+64 9 520 9200      enquiries@alliott.co.nz

The Business Advisory Blog

Welcome to our blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Email me when new posts are made to this blog

What you need to know about e-invoicing in New Zealand

Written by Vanessa Williams on April 20th, 2018.      0 comments

Small business being paid late is big impediment to success

Unpaid invoices crimp cash flow and can make it hard to settle your own bills.

overdue-771Perhaps worst of all, late payments create stress in the lives of business owners and their families.

Electronic invoicing, or e-invoicing, has sometimes been touted as a simpler, faster way to get paid. But what options are available in Australia? Let’s have a look.

First, it may help to define some of the terminology. E-invoicing refers to the electronic transmission of information between suppliers and customers. These formats are readable by both humans and machines. That means invoices can be automatically entered into accounting software. This is a huge timesaver at both ends of the transaction.

There is a hitch, though. Many e-invoicing solutions require the sender and recipient to use the same invoicing software. For that reason, the private sector has urged the government to develop a single low-cost e-invoicing standard that all businesses can use.

The governments of Australia and New Zealand recently agreed to do just that. The countries are fine-tuning a prototype developed over the last several years by the Digital Business Council, which is a collaboration between the Australian Taxation Office and businesses such as Xero. Singapore said in March it was exploring various e-invoicing standards and a common framework for businesses, and would announce details this year.

If everything goes to plan, we could see the NZ or Australian or governments use e-invoicing with their own suppliers as soon as the end of 2019. That would be the signal for businesses and software makers to line up behind a single e-invoicing standard.

Using Xero Connect

In the meantime, what’s available now? Xero Connect is a great tool if you’re a large supplier looking to invoice your many small business customers. Suppliers can e-invoice almost any of Xero’s half-million Australian subscribers. The bills flow automatically into Xero’s accounting software. Separately, Xero small businesses can e-invoice other small businesses on the platform. This saves recipients the hassle of manual entry, eliminates associated errors, and can generate quicker payment.

For small businesses hesitant to invest in a large e-invoicing solution, there are three alternatives that are highly effective. The first is online invoices, which differ from e-invoices. An online invoice is accessed via a private link in an email. This link takes you to the Xero web page which contains the invoice details. When the recipient clicks the link, Xero lets the sender know the customer has opened the bill. This information can be especially useful when a due date is approaching or has already passed.

The second tool, which can be combined with online invoices, is automated reminders. A Xero org can e-mail a reminder to customers when an invoice is overdue by a specified number of days. Some Xero small businesses even set a reminder before a bill is due. And they swear by the results.

Zlatina Beaumont, owner of The Fussy Cow cleaning service in Charlestown, New South Wales, has about 50 late payers each month out of a client base of almost 300 customers.

“An automated reminder goes out when an invoice is three days overdue” says Beaumont. “Almost all customers pay on the first reminder. Only about five or six late payers need a second or third nudge.”

Getting paid faster

In addition to reminders, Xero online invoices can include a Pay Now button. This allows recipients to pay immediately via PayPal or Stripe, which accept both credit and debit cards. Australian invoices with Stripe and PayPal options get paid up to 10.4 days faster on average, than invoices without them.

“We’ve had clients go from waiting nearly 60 days to be paid down to 41 with a combination of Pay Now, payment reminders sent three days prior to the due date, then again three days later,” says accountant Steph Hinds of Newcastle-based firm Growthwise. “We always find debtors are terrible until our clients put systems in. Pay Now and reminders work wonders.”

With a national e-invoicing standard on the way, and online invoicing tools available today, there’s no reason small businesses should tolerate consistently late payments. The current technology is easy to use and more affordable than ever for small businesses. Take advantage of it!

Contact Alliotts in Auckland today for a free trial and to speak to one of our Xero certified advisors about how to get the most out of using Xero for your business.​​​​​​​

Source Xero

 

Comments

We welcome your thoughts and opinions. Please keep it clean and friendly!