eInvoicing Adoption Leaders Group minutes – 4 April 2024

Meeting details

Date

• Thursday, 4 April 2024

Time

• 10:00am to 12:00pm (Auckland, Wellington)
• 8:00am to 10:00am (Brisbane, Melbourne, Sydney)

Locations

• Auckland – Westpac, 16 Takutai Square
• Wellington – MBIE, Pastoral House, 25 The Terrace
• Remote – MS Teams

Attendence

Minutes

Jump to:

• Welcome and administration
• New Zealand Government eInvoicing announcement
• Insights/trends of New Zealand business payment practices (Centrix)
• eInvoicing Community of Practice (eCoP) meeting #9 debrief
• Updates from member organisations
• Closing remarks

Welcome and administration

• New member organisations were introduced by the co-chair.
• The minutes from the previous meeting were approved.
• Action items from the previous meeting were discussed and approved by the group. 

New Zealand Government eInvoicing announcement

Hon. Minister Andrew Bayly's update on eInvoicing and faster payments

• The reasoning behind the repeal of the Business Payments Practices Act (BPPA). The Minister recognised the good intention of the act (small and medium businesses being paid on time is critical) but noted the opportunity for the use of other mechanisms to achieve these outcomes.
• Minister anticipated the BPPA to cost the industry approximately $30 to $40 million, which opposed the government’s intentions to make business easier, rather than more difficult.
• Minister noted the importance of Government leading the way and the opportunity for doing so regarding payment times.
• Minister noted the new proposed eInvoicing and payment times changes, including a target for government agencies to pay businesses within 10 working days, and eInvoices to be paid within 5. This reflects the government’s approach of incentivising the businesses rather than imposing requirements.
• Minister recognised that the most important part of this initiative was those businesses that are part of eALG. Critical in eInvoicing success and improving payment times are large businesses leading by example.
• Minister Bayly further quoted that “he fully supports the eInvoicing initiative and takes it seriously”.

MBIE Chief Operating Officer's update

• An outline of eInvoicing network growth since the last meeting. Advised that NZ is now the international leader in network growth from a percentage perspective. With this growth, NZ is now approaching 45% of the addressable target market.
• Noted Norway’s eInvoicing success, with 72% of invoices across the country being sent as eInvoices. The way this was achieved is clear: mandating business to government invoices as being eInvoices. Recent statistics indicate that around 2% of GDP (estimated) can be accounted for with eInvoicing.
• Drew extra attention to Datacom’s recent progress in becoming eInvoice enabled, as well as leading the way in supply chain eInvoicing engagement. Encouraged other members of the group to think about how they might leverage their existing customer and partner networks to drive eInvoicing network growth.
• Noted international Peppol developments: NZ eInvoicing team hosting Japanese government eInvoicing representative; MBIE’s involvement with the Australian Taxation Authority in the Australia-New Zealand eInvoicing Board; Malaysia and Singapore recently adopting and mandating Peppol.

MBIE Head of Commercial Projects and Business Adoption's update

• Outlined the future other uses for the Peppol network, outside of eInvoicing. Now that the network infrastructure is in place, there is an opportunity to leverage it for other areas of increased business efficiency and this includes (eProcurement): purchase orders, buyer created tax invoices, pre/post aware docs, etc.
• Potential benefits (eProcurement) to NZ’s economy of leveraging the network is approximately NZD $1.8 billion+. eInvoicing component is $400 million.
• Brought attention to the ‘intangible’ benefits of the Peppol network – reduction in risk of invoice fraud being one such example. Australia and New Zealand reported $250 million worth of invoice fraud last year, and much of this goes unreported.

Insights/trends of NZ business payment practices (Centrix)

Centrix data and analytics team overview of the business payments landscape in NZ

• The current climate is difficult for small and medium businesses. Centrix predicted that these difficulties faced by small and medium businesses will get worse before they get better.
• Businesses late payment times are on the rise – since the start of tracking, average payment time has increased from 5 to 7 days.
• Business payment practices are not consistent across sectors – high performing (low incidence of late payment) is the agriculture sector. Consistently paying their suppliers faster than any others, with an average of 5 days. Low performing (frequently late payments) is the property sector with an average of 13.6 days. This poor performance is consistent in other market environments, such as when the property market was booming in 2021.
• When divided by business size, small businesses tend to pay quickly, despite the difficulties faced with economic stresses. Larger business consistently pays in far greater time (6.4 days vs 13.4 days, small vs large).
• Drew attention to the fact that this current landscape represents an opportunity for the businesses in this room to show leadership and make business easier to do. This has significant effects on the prosperity of the NZ economy.

eInvoicing Community of Practice (eCoP) meeting #9 debrief

eCoP co-chair Graham Young's debrief of recent operational forum

• The last meeting was attended by 19 large businesses and hosted at Datacom’s office.
• Datacom presented on their eInvoicing implementation journey and success.
• Matt Lewis’s (Digital Service Providers Australia New Zealand) international Peppol momentum update.
• MBIE had a Q&A session on the repeal of the Business Practices Payment Act 2023 and the ongoing consultation process on eInvoicing         

Updates from member organisations

Roundtable discussion

• A member organisation is driving more of their supplier and customer base to adopt eInvoicing. Reinforced the idea that Invoice fraud is a real danger that is affecting business. Pointed out there is a massive opportunity to elevate all types of business across NZ by focusing on data completeness and quality. They have launched an eInvoicing communication campaign for small business partners, with the key messaging: “This is good for you, we will make it work”. Xero customers are often getting paid same day by this member organisation. Send capability is still in progress and is still progressing actively. Another avenue is leveraging business support information packs and communications to integrate eInvoicing with them. This organisation has received over 2000 eInvoices this year and looking at avenues like the Chamber of Commerce, etc to promote eInvoicing to the business community.
• A member organisation is eInvoicing send capable now and currently sending eInvoices to TPK, MBIE. Also testing with IRD, Stats NZ, HUD, MoJ and MSD, Kaianga ora, the whole state sector along with Westpac NZ. Everyone knew this was coming and suggested to need for a harder approach. Suggested that New Zealand’s largest companies are supportive of this initiative. Recommended minister come out and mandate this in the public sector, and it would be well received and show the government’s commitment to driving productivity and efficiency.
• A member organisation is ready to send eInvoices and are keen to do more as they have the capacity. Like another member organisation, they are also ready to increase the uptake. Happy to support customers who wish to work closely on this initiative. They are currently sending eInvoices to 7-8 government agencies and are also working on promoting this through case study and other channels.
• A member organisation shared their eInvoicing journey so far. Noted the difficulty of building a business case for finance system improvements like eInvoicing, when compared to flashier spend opportunities. This member organisation has succeeded in securing funding and executive buy in is framing eInvoicing as an exercise in standardisation, which in turn leads to cost savings and multiple productivity benefits. Being a large government supplier, the 5 days eInvoice payment time for better cash flow will be a big incentive.
• A member organisation outlined the recent progress with their customer bulk registration process for eInvoicing. Only 2% have been opted out, with huge numbers of businesses registered to date with more to come. This marks a change in the focus for eInvoicing in NZ, as many (most) small businesses will now be able to receive eInvoices. As a large sender, Xero has started sending their customers their monthly usage bills as eInvoices.
• A member organisation is in beginning of their eInvoicing journey. Need to reprioritize and reallocate funding with the repeal of the Business Payments Practices Act. The key driver is the international component and will start with an assessment from the Malaysian component of the business where it will be mandated. As stated earlier, already been outlined its nettle of receiving the finding and competing against other initiatives.
• A member organisation remains committed to the cause. Operate some complex instances of SAP – Farmsource, ANZ businesses, and global businesses. The Farmsource instance is eInvoicing enabled. Have a huge number of small and medium sized businesses that they can get on the network. There is huge opportunity for the businesses in the full eProcurement and extra electronic documentation and export docs.
• A member organisation understands the key motivator for eInvoicing to be data standardisation to build robust digital public infrastructure. Noted the huge opportunity for eInvoicing to reduce the impact of invoice fraud. Outlined the other markets this organisation operates in where eInvoicing is already implemented: Germany, France, Belgium, and Portugal, as well as further regions in progress. They see eInvoicing as a priority for them with prep work underway in 2024 to get ANZ and Japan eInvoicing enabled in 2025.
• A member organisation echoed another member’s comments about the need for a mandate. They were an early adopter (working with MBIE, Treasury), and are still committed. There are still manual processes at their client’s end that they need to work through, but the overall experience is positive.
• A member organisation also acknowledges and are grateful for the support they’ve had from MBIE and the team. Currently working with the active supplier list. Positive feedback on the 5-day eInvoice payment target. This will be a challenge as telecommunication billing for users and customers is going to be a big job. However, it’s something they’re committed to making happen.
• A member organisation remains committed to eInvoicing. Shares the consensus opinion around the table regarding fraud and business efficiency costs. Noted NZBN as one of the major challenges they faced, especially given the number of small businesses and medium that they work with. It would be excellent to get some further assistance from MBIE on improving the effectiveness of NZBN as a data source and expanding its user case as a resource.
• A member organisation is amid a project to upgrade their AP automation systems, which will take about 2 months. By the end of this year expect AP to be finished for eInvoicing. From a sending perspective, the diverse range of billing systems usage poses more of a challenge. Committed to making it happen at some stage but need to find the time in the workflow and prioritisation to make this happen.
• A member organisation reiterates positive experience with the MBIE team. Targeting go-live around October 2024 to be able to receive. They are currently working with Unimarket and MessageXchange on implementation that is well underway.
• A member organisation focused on partnering with their mailing houses, Western Mailing and Dataprint. Have had workshops with MBIE to look at how to achieve this. Recognised that the customer onboarding process needs to change to accommodate eInvoicing. SAP’s new high lever architecture has been assembled and is targeting Q1. Predict benefits such as removing approximately 80% of manual invoice processing effort just by moving their top 20 customers to eInvoicing.
• A member organisation’s focus is on data quality. Mentioned that invoice fraud is an issue across NZ business. Regarding the possibility of a mandate, one thing to be conscious is of the capacity of businesses to move quickly. In their instance, there are 28 different businesses, each with their own systems and processes. While the JDE system that the main company uses is capable, 26 other businesses are not. They are currently in the process of moving to SAP S4Hana, with an estimated 5-year program for the entire ERP upgrade.
• A member organisation has been working with their AP provider and are confident that they will have an RFP completed in the next month. Expect funding to be secured for a start in Q1 next year. Have already begun conversations on the supplier side about how much data customisation will be needed. The focus is to reduce the amount of process and system change on our bankers, as this increases the likelihood of a successful implementation. Noted the benefits of the BPPA repeal as it forced the bank to reassess and revolutionise their finance systems. Reiterated the importance of improving the NZBN quality and register.
• A member organisation is committed to eInvoicing and are excited about the productivity gains to be made as a country. Noted a key takeaway is to start early and try to integrate eInvoicing into that finance upgrade that’s currently underway. NZBN is a big consideration and represents a big opportunity. Also, acknowledged the 5-day payment time which will be a big benefit being a key government supplier.
• A member organisation is a long-standing member of this forum but advised that the eInvoicing progress has been halted by a potential merger between 2 of their entities. However, this remains a priority once the capacity is in place. Recognised the eProcurement opportunity in food safety documentation.
• A member organisation went live in February with receiving eInvoices. Relatively steady, but quite slow in terms of uptake. Now exploring the capacity to send eInvoices and remain committed to this initiative.
• A member organisation’s Accounts Payable has gone live recently since Q4 and is currently working with the customer side of things. Working towards simplification in the background. Have been fielding inquiries from government entities to start sending eInvoices. Their mail house has built and tested their solution and had successful testing.
• A member organisation isn’t actively looking at eInvoicing due to a hyper regulatory change period. Opportunity for improving payment times is reduced due to good practices currently: since the start of COVID, invoices are paid as soon as they are approved. However, keen to work with the internal SAP team to explore eInvoicing opportunities.
• A member organisation are committed to eInvoicing but are currently in the early stages of a major ERP shift, which is unfortunately taking a lot of time and resources.

Action points

• AP 1.1
  Members to provide feedback on whether eInvoicing should be mandated in NZ, views on different options for mandating eInvoicing (e.g., Business to Government, Business to Business, etc) and their suggested timelines for each.
• AP 1.2
  Members to provide feedback on how to stimulate usage / growth for NZBN.
• AP 1.3
  Members to provide clearer feedback on the other data standardisation opportunities across NZ business that also need to be worked on

Closing remarks

Minister Bayly complimented all member organisations on their progress

Minister's response to some comments:

• Digital scams are important to the Minister. Recently wrote to banks wanting a plan for scam management.
• eInvoicing mandate will rely on a complete view of the current landscape. With government agencies some of this data already exists.
• Recognised the importance of supporting SMEs.
• The Minister has a strong interest in the NZBN noting its massive usage opportunity. Wanting to get more fields of usage across the NZBN. Minister wishes to see NZBN as a type of digital identity. This aspect will require for ways to drive uptake of NZBN – eInvoicing is one such way. Also acknowledged in Australia that ABN is a key identifier for businesses.
• There Minister requested some additional feedback from the members/industry. The MBIE team will be coordinating these as action items and will compile responses ahead of the next meeting for the Minister.

The co-chair completed the meeting formalities, and a group photograph was taken for social media/LinkedIn posts.

Meeting closed at 12:03 pm.