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E- invoicing – practice of usage in EuropeECR Forum, June 2010Inga Major

© 2010 Tieto Corporation2 ECR Forum

Table of contents• Tieto• What is E-invoicing• Different data formats ; tax&legal requirements• Walki Case – demonstration of workflow with e-signature• Current EU VAT directive. New VAT directive• While label (own – brand) e-invoicing platform for banks• Future in Russia?

2010-06-03

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Tieto today

• 16 000 IT professionals in close to 30 countries

• Customers on all continents

• One of the leading IT service companies in Northern Europe and global leader in selected segments

• Net sales approximately EUR 1.8 billion

• Listed in NASDAQ OMX Helsinki and Stockholm

• Founded in 1968

• Represented in EU expert commission on e-invoicing

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E-invoicing – the whole process from creation to receiving of electronic invoice+ storage

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Definitions (Wikipedia)E-invoice• An e-invoice is an electronic transaction document that contains billing information in an

electronic format. • An e-invoice may be

• processed within an electronic invoice presentment and payment (EIPP) (B2B) or EBPP (B2C) workflow system or may be

• uploaded directly into a user’s ERP or accounting system. • Standard types of workflow performed on an e-invoice include verification, coding, routing

and approval. • By using e-invoices companies eliminate manual data entry, facilitate faster payments to

their vendors and track invoices more easily

• EIPP – normally it includes e-invoice exchange, portal and ERP integration

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http://en.wikipedia.org/wiki/Electronic_invoice_presentment_and_payment

http://en.wikipedia.org/wiki/EIPP

http://en.wikipedia.org/wiki/Enterprise_resource_planning


Definitions (Wikipedia)The process• E-invoicing provides seller’s with a method to submit invoices electronically to their

customers. • The most effective e-invoice programs connect the seller’s accounts receivable

operations with their customer’s accounts payable operations.• The seller submits an e-invoice to the buyer's EIPP system. The buyer, then, examines

and verifies the accuracy of the invoice, codes and routes it for payment approval.

E- invoice types • EDI – Also known as Electronic Data Interchange, is an electronic transfer of data from

computer to computer using an agreed structured format that can be generated and read by a computer and processed automatically.

• XML - Also known as extensible mark-up language, XML is a widely accepted way of sharing information over the Internet in a way that computers can use, regardless of their operating system.

• Webforms - Allow users to enter data that is typically sent to a web server for processing.

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http://en.wikipedia.org/wiki/Electronic_Data_Interchange

http://en.wikipedia.org/wiki/XML

http://en.wikipedia.org/wiki/Web_server


Corporate interface challenge:no single data formats

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VDA/Odette (automotive)

UN/Edifact

ANSI X.12

EANCOM

Rosettanet (Electronics)

chemXML (Chemical)papiNet (paper and pulp)

ETC.

Advantage:• Flexibility for different businesses & freedom to use any formats

• No over-regulation

Tieto hasany-to-any

conversion serviceNo need to wait

for standards(ISO 20022)!


E-invoice Tax & Legal Compliance in a Roaming Connection

Digital DocumentArchiving Service

Invoice

Receiver

Invoice

Issuer

Signing and Validation Service

SupplierServices

BuyerServices

AuditServices

IssuerCountry’s

CertificationAuthority

e-Invoice platform

ValidationConversion tointermediate

format

PDFRendering

Conversionto roaming

partnerformat

ReceiverCountry’s


In co-operation with

Attachmentpackaging

Inter-mediateformat

eInvoice Hub Service

Compliance Map

Other Service Provider

Conversion toreceiverformat

PDF SigningVerification

Attachmentseparation

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http://www.trustweaver.com/index.htm


© 2010 Tieto Corporation9

Tax & Legal Support in E-invoicing

2010-06-03ECR Forum

Nbr Nbr1 Australia 21 Latvia

2 Austria 22 Lithuania

3 Belgium 23 Luxembourg

4 Bulgaria 24 Morocco

5 Canada 25 Netherlands

6 Croatia 26 New Zealand

7 Cyprus 27 Norway

8 Czech Republic 28 Poland

9 Denmark 29 Portugal

10 Estonia 30 Romania

11 Finland 31 Singapore

12 France 32 Slovakia

13 Germany 33 Slovenia

14 Greece 34 South Africa

15 Hong Kong 35 Spain

16 Hungary 36 Sweden

17 Iceland 37 Switzerland

18 Ireland 38 United Arab Emirates

19 Israel 39 United Kingdom

20 Italy 40 United States

Country Country

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Walki case


An Actual Case from Paper and PulpCustomer locations

Production and sales locations

Customer requires all e-invoices to Germany, France and Austria to be signed

Tieto service signs e-invoices with issuing country and receiving country certificates

More countries expected to be added

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The Process for Walki

Invoice

Receiver

Signing PDF file

With

Digital Signature

IssuerCountry’s


GERMANY


ValidationConversion Tieto XML

format

PDFRendering

ReceiverCountry’s

CertificationAuthorityFRANCEAUSTRIA

In co-operation with

Attachmentpackaging

TietoXML


Other Service Provider

Conversion From Tieto XML

to receiverformat

PDF SigningVerification

Attachmentseparation

Invoice inpapiNetformat

Signed pdfFor archiving

Archive

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Data flow with Digital Signature• Invoice sender (supplier) sends data to Tieto in own format• Validation, conversion to Tieto format• Tieto produces original document – pdf file• Original document is signed with digital signature• No data files are signed! (if data would be signed –it would

be a problem with auditors and tax authorities : they treat data as original and have no resources to convert data to visualised format; for e-invoice provider signed data sets limitation for conversion services, ie presentment etc)

• Power of attorney is used to sign by the name of supplier• Data files are sent to roaming partner or to e-inv receiver• Signature verification is done by one of them• Original documents (signed pdfs) are sent back to

supplier, saved in electronic archive2010-06-03


Contractual relationships

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1.Service agreement(allows to create ORIGINAL from data)

Interchangeagreement

Business contract for support inmeeting tax& legal requirements

Agreements with several CA’sin different countries

2. Power of attorney to sign ORIGINAL documents

OtherServiceProvider




Practical situations for Digital Signature• Large Corporates operate and have subsidiaries in several

countries and shall obey different local laws and authority instructions

• Harmonized business processes are often executed from centralized shared service centers that serve all countries and units

• Seller shall often align itself into buyer requirements• Some Corporates require all purchase e-invoices to be

digitally signed for such legal units operating in countries where digital signing is applied

• Problems raising due to the fact that CA’s are not connected with each other

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Current EU VAT directiveThe Directive on VAT invoicing establishes• a list of ten mandatory general items of information that must be included on every invoice,

plus four additional items that may be required in specific circumstances, • simplified arrangements for small companies and small-value invoices, • the requirement for Member States' tax authorities to recognize the validity of electronic

invoices without any notification or authorization system, on condition that the authenticity of origin and integrity of data are guaranteed through the use of electronic signatures or Electronic Data Interchange (EDI).

Electronic signatures allow someone receiving data over electronic networks to determine the origin of the data and to check that it has not been altered.

EDI is a system of secure electronic information transmission used by businesses,

• the possibility in certain circumstances of outsourcing invoicing operations to a third party or to the customer (i.e. self-billing),

• free choice of the place and method of storage of invoices and the acceptance of electronic storage, including on-line storage in a Member State other than the Member State in which the firm in question is located

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The New EU Directive Proposal• How will this proposal make electronic invoicing easier?

- Equal treatment between paper and e-invoices by removing specific VAT conditions for e-invoicing

By creating equal treatment between paper and electronic invoices the Commission believes the VAT obstacles that hamper the use of electronic invoicing will be removed –

The current rules for e-invoicing requiring either use of an advanced electronic signature or EDI, along with the various options and interpretations afforded to Member States, makes electronic invoicing difficult to implement, especially cross border.

These conditions will be removed.

Authenticity requirements can be achieved by • business controls that provide audit trail between supply and invoice (in same way as

businesses do for paper invoices) • EDI or advanced e-signatures based on qualified certificate -only examples – not

mandatory- Technology neutral approach - Member States can not prescribe the use of any particular

technology - This approach has support of Expert Group on e-Invoicing

http://ec.europa.eu/taxation_customs/resources/documents/common/whats_new/memo_e-invoicing_en.pdf

http://www.trustweaver.com/press/ECOFIN_16032010_analysis.pdf

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http://www.trustweaver.com/press/ECOFIN_16032010_analysis.pdf


E-invoicing platform: bank provides e-invoicing services to clients

E-invoicePortal

File integrationERP StandardVirtual printers

File integration

ERP Individual

Paper to e-InvoiceScanningprovider

File integrationERP Standard

File integrationERP Individual

e-Invoice to PaperPrintshops

INVOICE SENDERS INVOICE RECIEVERS

Internet bankSingle Sign On

E-invoicePortal

Internet bankSingle Sign On

Bank White labelede-Invoice service

BankFactoring

Bookkeeping Supply Finance

Billing &Statistics

Supplier Financing

FactoringCash flow planning

(file integrations)

Customer AdministrationVia Swedbanks ordinary systems

Support & MaintenanceVia secure webinterface

Bank provides value added services

Payments

Payment initiation

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Why it is beneficial for a bank to become a e-invoicing service provider?

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•Benefits for banks’ clients• Invoices are integrated with payments• No need to have additional e-invoice provider• Simple interface, no need to invest in complex system for SMEs• Integration with ERP for big customers• Possibility to buy additional services like cash flow forecast• Access to cheaper finance

• Ready customer base• Additional income from existing customers :

• Add income e-invoice transactions• Opportunity to use business information to create new value added services

• Cash flow forecasting• Factoring• Supplier financing• Billing and statistics

• Customers require this service from banks • Customers want to have value added services (as bank service surveys show)


Future in Russia?

2010-06-03

•Coming changes in legislation will allow to use electronic VAT invoicesQuestions:• Mandatory data format?

– e-invoices not only required to tax authorities but most of all it is in the interest of business. Mandatory data format may not support / take into account the interests of businesses

•Technology neutral approach?

•Sinature of data files – data files are treated as originals? -in Europe is is not common as it causes problems:1) with auditors and tax authorities - they have no resources to

work with data files incl producing hunman readable format etc.2) it sets limitations for e-invoice operator in data processing

=>To transfer data electronically, but to use electronic signature for human readable files, not for data!


Future in Russia?

2010-06-03

• We believe that everybody needs the new legislation wich will allow to deal with electronic VAT invoices

• We believe that such changes in legislation will create a value added for many businesses – corporates big and small, banks, providers

•Electronic communications, B2B and B2C have big future in Russia

• Banks will have a special role in e-invoicing - such as it is typical in Europe

• This is new business segment in Russia• Large business opportunities for banks

Tieto inga major_ecr_presentation english

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