct access to the network through an access point provider.