SMBs have equal access to technology and can keep pace with customer expectations

We’ve all heard the old saying, “Cash is king,” but the addition of one word wouldn’t be out of place: “Cash flow is king”. No matter what size your business is, cash flow is a vital element – and it’s largely defined by your invoicing process.

Small and medium businesses (SMBs) have a few factors in common with the big players, but the most crucial commonality is cash flow. Plain and simple, it’s the heartbeat of any business, irrespective of size. Even a one-person business such as an individual tradesman can have the expertise, the customer base and great references – but if invoicing is slow, then cash flow suffers considerably.

I recently experienced this firsthand. We had to call out a plumber to fix a couple of leaks and he came out quickly and did a fantastic job. But I had a long and unforeseen wait for his invoice because he was so busy looking after his customers that invoicing had taken a back seat. I texted him and called him on multiple occasions because obviously I wanted to pay him, but I had to wait six months for the invoice to arrive. This might be a simple example, but it just shows the importance of getting the paperwork to a customer so that the payment can arrive in a timely manner.

The advent of mandated e-invoicing in Australia will be a game changer in many ways. Two years ago, the Australian Government announced that Commonwealth Government agencies would be required to process all invoices electronically by July 1st, 2022. While there is no mandate for SMBs to adopt e-invoicing as of today, if they provide services to government, they will need to be e-invoice-ready. Earmarked as an important component of SMB digitalisation, this is a core focus of Australia’s Digital Economy Strategy1, designed to help secure the country’s economic future.

Equal access to technology
The pandemic has prioritised the need for more effective business processes, accelerating digitalisation and technology adoption across both the public and private sectors. In this context, e-invoices will be the way for companies of any size to communicate, providing a faster and more secure method of processing, sending and paying invoices. In short, this is truly a democratisation of financial processes, where everyone has access to the same technology, thereby removing many of the common bottlenecks involved in receiving payment.

Irrespective of size or turnover, companies will have the ability to directly exchange digital invoice information with another company’s software, even if they are using a different system, network, or portal. By minimising error rates associated with manually processing paper, PDF and email invoices, e-Invoices also save time and help to reduce processing costs. Currently, it is independently estimated that each paper invoice costs around $30 to process, and each PDF invoice around $27. In comparison, e-Invoices cost less than $10 to process, so in theory both the sender and receiver can share up to $20 in cost savings.

The Australian Government has adopted a standardised invoicing format for e-Invoices called PEPPOL. Used for more than a decade in at least 38 countries as an international standard, PEPPOL provides a more secure channel for invoices than email, transmitting e-Invoices between the senders’ and receivers’ systems via access points.

As the legislated Australian PEPPOL Authority, the Australian Taxation Office (ATO) has been appointed to facilitate the adoption of e-Invoicing, including the accreditation of trusted service providers as access points for the PEPPOL e-Invoicing network. SAP is one of the few service providers accredited by the ATO to complement PEPPOL as an end-to-end ERP provider.

This means that invoices can be sent, received, corrected and monitored using one centralised solution: SAP Document Compliance. Enabled by SAP, e-Invoicing provides an efficient, cost-effective, and reliable way for companies to connect in a rapidly changing world.

Three key decisions
For our purposes, a small business is one that has between 1-19 employees, whereas a medium business is one that has between 20-100 employees. They have three essential decisions to make: the time and cost involved in adopting e-invoicing; understanding what software to use before integrating the process; and getting the right advisors while planning how to manage the change.

Broadly speaking, the switch to digitalisation has six steps:

Do your research: Take the time to map out all areas of your business where there is the potential to implement digital processes, identifying priorities and what will have the biggest short-term or long- term impact.

Different perspectives: Tap into external inspiration and learn from others to uncover new ways of achieving your goals.

Involve employees and suppliers: Change in the workforce can cause resistance, especially if it means new ways of working, so get employees involved in the decision-making process.

Find the right partner: Choose a technology partner that fully understands your business and your goals to ensure a smooth transition.

Total connectivity: Generate real-time understanding of your business and valuable market insights by connecting internal solutions and external networks.

Prioritise the change: Digitalisation requires commitment to the process, so start small but think big, learn along the way and keep moving.

While that might sound challenging, 88% of SMBs say that making the switch was easy. SAP has tried to highlight the benefits of e-invoicing to SMBs by examining the issue from their point of view, to understand their barriers to adoption. We recognize the fact that a lot of small businesses, especially the mum-and-dad businesses, don’t use SAP, but they will interact with or have relationships with bigger businesses or they may be selling things to large organisations.

Taking the next step
This is not just about selling software, per se. We want to be able to take a reasonably pragmatic approach to why we’re doing this, and what benefits we can provide to SMBs. We’re helping them take an outside-in approach so that they can see the upside of how their businesses will prosper. In a sense, we’re targeting this at install base or at net new. We have many lines of business, but the ones that I’m focusing on here are for those customers that already have SAP installed or are about to instal SAP as their digital core. What we recommend to them would depend on their profile, whether it’s Ariba or Concur, or what is the best recommendation if they’ve really got no underlying ERP or if they need our compliance and reporting solution.

It’s important to clarify that a mum-and-dad SMB currently using MYOB or XERO would continue to do so. Larger businesses would be the main users of SAP, but if they happen to buy from a mum-and-dad business, the latter in turn would need to be e-invoice compliant in order to get paid quicker.

SAP is committed to helping SMBs keep pace, drive change and move forward in the face of shifting customer expectations, disrupted supply chains, and ongoing market uncertainty. It’s interesting to note that 80 per cent of our customers are small and medium-sized companies, so no matter how many employees a company has, we have solutions designed and priced for all.

We connect finance, operations, HR and sales to create exceptional employee and customer experiences. Proven procurement, inventory, and industry specific processes will help you move faster, adapt quickly, and face any competitor. Our local partners will get you up and running in a matter of weeks, so you can keep business moving forward today and be confident SAP will be with you wherever you go next.

Click here to find out how SAP can help you with eInvoicing