A statement from enterprise software company TechnologyOne, which has been working with Treasury and the ATO to develop the solution, said small businesses would now be able to be paid in five days.
It said Prime Minister Scott Morrison had asked every Federal Government agency to implement e-invoicing as part of boosting the economy as the country emerges from the pandemic.
TechnologyOne chief executive Ed Cheung said: "Growing up in and around small family businesses most of my early life, I know first-hand how important cashflow is to survive, and to be able to pay the bills and staff.
"We understand e-invoicing is a high-priority issue for the government, and we're committed to ensuring this important economic recovery and digital transformation initiative happens smoothly for the benefit of all Australians."
Peter Strong, chief executive of the Council of Small Business Organisations of Australia, a lobby group for the sector, said: "It should be noted that it is small business associations and the software industry who have led the way in getting e-invoicing onto the business and government's agenda.
"Now, more than ever, Australian small businesses need e-invoicing. Last year we were saying e-invoicing was the future. It's now the present, and it's great to see Treasury is truly leading by example.
"It's also very pleasing to see the Federal Government putting their 'buy local' message into action by choosing an Australian company like TechnologyOne, to lead the charge. E-invoicing is about less stress for small business folk and more time to run the business or spend time with family."
Contacted for comment, a Treasury spokesperson said: "The Australian Government has introduced e-invoicing to support businesses and make it easier and faster to get paid. Treasury is pleased to introduce this service."