Understanding the Impact of InvoiceNow on Singapore’s Business Landscape
The Inland Revenue Authority of Singapore (IRAS) and the Infocomm Media Development Authority (IMDA) have introduced a major change to business invoicing requirements. The phased adoption of InvoiceNow for GST-registered businesses will begin in November 2025, starting with newly incorporated businesses that voluntarily register for GST.
Cloud-based accounting solutions are essential tools for this e-invoicing transition. We have extensively evaluated and implemented various cloud accounting solutions for clients across different sectors, which led us to adopt Xero as our preferred platform. This decision makes Xero an ideal example for demonstrating how online accounting tools can create direct, practical paths to e-invoicing implementation while simplifying accounting operations.
This analysis will show the significant benefits that integrating cloud accounting with the InvoiceNow network will bring to Singapore’s small and medium-sized enterprises (SMEs). By improving efficiency and meeting upcoming regulatory requirements, this transition promises a more streamlined and cost-effective future for Singapore’s SMEs.
Understanding InvoiceNow and Xero Integration
InvoiceNow operates on the Peppol network, a secure global public infrastructure for standardised electronic document exchange. Over 60,000 businesses in Singapore already use the InvoiceNow network, which streamlines invoice processing and accelerates payment cycles while reducing paper usage.
Network Security and Infrastructure
InvoiceNow, utilising the Peppol network, operates with cutting-edge security measures, including:
* PKI certificate authentication for all Access Points
* SSL transport layer security for data transmission
* Digital signing of all transmitted data
* Verification of Access Point signatures for receiving systems
Xero’s InvoiceNow Integration and Features
Xero’s integration with InvoiceNow brings several automatic functions to Singapore SMEs:
Direct Bill Reception
* E-invoices arrive as draft bills in Xero
* No manual data entry required
* Automatic population of supplier details
* Real-time invoice updates
Sending E-invoices
* Direct transmission to other registered businesses
* Immediate delivery to government agencies
* Built-in verification of recipient Peppol IDs
* Status tracking of sent invoices
Registration and Setup
* Free registration via Xero platform
* CorpPass authentication integration
* Automatic Peppol ID assignment
* Public directory listing for easy discovery
Business Impact and System Value
Tax Compliance Benefits
* InvoiceNow e-invoices are accepted by IRAS as valid tax invoices for GST purposes
* No requirement for “Tax Invoice” wording on e-invoices
* Meets all GST documentation requirements when including standard invoice elements
* Simplified GST reporting and compliance processes
Operational Improvements
Data Accuracy
* Manual data entry introduces significant risks to business operations
* Research indicates a 3.7% error rate in manual entries – translating to 370 potential mistakes per 10,000 entries
* InvoiceNow through Xero addresses this issue by providing:
+ Reduced input errors
+ Standardised format across all invoices
+ Automatic validation checks
+ Consistent record-keeping
Payment Efficiency
* The IMDA InvoiceNow FAQs show some striking improvements in payment timing:
+ 92% of e-invoices paid on time versus 45% of paper invoices
+ Faster processing cycles
+ Improved cash flow management
+ Automated reconciliation
Environmental Benefits
* Digital invoicing reduces:
+ Paper consumption
+ Storage space needs
+ Printing costs
+ Physical filing systems
Financial Benefits
* The financial benefits of e-invoicing adoption present a clear business case
* IMDA research indicates businesses save approximately $8 per invoice processed via InvoiceNow
* For companies processing hundreds of invoices monthly, these savings add up significantly
Cost Savings
* $8 average savings per invoice processed
* Senders reduce costs by 59%
* Recipients reduce costs by 64%
* Minimised storage and manual processing expenses
Technology Investment
* Xero customers require no additional software beyond Xero subscription
Productivity Gains
* Staff reallocation to higher-value tasks
* Automated data capture
* Faster month-end closing
* Simplified audit preparations
Additional Cost Considerations
* While Xero’s InvoiceNow implementation is free of charge, some accounting software providers may charge based on invoice volume
* Some other providers may also apply fees for add-on services, e.g. PDF-to-Peppol conversion services
* It is therefore important to evaluate total cost implications when selecting service providers
InvoiceNow Implementation Timeline
IRAS and IMDA have outlined a clear timeline for InvoiceNow adoption. Business leaders should note these key dates:
* Phase One: 1 May 2025
+ Voluntary early adoption period begins
+ Available for GST-registered businesses
+ Soft launch phase
Setting Up InvoiceNow With Xero: Practical Steps for Businesses
Setting up Xero for e-invoicing follows a straightforward process that streamlines adoption for SMEs.
Initial Setup
* System Requirements:
+ Active Xero subscription
+ Singapore-based business with Unique Entity Number (UEN)
+ Electronic purchase orders (ePO)
Sending E-invoices
* Create Your Invoice:
+ Prepare invoice as usual in Xero
+ Select “Approve & email” when ready to send
+ Apply any available credits if needed
* Delivery Process:
+ Enter recipient’s unique Xero InvoiceNow email address
+ Add multiple recipients using commas or semicolons
+ Complete remaining email fields
+ Click “Send”
* Track Your Invoice:
+ Check sent status in Xero
+ View confirmation message
+ Track unique transmission ID in history
Receiving E-invoices
* Monitor Incoming Documents:
+ Check regularly for new draft bills in Xero
+ Review automatically populated data
+ Electronic purchase orders appear as draft invoices
* Process Received Documents:
+ Verify invoice details
+ Approve for payment
+ Process payments within Xero
Best Practices
* Regular Maintenance:
+ Check draft bills frequently
+ Keep contact Peppol IDs updated
+ Monitor invoice statuses
* Staff Training:
+ Ensure team familiarity with the system
+ Establish standard operating procedures
+ Maintain documentation of processes
Future Implications and Strategic Benefits
Data Privacy and Security
* Government agencies cannot access or track e-invoice contents under current regulations
* Direct peer-to-peer routing between sender and receiver Access Points
* Secure transaction environment maintaining business privacy
International Capabilities
* Cross-border transactions receive particular support through recent InvoiceNow enhancements
* The introduction of Peppol International (PINT) specifications allows businesses to send e-invoices without adapting them to match receiver-specific domestic requirements
* This creates substantial benefits for companies engaged in international trade
Where to Next With InCorp
The adoption of e-invoicing marks a significant and compelling step in Singapore’s digital transformation of business processes. As IRAS and IMDA roll out mandatory requirements from 2025, our tax experts see particular merit in cloud accounting platforms like Xero that include e-invoicing capabilities at no additional cost.
The built-in InvoiceNow functions in platforms like Xero are especially noteworthy in their ability for Singapore SMEs to reduce barriers to adoption while delivering improved payment cycles and accuracy.
If you would like more information on how your business can take advantage of e-invoicing or cloud accounting platforms like Xero, contact InCorp today.
FAQs about Xero Support E-invoicing in Singapore
- InvoiceNow functionality comes included in all Xero subscription plans (Starter, Standard, and Premium) at no additional cost. Registration for InvoiceNow through Xero is free, and no external software or services are required.
- IRAS and IMDA will implement mandatory InvoiceNow requirements starting November 2025 for newly incorporated companies that register for GST voluntarily. By April 2026, all new voluntary GST registrants must participate in the programme.
- Xero’s e-invoicing integration offers automatic draft bill creation, direct invoice transmission, reduced data entry errors, faster payment cycles, and simplified GST compliance. Research shows e-invoicing can save businesses approximately S$8 per invoice processed.
