Nigel Taylor Marketing Director, Head of e-invoicing Solutions

Global Electronic Invoicing

Global Electronic Invoicing

Nigel Taylor

Marketing Director, Head of e-Invoicing Solutions

Nigel Taylor

Electronic Invoicing



Global e-Invoicing & Challenges



Global Tax Compliance



Community Collaboration



e-Invoicing – Enabling the Future



Case Studies

Accounts Payable (AP) is still

a paper-heavy business

function. …nearly 77% of all

incoming invoices were still

paper-based…

Paper Is Still the Problem

Companies Continue To Send and Receive Paper Invoices

Paper invoice processing: €17- €60 per invoice,10-55 day cycle

Approx. 16bn B2B invoices in Europe

€200bn in corporate savings possible

Approx. 12bn B2B invoices in US

Reduce

Costs

Automate

Processes

Gain

Strategic

Value

 Lower invoice processing costs (60%-80%)

 Reduce accounts payable/mailroom labor (40% - 50%)

 Reduce late payment fees/fraud

 Reduce invoice cycle times

 Eliminate invoice data entry and errors

 Improved data quality & matching

 Simple financial reporting

 Increase prompt payment to terms

 Speed dispute resolution

 Competitive advantage

 Optimise working capital

 Manage supply chain financial risk

 Corporate social responsibility

Why Change?

Compelling Benefits

Regulatory

Requirements

 Global e-Invoicing legislation

 European late payments legislation

Cost of processing paper for the buyer

€17.60 per invoice

Buyer e-invoicing cost

€6.70 per invoice,

62% savings

Cost of processing paper for the seller

€11.10 per invoice

Seller e-billing cost

€4.70 per invoice,

57% savings

Source: Billentis, 2010

Why Change?

e-Invoicing Business Drivers

Only 11% of respondents claimed cost savings as their driver

You order the goods or services

You get the invoice

You pay the supplier

Order to Pay

(Buyer Side)

Order to Cash

(Seller Side)

You ship the goods or services You send the invoice The customer pays YOU Your Business

What Is the Invoicing Process?

Challenges for Buyers

The Cost of Processing Paper

Creation of invoice by vendor Delivery of invoice

to buyer

Sorting and routing of invoice to A/P Entry of invoice into

A/P system

Verify and augment vendor data Validate math on

invoice Match invoice to

order, receipt & contract

Assign to cost centers Ensure correct tax

treatment

Determine approval authority

Challenges for Sellers

Who Needs e-Invoicing?

Each Department Has Different Objectives

 Minimise resources required to support e-invoicing functionality

 Ensure secure connectivity and data transmission

 Globalisation/centralisation of 3rd _{party providers}

 Improve AP performance metrics

 Eliminate manual processes to focus on value-add activities

 Issue comprehensive remittance data and reconciliation services to suppliers

 Increase internal process visibility

 Meet tax and regulatory compliance

 Meet green initiatives

 Increase cash visibility and forecast accuracy

 Optimise working capital

AP/AR

IT

 Institute checks and balances

 Conduct compliance reporting more easily

Audit Treasurer

 Ensure a stable supply chain

 Manage spend and supplier relationships

 Seize early payment discount opportunities

 Ensure contractual and regulatory compliance

EDI Landscape

Does your company already process electronic invoices?

Global Compliance Challenges

The Global Importance of Indirect Taxes



With over 150 countries VAT/GST is the main transaction

tax in the world



A steady transition from sales tax to a VAT system

Authenticity & Integrity

Authenticity & Integrity

Tax Data

Tax Data

 Invoice data complies with country-specific tax authority rules

 Minimum data required for an invoice

 Digital signature complies with country-specific tax authority rules

 EDI in a VAN complies with country-specific tax authority rules

 Guarantees identity of sender and integrity of invoice data

Archiving and Audit

Archiving and Audit

 Invoice archive complies with country-specific tax authority rules

 Stored for a specified period

 Access for tax authorities

EDI

Global Compliance

Insulate company from complex existing and emerging regulations Provide visibility to invoice data to multiple parties of interest

 Invoice data needs to be viewed internally for SOX or SAS70 compliance as well as externally by tax authorities for tax compliance

 Multiple repositories and formats hinder visibility

 Authenticity and integrity must be guaranteed when delivering an electronic invoice

 Invoice must be archived for a set period

 Organisations must stay current on country specific electronic invoice technical and business requirements for tax compliance

Who Needs Compliance?

Buyer and Supplier Must Meet Each Tax Authority’s Requirements

Reduce risk by enabling tax reporting in accordance with tax regulations of multiple countries

 Local business groups implement disparate, localised solutions

 Ensure invoices are auditable by appropriate tax authorities to ensure company can reclaim VAT and avoid fines for

non-compliance.

─ VAT can account for approximately 20% (EU average) of total invoice amount

EU Compliance Today and Tomorrow

Current EU Recommendations Have Been Interpreted Differently

Middle-Way

Less rigid rules

France* Luxembourg Bulgaria Denmark Prescriptive Rigid rules focus on form Germany Italy Hungary Austria  Advanced electronic signatures with qualified electronic certificates  Secure signature creation devices  Summary lists  2 methods recognised – EDI in a VAN according to 1994/820/EC – Electronically signed  Advanced electronic signatures preferred

* France recognises unsigned EDI through 289bis Functional Relaxed rules focus on result UK Finland Sweden Netherlands Belgium  3 methods recognised – EDI in a VAN according to 1994/820/EC – Electronically signed

– any other means

 Any other means as long as authenticity and

EU/2010/45 – New EU directive on electronic invoicing

 EU Member States are to adopt a new directive which is designed to increase the use of electronic invoicing by 2013

 The current application of the rules on invoice requirements across Europe is inconsistent

The new directive means:

 Electronic invoices will be equally valid alongside paper invoices

 Rules for guaranteeing authenticity and integrity have been relaxed

 Established business controls and a clear audit trial are known as alternative means

What is certain?

 There will be two clear forms of electronic invoicing:

– EDI in a VAN according to 1994/820/EC

– Digitally signed documents

 Each alternative means method will be subject to scrutiny by the tax authorities

EU Compliance Today and Tomorrow

Data

Validation

Authenticity

Integrity

Archive

EDI Network

Digital

Signatures

Other Means

Compliant EDI e-Invoicing Options

Ensure your customer’s requirements for Europe are met

Green : Compliant

Supply chains are becoming

increasingly global – sourcing

from the lowest-cost regions.

Maximising efficiency with your

entire supply chain is critical.

Trading Partner Communities

Connecting companies to the information and processes around the transaction

Information & Support

• ERP Integration • Maps & Forms

Development • Change Mgmt. • Contact Cleansing • Activity Monitoring • Onboarding support • Tech. Support

Community Management

Connecting all trading partners, finding value beyond e-Invoicing

Community

Full Spectrum of Enablers

e-Invoicing Solution for all Suppliers

Microsoft Office PO Turnaround Integration Broker Enterprise Resource Planning

Small Mid-Size Large

Desktop Translator SME

Accounting Package

SOHO Very Small Small National Global

Supply Chain Finance Optimal financing for buyer/supplier communities Financial Supply Chain Automation Buyer/supplier workflow automation and integration Dematerialisation EDI Process automation Self-service Regional/Global Consolidation Process/system standardization Labour arbitrage Decentralised High cost Fragmentation Non-standard processes/ systems

•

New forms of trade finance aimed at replacing documentary trade and

providing suppliers with low-cost finance

25% of

respondents

send/receive

over 25% of

their invoices

cross-border

Enabling the Future

PHYSICAL and FINANCIAL SUPPLY CHAIN APPLICATIONS

Invoices

Electronic Invoicing & Billing

GXS B2B Solutions

PHYSICAL and FINANCIAL SUPPLY CHAIN APPLICATIONS

Documents

Orders Logistics

Community Connectivity Payments

Invoices Catalogues

Data Quality Treasury

End-to-End Message Tracking and Alerting Purchase Order

Management

Global Shipping Track and Trace

Electronic Invoicing & Billing Product List Sharing

Expert On-Boarding

and Community Intelligence 20 Connectivity

Solutions Electronic Payments

Complex Business Rules

and Data Quality Global Cash Management

GXS B2B Solutions

Ocean Freight

Customs Clearance

Factory Inspection Warehouse Receipt Late Stage Configuration

Ground Transport

Letter of Credit Issued Foreign Exchange

Payment Issued Supplier Invoice Dispute & Deduction

Factor Receivable

Enabling the Future

Tesco

Customer Case Study – Enabling 100% of Tesco Suppliers

Company Overview

Solution Deployed Business Issues

Business Benefits Obtained

• Manually processing 50,000 GFR invoices a month

• Costly overhead of processing paper.

• Invoice processing time too long. Preferential payments terms not received. Late payments to suppliers.

• Getting suppliers to trade electronically

• EDI & Web e-Invoicing

• Supplier - Pay model

• Tesco mandate for suppliers

• Enable suppliers to trade electronically

• 3500+ suppliers trading electronically

• Operational cost cut by 90%

• Improved Supplier Relationship

Step 1 Step 2 Step 22

New Vendor Registration Ongoing Vendor Management/Communications

Supplier Database

ERP Application

Small Vendors – Order-to-Cash

GXS Managed Services

Large Vendors – Order-to-Cash

ERP Applications APIs

10,000+ On-Boarded 100 Top Vendors

100 New Setup Per Day Community of

100,000

Comcast

Ralph Lauren

Ralph Lauren

Ralph Lauren

•

Single process for all customers - large, medium or small

•

Implemented 70% of our SMB customers (to date)

•

Timely payments from customers

•

Better customer service

•

Visibility

•

Cost savings

– Shipping & receivables processes, mailing & printing, DSO

Customers

•

Real-time advance notice of shipments (ASN)

•

Ability to save, email or print a soft copy of documents

•

Visibility

•

Easy reconciliation with invoices

•

Faster issue resolution

Ralph Lauren

• Corporate-wide data definitions

• Cheaper and faster to implement change

• Single version of the truth

• Stability: solid foundation for growth and change

Future

Plan BuyBuy MoveMove SellSell RespondRespond

Business Foundation Progra mme Buying Pricing Stock Finance Data Intern’l solution Finance planng E-Comm Supply chain Range & Space planng Product dev’t Ware house mgt IPOS New Business initiative Business sy st e m s Fore casting

Marks & Spencer

Customer Case Study –

•

Modernizing B2B processes

•

Implement procure-to-pay

•

Across 3,500 suppliers

– Some EDI, some no capability – Mostly paper, some PDF

•

Implemented EDI and web EDI

•

Suppliers receive PO and

turnaround invoices

•

Cost savings

•

Granular visibility

•

Processing 2m invoices a year

•

First-time pass rate of 95%

•

Single view for suppliers

• Harness the power of the network • Trading partner ‘ownership’:

Cross-sell of other value-add

products/services to buyers and suppliers

• Risk management: Physical and financial supply chain analysis for both parties

• Collaboration: Resolving disputes quickly and paying suppliers on time. A healthy financial supply chain

equals lower cost of goods. • Finance: Predictable cash

management for both parties and integrated finance options

• Automation: Cost savings • Compliance: No-risk audits

• Integration: Single point of connection • Harness the power of the network • Trading partner ‘ownership’:

Cross-sell of other value-add

products/services to buyers and suppliers

• Risk management: Physical and financial supply chain analysis for both parties

• Collaboration: Resolving disputes quickly and paying suppliers on time. A healthy financial supply chain

equals lower cost of goods. • Finance: Predictable cash

management for both parties and integrated finance options

• Automation: Cost savings • Compliance: No-risk audits

• Integration: Single point of connection

Networked Economy

Working Capital Optimization Cash Management Financial Supply Chain Risk

Direct Materials

In‐Direct Materials

Procurement/Sourcing Physical Supply Chain Risk

Supplier Collaboration Supplier Performance Spend Analysis Tax Compliance/Legislation Financial Reporting Dispute Resolution On-Time Payments B2B Integration SME Integration

Reduce

Costs

Automate

Processes

Gain

Strategic

Value

 Lower invoice processing costs (60%-80%)

 Reduce accounts payable/mailroom labor (40% - 50%)

 Reduce late payment fees/fraud

 Reduce invoice cycle times

 Eliminate invoice data entry and errors

 Improved data quality & matching

 Simple financial reporting

 Increase prompt payment to terms

 Speed dispute resolution

 Competitive advantage

 Optimise working capital

 Manage supply chain financial risk

 Corporate social responsibility

Why Change?

Compelling Benefits

Regulatory

Requirements

 Global e-Invoicing legislation

 European late payments legislation (2011/7/EU)

EDI

Portal

SME Integration through technology

innovation… Web forms do not work for

the ‘mass-middle’

SME

Integration Solutions

From Web Forms to Integration

GXS EDI Solutions already

address the ‘mass-middle’

•

New EC procurement projects aimed at Universities & Hospitals

Only 20% of

respondents

issue invoices to

public sector

customers

•

EU Digital Agenda

– e-Procurement by 2016

– e-Invoicing by 2020

•

PEPPOL

– A gateway to government entities

– 11 Countries: Austria, Denmark, Finland, France, Germany, Greece, Italy, Norway, Portugal, Sweden and the United Kingdom

•

Auto-Gration

– e-Enabling SMEs in the automotive sector (EDI)

•

STORK, SPOCS, eCodex