KPMG has advised the government against rushing to implement a compulsory approach to e-invoicing. KPMG has cautioned that compliance costs and competing priorities will weigh significantly against businesses.
It is in the opinion of KPMG that the governments desire for mandating e-invoicing – beginning with large businesses has failed to consider the compliance burden faced by large businesses who are now obliged to participate in the Payment Times Reporting Scheme.
KPMG wants the government to resist adopting a mandatory approach until at least 2023, this recommendation was reached upon the conclusion of the legislative post-implementation review of the Payment Times Reporting Scheme.
In their submission to The Treasury, KPMG expresses that they are concerned that many businesses may not have the finances to invest in e-invoicing even if there is a positive return overtime. They believe that small and medium businesses are more than likely to see an increase in compliance costs during a period when only a small percentage of businesses are capable of funding necessary system changes.
“This is particularly relevant during the current covid-19 pandemic, where profitability concerns and unplanned IT investments may have depleted funding that would have usually been used to fund e-invoicing compliance. For SMEs with limited resources in relation to their invoicing and purchasing functions, mandatory Peppol e-invoicing may cause an initial increase in compliance costs and delays to their invoicing and payment cycle.” they outlined in the statement sent to The Treasury.
Despite the concerns, KPMG has recognized that Australia faces a tight window to introduce e-invoicing as international adoption rises, as the European Union is aiming to have mandatory adoption before 2025.
The mandatory adoption of e-invoicing is inevitable, but the big four want the government to ensure that compliance costs and red tape are reduced and any push to enforce e-invoicing comes at a time that will make it less likely to cause a regulation burden.
The KPMG has encouraged the government to consider a non-regulatory approach by first and foremost rolling out education programs which aim to increase awareness among Australia businesses, or to consider offering financial incentives to businesses to cover the costs of implement e-invoicing.
The Treasury has outlined that it believes a voluntary approach will not harvest the potential time and cost-saving benefits of e-invoicing due to a lack of broad participation across businesses.
If the government forges ahead with the mandatory route, KMPG contents that the government should initiate a five-year timeframe which is very similar to the European Unions strategy. This approach will enable businesses to prepare and make the necessary system upgrades.
The belief to delay the mandatory introduction of e-invoicing is a stance that is also shared by professional accounting bodies such as; CPA Australia, Charted Accountants Australia New Zealand and The Institute of Public Accountants.
These professional bodies are concerned about the current economic conditions that have occurred due to the covid-19 pandemic. They believe that a mandatory approach will be an unnecessary distraction for businesses who are trying to recover from the pandemic and maintain a day-to-day solvency.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
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