The Government and Xero are pushing eInvoicing for organisations. Here's what it means for businesses

If you subscribe to the web-based online accounting software Xero, you have probably received a notice that as of Tuesday electronic invoicing - or eInvoicing as it's been named - will be enabled on your account as of Wednesday. The eInvoicing enrolment for subscribers is automatic, and users can opt out of the feature at any time.

In simple terms, eInvoicing lets organisations send and receive invoices directly between their financial software provided both parties are registered to do so. Doing so reduces data entry, particularly if invoices are sent the old-fashioned way on paper. It is also more secure than emailing attachments, which is prone to malware compromise and fraud.

For now eInvoicing is free to use, and included in Xero customers' subscription. Subscribers who have already registered for eInvoicing do not need to redo the enrolment, Xero said.

The story here is that since 2019, New Zealand has been using the grandly named Pan European Open Procurement Online set of standards for eInvoicing. Known as Peppol, the implementation in 78 countries around the world, including New Zealand and Australia, uses is OpenPeppol. There are no others currently, and OpenPeppol is set up as a not-for-profit with headquarters in Brussels, Belgium.

Uptake of eInvoicing has been slow, however. As of writing this piece, the Ministry of Business, Innovation and Employment's eInvoicing web site says just under 23,400 organisations have registered for the new way to send and receive bills. 

That number is set to rise now, but how much is not yet clear. Xero declined to say how many of its subscribers will be e-invoicing enabled, unless there's opting-out en masse, it'll be a a fair few. In its annual report Xero claimed to have around 2.4 million subscribers in New Zealand and Australia as of March 31.

A search through the NZ Peppol directory shows many government organisations are registered, and Xero's country manager for Aotearoa New Zealand Bridget Snelling confirmed there is strong official support for eInvoicing.

On Tuesday, the Minister of Small Business and Manufacturing, Andrew Bayly, and Economic Development Minister, Melissa Lee, announced government agencies would accelerate the adoption of eInvoicing, coinciding with Xero's announcement. Bayly and Lee say eInvoicing will help speed up payments 

The Inland Revenue Department also prefers eInvoices. New laws brought in April 1 last year enable eInvoicing to operate with GST, replaced the requirement to use tax invoices. 

Instead, IRD said there is now a more general requirement to provide and keep certain records known as taxable supply information. There is no longer the requirement to include the words "tax invoice" for example.

A number of big private organisations are also onboard with eInvoicing, with MBIE listing Spark, Bunnings, Countdown, Westpac, Office Max and KPMG among them.

MBIE is New Zealand's Peppol authority, and the open implementation of the business-to-business document exchange protocol is based the cryptically named Applicability Statement 4 (AS4) standard. Messages sent using AS4 can be compressed to reduce their size, and importantly, be digitally signed so that their provenance can be proven, and  encrypted for security.

Together with the requirement for organisations to register with a Peppol authority, eInvoicing has the potential to reduce fraud such as impersonation by scammers considerably. 

Using eInvoicing doesn't mean organisations are locked in to one particular financial systems supplier. Along with Xero and its competitor MYOB, Alan Carnaby, MBIE's manager of eInvoicing adoption told interest.co.nz that over 60 software systems in the New Zealand market support the electronic bills exchange, and this can be migrated between them.

"The process involves de-registering to receive eInvoices from the old provider, and then registering to receive eInvoices via the new provider. This is so eInvoices can be delivered to the right place," Carnaby explained.

So how much information can MBIE the Peppol authority see on organisations using eInvoicing? Not a great deal, Carnaby said.

"eInvoicing is a secure channel and there is no visibility of eInvoices by the government or any other third party. The only parties that can view eInvoices are the invoice sender and receiver, and the technology providers these parties use to send/receive invoices," Carnaby said.

According to Carnaby, as the Peppol Authority, MBIE has access to only the following aggregated statistical data about eInvoicing transactions collected by OpenPeppol:  

• The number of active users across the Peppol network. 
• The number of transactions sent and received per Document Type ID across the Peppol network. 

"Under contractual arrangements, MBIE cannot collect or retain any disaggregated information about individuals or businesses, or any sensitive commercial information," Carnaby said.

"The statistical information collected from service providers is aggregated and anonymised, ensuring that individuals’ data, business information or commercially sensitive information is not identifiable," he added.

Using eInvoicing instead of paper-based or portable document format (PDF) file invoices is faster as well, Carnaby noted, as there's no need to manually enter the information into financial and account systems.

"eInvoicing transactions involve the transfer of structured invoice information directly from one system to another. This happens in near real-time," Carnaby said.