Electronic Invoicing Overview. April, 2010

Electronic Invoicing Overview

Electronic Invoicing Topics

• Electronic Invoicing Overview • Electronic Invoicing Benefits • Supported File Formats

– Flat File

• Flat File Invoice Process Functionality • Flat File Benefits & Barriers

• Flat File Process Flow

– Electronic Data Interchange (EDI) • EDI PO/Invoice Process Functionality • EDI PO/Invoice Benefits

• EDI PO/Invoice Barriers • EDI PO Process Flow • EDI Invoice Process Flow – XML

• PO/Invoice Process Functionality • XML PO/Invoice Benefits

• XML PO & Confirm Process Flow • XML Invoice Process Flow

– Ariba Supplier Network

• Ariba Supplier Network Overview • Ariba Invoice Process Flow

Electronic Invoicing Overview

• As part of the Structured Expense Initiatives (SEI Program), Citi has embarked on a global program to migrate supplier manual submissions of invoices to electronic submissions

 Initiative will enable electronic connectivity to Citi’s suppliers for

electronic PO routing, order confirmations, and invoice submissions  Key business drivers for this initiative are to:

• Expedite supplier invoice receipt by Citi Payment Services • Reduce manual entry time and error rates

Electronic Invoicing Benefits

• General Benefits of Electronic Invoicing

– Improves business processes, increases efficiency and produces resource cost savings – Enables significant reductions in business and supplier expenses, such as postage,

printing, phone calls, and handling

– Eliminates the human interaction and manual work required to process purchase orders and invoices; reduces input errors and processing time

– Transfers information faster and more accurately; shortens transaction processing cycles – Enables on-line data storage of PO and Invoice documents

– Allows a company to take advantage of the benefits of storing and manipulating data electronically without the cost of manual entry

– Builds closer business partnerships

– Enables competitive advantage opportunities

– Integration of electronic documents means they can be processed much faster, reducing lead times and speeding up payments

Electronic Invoicing File Formats

The Citi Procure to Pay system (P2P) supports the following

electronic file formats:

1. Flat File format – variable length text file submitted through a secure file transfer process (CitiSFT)

2. EDI X12 structured data format - submitted through a value-added network (VAN), allowing trading partners to send and receive EDI transmissions independently of one another; Citi’s VAN is Advantis 3. XML structured data format (cXML Invoice Documents) - submitted

through an HTTPS connection to the CitiSOA Internet Gateway (DMZ) 4. Ariba Supplier Network – 3rd Party Supplier Network where vendors

Flat File Invoice Process

Functionality

• Flat File format

– A Citi Flat File Invoice Format specification is provided

– Submitted files must be of variable length, tilde (~) delimited text format – Batch header and trailer record are required for each file

– Invoice information is provided in Invoice Header and Invoice Line records – Each record in the file must be on a separate line in the file, terminating with

a new line character

– An entire file not in compliance with the format will be rejected

– An Exception File will be provided to communicate invoice exceptions or file rejects

Flat File Invoice Process

Benefits & Constraints

• Benefits of utilizing Flat File Format

– This is the simplest and quickest electronic submission method to implement – File transmissions between Citi and suppliers utilize a secure, encrypted

method of transferring files across open networks (CitiSFT), based on the HTTPS, SFTP, and FTPS protocols

– File transfer activity is monitored and supported by the Citi network operations team 24x7

• Constraints of utilizing Flat File Format

– Development cost for creating invoice file per Flat File specification – Entire file rejections if file format errors detected (deviation from

specification); file returned to FTP account it was sent from

Flat File Invoice Process Flow

Secure File Transfer using HTTPS, SFTP, or

FTPS protocols

Vendor

EDI PO/Invoice Process

Functionality

• P2P EDI X12 Functionality

– A Citi EDI Invoice Format specification is provided

– P2P supports the EDI ANSI X12 standard (v 4010) for electronic data exchange between and within businesses

– The following electronic messages/document types are supported:

1. EDI 850 - Purchase Order Outbound to vendors – Live in the US

2. EDI 860 – Purchase Change Order Outbound to vendors – Live in the US

3. EDI 810 - Invoice Inbound from Vendors – Live in the US

4. EDI 824 - Invoice Exception Outbound to Vendors – Live in the US

EDI PO/Invoice Process

Benefits

• Benefits of utilizing EDI Data Exchange

– EDI is the ideal solution for suppliers currently utilizing or planning to utilize EDI technology

– EDI is used as a strategic tool to reduce expenses, streamline business procedures, and create a competitive advantage

– EDI transactions between companies flow faster and more reliably than paper documents

– EDI electronic exchanges pass through the VAN allowing trading partners to send and receive EDI transmissions independently of one another

– EDI allows a company to take advantage of the benefits of storing and manipulating data electronically without the cost of manual entry

– Secure message transmission is provided between Citi and Advantis VAN; each document is authenticated and validated (EDI translator)

EDI PO/Invoice Process

Constraints

• Constraints to utilizing EDI Data Exchange

– Business process changes are required to accommodate automated processing

– Costs involved in time and money in the initial set-up (implementation, customization, training)

– Transaction costs to utilize the VAN

– Companies must have the resources in place to make an EDI program work – Possible lack of EDI technology expertise in-house

• however, outsourced solutions are available from EDI “Service Bureaus”

– Perception that EDI represents just a data format

• the correct business view is that EDI is a system for exchanging business

EDI PO Process Flow

Ex: CRM, ERP Purchase

XML PO/Invoice Process

Functionality

• P2P XML Functionality

– Industry supported cXML standards (v 1.2.009) have been established for P2P

– The following electronic messages/documents are supported:

1. cXML Purchase Orders Outbound Direct to Vendors

2. cXML Purchase Order Confirmation Inbound from Vendors 3. cXML Invoice Inbound from Vendors

– P2P has partnered with the CATE (Citi Architecture & Technology

Engineering) organization for transmission of all inbound messages and authentication of the messages

XML PO/Invoice Process

Benefits

• Benefits of utilizing XML Messaging

– Industry standard for the exchange of information

– The extensibility and structured nature of XML allows it to be used as a common technology for communication between different systems and platforms

– XML supports platform, vendor and application neutral data

– One source of XML-based information can be formatted and distributed via a multitude of different channels with minimal effort.

– XML electronic messaging is direct to the vendor

– Information coded in XML is easy to read and understand – Supports multilingual documents

– Mapping to existing file systems or relational databases is a relatively simple process

XML PO/Invoice Process

Constraints

• Constraints to utilizing XML

– Business process changes are required to accommodate automated processing

– Costs involved in time and money in the initial set-up (implementation, customization, training)

– Companies must have the resources in place to make an XML program work

– Lack of XML technology expertise in-house

Ariba Supplier Network Overview

• What is a Supplier Network?

– A 3rd Party Trading Network where buyers and suppliers can communicate via an electronic exchange. This includes a web portal

– Supports several document standards for Purchase Orders and Invoices

– cXML, EDI, CSV, fax, manual, etc.

– Global and Secure Network to transact and manage suppliers

– Real Time documents

• Benefits of Utilizing Ariba Supplier Network

– Citi can utilize vendors already existing on the Supplier Network to quickly enable vendors to an electronic format within P2P.

– Supports large and small volume vendors

– Reduced time in supplier onboarding/enablement – Minimize coding/customization from supplier and Citi – Multiple supplier document layouts supported

– Dedicated 3rd party team to help onboard new vendors not on the network – Supplier Network will follow Citi standards

– Integrate with P2P XML functionality to process the PO’s and Invoices – Supplier Network Portal used to interface with P2P

Supplier Supplier Supplier Supplier Supplier Ariba Supplier Network Different File Formats

One File Format to Citi

Electronic Invoicing

Technology Decision

• Considerations for Electronic File Format:

– If cost, resource constraints, or ease of implementation are major considerations then consider using the Flat File format for electronic invoicing

– If your company already has an investment in EDI technology or an interest in using EDI technology then consider the EDI format for electronic invoicing

– If your company is already using XML, or has an interest in greater levels of standardization, or has an interest in implementing the