E-invoicing white paper
Once connected – Reach all
Digitizing trading partner connectivity
Today e-invoicing is in the core to digitize business practices. Electronic invoicing is rapidly gaining share from traditional paper-based. Technology that was in the beginning of early 2000 leading edge innovators initiative is in many businesses and countries already a mainstream for collecting receivables. Because of the content of the data carried in invoices it is not only corporates and large organizations that take advantage of e-invoicing services but public sector and especially tax authorities have increasing interest.
Growing number of corporates, cities and country level central government organizations have publicly announced that they accept only structured e-invoices as a mean to receive their purchase invoices. Some countries have regulated electronic data to be mandatory for recognizing VAT data. All these actions will accelerate the speed of change while being mandatory to be able to send invoices in electronic form to one business partner or authority leads automatically wish to send electronic invoices to all business partners.
Main drivers for the change to digitized business processes lies obviously in gained benefits. Several academic studies have find 50-60 per cent savings both sending and receiving electronic invoices compared to traditional paper based means. Digitizing invoices gives also tax authorities efficient tools and means to fight against value-add tax fraud and grey economy in general. In several markets consumers benefits ease-of use, freedom from time and place when managing their invoices through internet banks. Electronic invoicing in large scale shall also save our nature and resources when traditional paper and postal services are avoided.
Distribution, collection and automation
Tieto’s view into e-invoicing is that it enables straight-through-processing or business process automation. Distribution of sales invoices and collection of purchase invoices can be electronic without capability for process automation. It is possible to carry invoice pictures and images through electronic channels, but data in this form does not support automated processing. This fact emphasize the importance that invoice data shall be in some structured format. It is the key for actual business process automation.
Distribution or collection does include wider scope of channels and data formats than e-invoicing. In practice this means to cover in distribution and collection concepts also paper invoice processing as well as PDF-format invoices transfer.
E-invoicing is the hard core in invoice collection and distribution where true benefits are aimed and achieved. E-invoicing can be enhanced to include also to carry human-readable or visualized content but core content is the structured data to enable automated processing.
E-invoicing benefits are best acquired when organization core business systems are in good shape and can fully utilize e-invoice automation capabilities.
Interoperability and reach
Corporates and organization have a vast number of solutions and service providers they use to establish their e-invoicing capability. Another important differentiator is variety of invoice data sets and formats used.
Interoperability is the term used to describe different service provider’s capability to interchange end-customer data with each other. Conceptually we speak about four-corner model to describe situation where invoice issuer and invoice receiver use different service providers. For issuer and receiver to reach each other in this kind of situation it is necessary that used service providers can interchange invoices with each other. This situation is very similar with the telephone networks or payments networks. However, in e-invoicing there is no such strict regulation in place for interoperability as for example in telephone networks. Non-reach situations are most often result of restricted interoperability networks. Lack of maturity and proper business rules are evident in situations where some service providers and their customers even try to force all trading partners to use one solution. These situations will change and disappear when interoperability becomes norm of business practice.
In many cases different invoice data content requirements based on authority requirements or corporate own requirements can easily restrict interoperability and trading partner reach.
Finally in several countries there are number of specific requirements that demand specific operational or technical features avoiding flexible interoperability.
Current e-invoicing ecosystem consists of several smaller or larger islands and it could take some time before one will see true global interoperability.
Tax and legal compliance
Tax and legal compliance for electronic invoicing is most crucial topic for the organizations. Possible shortcomings and violation may cause loss of deductions or even lead in prosecution.
Tax and legal compliance requirements vary typically over the countries. Topic is often related with instructions in VAT legislation, tax authority instructions, bookkeeping legislation and practices, electronic archiving etc. In some cases legal requirements are strictly regulated for used data contents, message formats and integrity, authenticity and assurance.
Bottom-line is that it is only the trading parties who can ensure that trading documents including the invoices reflect the actual business transactions. This fact remains true independently from the used forms of business documents.
Cloud-based solution advantage
Tieto’s recent studies among 270 large customer organizations emphasize the importance of cloud-based solutions.
There is clear correlation between cloud solutions maturity and organization gained benefits. Cloud-mature organizations report over 30% lower costs in IT operations, 30% higher flexibility to adapt changing requirements, two times higher proportion of IT budgets available for innovation etc.
We believe that cloud service usage is not a strategy as such in the organization. It seems that cloud services usage is an outcome of clear and well-defined strategy where focus is in innovation, flexibility for changes and value for the business.
Thought-leader in e-invoicing innovation
Tieto is the leading IT Service provider in Northern Europe. Company is one of the initiators of the e-invoicing practice in early 2000 and leading-edge provider of modern services. Long experience to work with large international corporations, banks and public sector organization has been extremely good basis to develop solutions that those customers need when digitizing their financial value-chain operations.
Customers from different industries in both B2B and B2C area have been driving our service development to be widely useful and capable to meet different customer needs and situation. Cross-industry cooperation is a rich source for new innovations.
Building the reach through networking and cooperation
Tieto has realized from the very beginning of its E-invoicing service development that interoperability is the key success factor to provide wide reach to its customers. Corporates that implement e-invoicing capability are not looking for just a fraction of their sales invoices distributed through this channel but aim is to get full coverage.
Tieto is open and willing for cooperation with other service providers. Proof of this approach is one of the industry largest interchange networks with other operators and banks. Our model does not force organizations to change their existing solutions when onboarding connections with Tieto customers. We continuously build our interchange network with other service providers to achieve comprehensive reach of trading partners for our customers.
Tieto is active participant and often a founding member in several regional and international forums and cooperation organizations. We believe that standardization is an important vehicle to build interoperability capable infrastructure.
Tieto has also purposefully built an ecosystem with cooperation partners who integrate Tieto’s e-invoicing service with their core services and products. This cooperation with banks, accounting firms, ERP vendors, billing service providers, BPO providers, trade financing providers etc. is a mean for vast value-add service portfolio utilizing robust and high-quality e-invoicing engine.
Adapting market practices
E-invoicing practices vary very much over different countries and industries. Especially this is the real situation in B2C invoicing where different internet banking solutions, email deliveries and direct debit usage are widely used as basic distribution infrastructure.
Tieto has deep knowledge and long experience to manage invoice dataset in different formats. Even though it is highly recommended to get invoice message usage harmonized there exist different existing practices in the countries and industries. We have in our e-invoicing service wide portfolio of different message formats and needed knowledge and technology to manage mappings between different formats. Specific effort and care is taken to carry all possible data across different formats without losing any important elements. Another important viewpoint is to correctly process tax and other regulated data in such transformations.
Tieto services in invoice distribution, collection and e-invoicing
Tieto have two main service offering in this area called Tieto Sales Invoice Distribution and Tieto Purchase Invoice Collection.
We like to distinguish invoice distribution and collection from e-invoicing. Distribution and collection are wider concepts that aim to provide solution to customer overall needs in these areas. E-invoicing is the core component in both of those services, but it does not accomplish today all the needs to reach organization trading partners. For comprehensive service one need to include also paper based channels support, image files transport, web portals etc. Our Sales Invoice Distribution and Purchase Invoice Collection services are aimed to provide maximum coverage for a corporate to reach their trading partners.
The figure illustrates our solution for corporate sales invoice distribution.
Internet banks, portal, file-transfer based ERP connections and Tieto Interchange Network are actual e-invoicing part of the service. EMail channel has a dual role while it can be used just as a carrier network for structured invoice messages but more often eMail is used to distribute PDF-based invoice pictures.
In both Tieto’s services it is important to notice that end-customer interface is standardized. Customer don’t need to bother of the connection channel or message format their trading partner is using.
The figure illustrates our solution for purchase invoice collection.
Additional functionality usually needed in e-invoicing
Digital signing and validation
In certain markets digital signing is mandatory technology to be used in electronic invoicing for authenticity and integrity purposes. Tieto’s default digital signing model is to attach with structured invoice data also human-readable pdf-visualisation that is signed or validated. Other models based on actual structured data signing are also supported case-by case.
Tieto provides also a robust archiving solution to store sales and purchase invoices together with their attachments. This solution is accessible online through web interface or can be linked with customer ERP system through specific API.
By presentment we mean a solution to have invoice issuer look and feel invoices storage that is linked with internet banks or similar systems. This solution is commonly used and needed in B2C invoicing to provide individual consumers needed view on their incoming invoices.
When sales invoice issuer don’t have required functionality in their billing system to maintain customer electronic addresses Tieto can provide a solution to solve this need.
Onboarding and trade tracker
There is often a challenge to onboard trading partners for e-invoicing. To support customers with this task Tieto has specific tools and supporting service to help customers. There are also available in service portfolio specific Supplier and Client Web solutions for Tieto’s e-invoicing customers to provide easy to use solution for such trading partners that don’t have e-invoicing capability in their own systems.
Cloud service – simple implementation
Tieto’s Sales Invoice Distribution and Purchase Invoice Collection are true cloud services. There is no need for acquiring software licenses, hardware or other upfront investments. Our private cloud environment provides customer true cloud benefits without compromises in data and technical security.
When customer is capable to use some basic data connection like AS2, SFTP, MQ etc. and some standard e-invoice format like TEAPPSXML, Finvoice, Svefaktura, EHF, OIOUBL, CEN-BIS etc. service setup is very rapid.
Service provides support, reporting and billing features. It is very easy to customer to estimate their service setup and running cost in advance to build trustworthy benefit case.
Business Integration Exchange, e-invoicing