E-Invoicing in New Zealand

Stay informed with Complyance.io: Essential updates on e-invoicing and insights into New Zealand's tax regulations.

Ajith Kumar M
January 3, 2024
11 min

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A Strategic Asset for High Tax-Paying Businesses

Introduction: A Journey Towards Efficiency

In the dynamic business environment of New Zealand, high tax-paying companies constantly seek ways to enhance their financial operations' efficiency and compliance. Amidst this bustling economic landscape, a transformative element emerges: e-invoicing. This digital solution is not just a technological upgrade; it's a voyage towards unparalleled efficiency, reshaping how businesses manage their financial transactions.

Understanding E-Invoicing in New Zealand

E-invoicing in New Zealand is a reality, with its adoption beginning in earnest by late 2019. The process involves the generation of an e-invoice by the supplier's ERP system, which is then sent to an Access Point (AP). The AP checks the invoice, especially the NZ Business Number (NZBN), and forwards it via the Peppol network to the recipient's AP. This system ensures that invoices are directed correctly and efficiently, reducing the likelihood of errors.

While e-invoicing is not mandatory in New Zealand for B2B or B2G transactions, from March 31, 2022, central public entities must be able to receive e-invoicing if chosen by their suppliers. The standard format for e-invoices in New Zealand is the Peppol BIS 3.0, and the Electronic Transactions Act ensures the integrity and authenticity of these electronic transactions.

E-Invoicing in New Zealand: The Current State

The landscape of e-invoicing in New Zealand has witnessed a significant upswing in 2023. The year wrapped up with substantial growth in all metrics, especially in the volumes of e-invoices, the number of registrations, and the activation of new e-invoicing senders. A key driver of this growth is the increased participation of SMEs and the government's focused efforts on supplier onboarding.

By November 2023, the total number of businesses registered for e-invoicing reached 11,597, marking an 8.8% month-on-month growth. This burgeoning trend reflects a broader acceptance and realization of e-invoicing benefits across the business spectrum.

The surge in e-invoicing is further evidenced by the impressive 36% increase in the number of e-invoices received in November 2023 compared to the previous month. This brings the cumulative total to 42,045 e-invoices, indicating a robust and growing e-invoicing ecosystem.

Sector-specific adoption rates offer additional insights. The construction sector, for instance, has shown remarkable enthusiasm, with 1,769 businesses (+113) embracing e-invoicing. The central government is not far behind, with a significant 25 out of 32 entities onboard. The recruitment sector and the community of accountants and bookkeepers are also actively participating, with 70 (+12) and 451 (+75) registrations, respectively.

Benefits of Adopting E-Invoicing

E-invoicing offers a range of benefits for New Zealand businesses, especially those with high tax obligations. Here's a simpler breakdown of these advantages:

  1. No More Paper Invoices: E-invoicing means you don't need to use paper or print out invoices anymore. Everything is done digitally, which is faster and more eco-friendly.
  2. Quicker Payments: Digital invoices reach their destination faster than physical ones. This speed can lead to getting paid sooner, which is great for your business's cash flow.
  3. Less Admin Work: With e-invoicing, a lot of the manual work of creating and sending invoices is automated. This saves time and effort, allowing staff to focus on other important tasks.
  4. Cost Savings: Moving to e-invoicing cuts down on costs related to printing, mailing, and storing paper invoices. It also reduces mistakes that can happen with manual handling.
  5. Easy to Track Finances: E-invoicing makes it easier to see where your finances stand at any moment. You can quickly check the status of invoices and payments, which helps with managing your budget and financial planning.
  6. Keeps You Compliant: E-invoicing ensures you are automatically following New Zealand's tax rules for invoicing and record-keeping. This is especially important for businesses that pay a lot of taxes.

e-invoicing is not just about replacing paper invoices with digital ones; it's about enhancing efficiency, saving resources, improving financial health, and ensuring compliance. For businesses in New Zealand, it's a step towards a more streamlined, modern approach to handling finances.

Getting Started with E-Invoicing feature.

Small and medium businesses

For small and medium businesses looking to start using e-invoicing, here's a simple, easy-to-follow guide:

  1. Check Your System: First, see if your current financial software can handle e-invoicing. If it can, great! If not, you might need to upgrade your software or get a new one that supports e-invoicing.
  2. Activate E-Invoicing: Once your software is ready, turn on the e-invoicing feature. You might need to talk to your software provider to help set this up.
  3. Get an NZBN: Make sure you have a New Zealand Business Number (NZBN). It's important for making sure your e-invoices go to the right place. If you don't have one, you can easily register for it.
  4. Start Using E-Invoices: Now you're ready to send and receive e-invoices. Let your clients and suppliers know you're using e-invoicing now. This helps everyone be on the same page and makes transactions smoother.
  5. Share Your NZBN: Share your NZBN with your suppliers and clients and ask for theirs. This helps ensure all e-invoices are sent and received correctly.

By following these steps, small and medium businesses can switch to e-invoicing easily, leading to better, faster, and more accurate invoicing.

Large businesses and government

For large businesses and government agencies in New Zealand, moving to e-invoicing is a key initiative. Here's a step-by-step guide to make it easy to understand:

1. Understanding the Commitment to E-Invoicing:
  • The New Zealand Government is dedicated to implementing e-invoicing.
  • With around 280 million business invoices exchanged annually, e-invoicing could save the economy $4.4 billion over 10 years.
  • By July 2026, the goal is for 90% of invoices to the Central Government to be electronic.
2. The Benefits:
  • E-invoicing is beneficial for the economy and speeds up payments, especially to small businesses.
  • For government and large businesses, which receive many invoices, it means saving money and time and less administrative hassle.
3. Getting Started with E-Invoicing:
  • Step 1: Check Your System: Talk to your accounts payable software provider. Can your system handle e-invoicing? If not, you might need to upgrade or get a new system.
  • Options:
  • Repurchase: Get a new system that can do e-invoicing.
  • Rebuild: Update your current system for e-invoicing.
  • Retire: If you have multiple systems, merge them into one that can handle e-invoicing.
  • Retain: Keep your current system but add a feature that enables e-invoicing.
  • Step 2: Connect to the E-Invoicing Network: Decide how you'll connect.
  • Options:
  • Use a software provider that will handle the connection.
  • Choose an accredited provider to integrate e-invoicing into your system.
  • Step 3: Implement and Engage: Start using e-invoicing and encourage your suppliers to do the same.
  • Remember:
  • Get and share your NZBN (New Zealand Business Number) for accurate invoicing.
  • The more suppliers you have using e-invoicing, the better it is for speed and accuracy.

Cost Considerations:

  • Implementing e-invoicing can cost between $3,000 and $20,000, but this varies based on your system and needs.
  • The investment is typically worth it for the efficiency and benefits gained.

In summary, for large businesses and government sectors in New Zealand, transitioning to e-invoicing is a strategic move that promises significant economic benefits, increased efficiency, and better financial management. With a clear plan and the right tools, this transition can be smooth and advantageous.

Why Choose Complyance.io for E-Invoicing?

Complyance.io is an ideal choice for businesses navigating the complexities of e-invoicing, particularly for those with high tax liabilities. The platform Complyance.io offers is designed to make the e-invoicing process both simpler and more efficient. It ensures that businesses are not only complying with the latest e-invoicing standards but also optimizing their financial operations for greater accuracy and enhanced security. Choosing Complyance.io means embracing a streamlined, efficient approach to financial operations, ensuring compliance with regulatory requirements while also opening up opportunities for improved cash flow management and operational efficiency. This makes Complyance.io a valuable ally for businesses looking to modernize their invoicing processes.

Conclusion: The Future of E-Invoicing in New Zealand

E-invoicing in New Zealand is not just a compliance measure; it represents a strategic decision that positions businesses for future success. As we look to the future, one might wonder how the continued adoption of e-invoicing will shape New Zealand's financial landscape and contribute to economic growth and stability. How will this digital transformation impact the efficiency and compliance of high tax-paying businesses in the years to come?