It might be "boring", but a hi-tech solution to a problem many Kiwi businesses face – getting paid for their service or product – could save the economy more than $4 billion over 10 years.
So says John Mazenier New Zealand country manager for TechnologyOne, a leading enterprise software company working with the governments of both New Zealand and Australia and business leaders on an automated e-invoicing system making it possible for invoices to be paid within five days.
Mazenier says the problem of chasing money is a huge one, especially for smaller companies. In New Zealand up to 280 million B2B invoices are sent every year, a quarter of which are either in dispute or overdue. Many also contain the wrong amount or are sent to the wrong person.
"Most are sent either on a piece of paper or by PDF (66 per cent are issued by PDF) and cost the equivalent of between $23 and $25 each according to the Ministry of Business, Innovation and Employment (MBIE)," he says. "Compared to that, e-invoicing carries a cost of around $8, meaning the system could save the New Zealand economy about $4.4 billion over 10 years.
"It (e-invoicing) sounds simplistic and might be really boring to some, but it could make billions of dollars of difference to the economy if done right. The cash-flow boost to small business suppliers of getting paid within five days rather than a month or more has massive potential economic benefits.
"It will makes the lives of business owners easier and encourage them to modernize and automate their IT systems in a secure and simple way."
Mazenier says it's time to re-think the invoice: "I mean it's time to stop paying each other based on scraps of paper. In many places accounts payable remains the last bastion of work practices dating back to the 19th century and paper invoices should be put in the recycling bin where they belong, along with those PDF invoices in email for that matter."
TechnologyOne's e-invoicing solution - which Mazenier says is part of its well-known government ERP (Enterprise Resource Planning) software - was adopted by the Department of Treasury in Australia last year as part of a broad digital transformation programme. In New Zealand MBIE convened an e-invoicing advisory group in March made up of representatives of technology companies like TechnologyOne, banks, manufacturers and retailers.
These moves followed the signing of the Trans-Tasman Electronic Invoicing Arrangement by the two governments in October 2018 with the aim of aligning each country's approach to e-invoicing.
Mazenier says small business owners in particular spend too much time chasing payment for work done. Even among large private and public organisations it's not uncommon to hear about standard payment terms of 45 days or longer – and that's when the system is working as intended.
"Ask a small businessperson in this country what keeps them up at night and you won't have to go far down the list before you hear 'getting paid'," he says. "This has consequences and for many, growth is a two-edged sword.
"The larger their clients, the bigger the jobs and the longer they wait to get paid. That leaves many to opt out of certain work and that's bad for the future of local industry.
"Since Covid we have seen how fragile some businesses are, a heap of which have failed because they have run out of cash. For small business owners especially, cash in the door means they can put food on the table."
He says most commentators agree that to return to pre-Covid levels of GDP everything possible needs to be done to help the sustainable growth of small businesses which "are the country's largest employers and the engine room of innovation."
He says e-invoicing takes out the middleman and turns what has traditionally been a manual process into an automated one. It helps reduce errors and improves security and traceability within accounts payable.
Mazenier says TechnologyOne has signed an agreement with MBIE which opens the way for government organisations to adopt e-invoicing. Currently the company has 24 New Zealand government agencies on its books and is in discussion with a number of others.
For more information go to: technologyone.co.nz