Commonwealth Bank, Telstra and MessageXchange have collaborated to perform Australia’s first end-to-end electronic invoicing experiment with leadership from the Digital Business Council.
The experiment tested the Digital Business Council framework which applies a 4-corner model where every business and its trading partner communicate via an access point. Access points are built into business software systems or outsourced to third parties. This experiment involved the movement of invoices over three months between Telstra as the supplier and Commonwealth Bank as the buyer through technology provided by MessageXchange.
The Digital Business Council estimates that Australian businesses could be saving between $7–10 billion a year through reduced paper and postage costs, processing errors and processing time on the estimated 1.2 billion invoices issued each year.
E-invoicing is potentially 60-80 per cent more efficient than traditional paper invoice processing and the implementation of a common framework of standards will allow businesses of all sizes the ability to transact seamlessly.
Australia has lagged the world in whole-of-economy based e-invoicing mainly due to the lack of a national framework of standards, a disproportionate cost burden for small business to interact with multiple systems, and a reluctance of software developers to invest without a clear national framework.
Peter Strong, CEO Council of Small Business Australia and Chair of the Digital Business Council said e-invoicing is a transformational step to a streamlined, integrated and productive economy, and an exciting step forward especially for the small business community.
“The establishment of a national framework of standards will provide a seamless system for all businesses to use and give software developers the confidence to produce e-invoicing integrated software,” Mr Strong said.
Michael Eidel, Executive General Manager of Commonwealth Bank’s Cash-flow and Transaction Services said existing paper invoice processes are well and truly ready for improved efficiency.
“We are committed to helping businesses make their processes easier and e-invoicing is one way to help, especially for small to medium sized businesses. It will reduce the pain points of processing errors and cost and improve processing time and accounts reconciliation,” Mr Eidel said.
MessageXchange Managing Director, John Delaney, said: “The new e-invoicing standard offers the potential for major improvements in productivity and cash flow for businesses and government agencies.”
“If we look to Europe, which has had e-invoicing in place for some time, the productivity and cost savings are so obvious to business leaders that some countries have already achieved a 40 per cent adoption rate, saving businesses and government billions of dollars every year.”
It is expected that the national standard will be adopted more broadly with these continued developments as has been the overseas experience. Further work will continue with other banks, technology providers and industry to automate the exchange of information with emerging platforms such as New Payments Platform and other fintech innovations such as blockchain.