How E-Invoicing Adoption Can Accelerate in the U.S., and ... · November 12-14, 2017 Bellagio Resort & Casino, Las Vegas How E-Invoicing Adoption Can Accelerate in the U.S., and What

November 12-14, 2017

Bellagio Resort & Casino, Las Vegas

How E-Invoicing Adoption Can Accelerate in the U.S., and What

That Means to You

Todd M. Albers

Sr. Payment Consultant

Federal Reserve Bank of Minneapolis

©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.

Disclaimer

The opinions expressed are those of the individual presenters & not those of the Federal

Reserve System or any Federal Reserve Bank


• Tasked with advancing the FRS mission in payments by supporting work in standards, research, education, and other initiatives that increase the efficiency of business-to-business (B2B) transactions

• Standards Work:

– ISO 20022 Payments SEG

– U.S. Mirror Group to TC 68/SC9/TG01

– W3C Web Payments Commerce Group

– OASIS Universal Business Language (UBL) Technical Committee

• Co-Chair of the Adoption Subcommittee

• Co-Chair of the Payments & Finance Subcommittee

Todd M. Albers

Senior Payments Consultant

Federal Reserve Bank of Minneapolis

Provide financial

services to depository

institutions & U.S. government

Establish & execute U.S.

monetary policy

Supervise & regulate financial

institutions

Maintain a stable financial

system & contain

systemic risk

Federal Reserve Banks


Topics for our Discussion

• Barriers to Electronic Payments & Invoicing

• Observation of Global & U.S. Market on Electronic Invoicing Adoption

• Federal Reserve & Business Payments Coalition

• Increasing E-Invoicing through an Interoperability Framework

– Benefits to you




Barriers to Electronic Payment & Invoice Adoption


Barriers to Electronic Payment Adoption


Source: Strategies for Improving the U.S. Payment System, page 50

Electronic payments are more complex than check payments

Electronic payments capabilities are not ubiquitous

Small & Mid-Sized businesses do not always have support of their FIs

Difficult to discover trading partners electronic payment capabilities

Difficultly in exchanging payment related data (i.e. invoices & remittance information)

• Large Business still send 50% of their payments via check

• For Small & Micro Businesses its even higher at 70% to 90% using paper checks

Paper Checks



Electronic Invoice Processing

Supplier Portal

Prin

t Up

load

Scanner

A/R A/P

Download

Login / View

EDI


Barriers to Broader E-Invoicing Adoption in the U.S.

Service Providers & Businesses have created

isolated islands of e-invoicing, increasing the difficulty and expense to

integrate

No common definition of what an

“e-invoice” is, Many different

syntaxes, formats, and methods

What’s in place – works. Business case needs to be compelling. No industry led coordination,

collaboration, or leadership to broaden adoption

Interoperability

Many

Integration

Points

Inertia




Observations of the U.S. & Global Markets on E-Invoicing


Observations on the U.S. Market

• Large & complex market, requirements differ by industry segment & size (30+ million businesses)

• Multiple definitions for e-invoices, many technical e-invoicing syntax & formats in use

• Hundreds of service providers offering solutions in the marketplace

• Estimated 24% of invoices were electronically sent in 2015, up from 15% in 2004

• By 2024 expected to have 38% converted to electronic invoices

• Key market drivers include AP / AR automation and meeting requirements of their trading partner

• U.S. Federal Government OMB memorandum focused on increasing B2G e-invoicing with the goal to reduce processing costs and mitigate incurring late payment fees and penalties

Source: Electronic Invoicing in the U.S.: Challenges and Opportunities


A Global Perspective on E-Invoicing

Legislative

Directives mandating E-Invoicing for B2G

Estimated economic savings €243 billion (EUR)

Clearance

Tax Authorities to “clear” the invoice for tax compliance

Mexico - $1 invested in improving tax control resulted

in $61 in collections (USD)

Partnership

Public-Private entities cooperated, collaborated, and coordinated efforts to develop

a E-Invoicing framework

Estimated economic savings $9 to 10 Billion (AUD)

Europe

Mo

del

M

eth

od

B

en

efit

s

• Reduce processing costs • Cross border issues • Global competitiveness

Re

sult

s

• Improve tax compliance & collections

• Reduce processing costs • Global competitiveness

Defined E-Invoice standards & interoperability framework

Defined E-Invoice standards Defined E-Invoice standards &

interoperability framework Ho

w

Latin America Australia




Federal Reserve & Business Payments Coalition


Strategies for Improving the U.S. Payment System

1. Actively engage with stakeholders on initiatives designed to improve the U.S. payment system.

2. Identify effective approach(es) for implementing safe, ubiquitous, faster payments.

3. Reduce fraud risk and advance the safety, security and resiliency of the payment system.

4. Achieve greater end-to-end efficiency for domestic and cross-border payments.

5. Enhance Federal Reserve Bank payment, settlement and risk management services to address identified gaps.

SPEED

SECURITY

EFFICIENCY

INTERNATIONAL

COLLABORATION

Five strategies in pursuit of five desired outcomes


Focus on B2B Payment Efficiency

Specifically calls to explore the possibility of developing & implementing a standard, ubiquitous B2B electronic invoice & processing platform

Exploration resulted in a whitepaper reporting on the current global activities with e-invoices, potential benefits, & the barriers to greater adoption in the U.S. market


Federal Reserve Next Steps in the Payments Improvement Journey

Summarizes progress toward desired outcomes

Outlines the Federal Reserve’s planned next steps

Serves as a call to action for all stakeholders


Next Steps towards B2B Payment Efficiency

As part of the Business Payments Coalition, the Federal Reserve will support a 3-year initiative to design an electronic invoice Interoperability Framework for the U.S. Market.

Calls out to support industry efforts to develop and promote adoption of standards that enable end-to-end electronic processing of business invoices, payments, and remittance information.


Business Payments Coalition

Mission: Work together to solve problems related to processing information associated with B2B payments in order to promote use of electronic payments & straight through processing (STP).

Participation: Formed in 2011, the coalition members consist of National group of associations, small & large businesses, financial institutions, technology & software vendors, standards development organizations & others.


E-Invoicing Work Group

Mission:

Established in the fall of 2016, Identify ways to accelerate the adoption of B2B

e-invoicing by all types and sizes of U.S. Businesses

Objectives:

• Develop a catalog of electronic invoice syntax, formats, and subsets used in the U.S.

• Define what a electronic invoice is for the U.S. market

• Develop an interoperability framework

• Develop an implementation guide




Increasing E-Invoicing through a Interoperability Framework



20

What is an Interoperability Framework for E-invoice & Remittance?

Reality is…….


21

Through telecommunication standards

An Interoperability Framework was created, where you can connect across providers!

Sprint

T-Mobile

AT&T

Verizon

OASIS standards UBL documents

E-invoicing & Remittance Interoperability Framework

• Follows framework implementations in Australia & Europe

• Leverages existing, open standards from OASIS for messaging & document exchange


22

Seeking SMB representation to contribute to U.S. business requirements

Invoice to #4

1

Invoice to #1

Remittance to #2

Remittance to #3

2

4

3

How Does this Benefit You?

Efficiency Innovation

Business Interoperability

• Reduce Technical

Barriers

• Reduce Implementation

Costs

• Freedom to Change

• Catalyse to digitalization

• Certainty on investment

into development

• New business models,

software and solutions

• Reduce Costs

• Streamline Processes

• Flexibility

• Improved Data

Quality

• Streamline On-

boarding Processes

• Increase Throughput &

Speed to Pay

• Improved Data Quality


Economic

Roadmap to a E-Invoicing Interoperability Framework


Questions?




Thank You!

Contact me with additional questions or interest in joining the Business Payments Coalition at

[email protected]




Resources




Federal Reserve Websites & Publications:

• Fed Payments Improvements Website: – https://fedpaymentsimprovement.org/

– Strategies for Improving the U.S. Payments System (SIPS) paper – https://fedpaymentsimprovement.org/wp-content/uploads/strategies-improving-us-payment-system.pdf

– Federal Reserve’s Next Steps in the Payments Improvement Journey paper – https://fedpaymentsimprovement.org/wp-content/uploads/next-step-payments-journey.pdf

• Business Payments Coalition Website: – https://fedpaymentsimprovement.org/payments-efficiency/business-payments-coalition/

– U.S. Adoption of Electronic Invoicing: Challenges and Opportunities paper o https://fedpaymentsimprovement.org/wp-content/uploads/e-invoicing-white-paper.pdf

– Catalog of Electronic Invoice Technical Standards in the U.S. paper o https://fedpaymentsimprovement.org/wp-content/uploads/catalog-electronic-invoice-standards.pdf


https://fedpaymentsimprovement.org/



https://fedpaymentsimprovement.org/wp-content/uploads/strategies-improving-us-payment-system.pdf












https://fedpaymentsimprovement.org/wp-content/uploads/next-step-payments-journey.pdf










https://fedpaymentsimprovement.org/payments-efficiency/business-payments-coalition/








https://fedpaymentsimprovement.org/wp-content/uploads/e-invoicing-white-paper.pdf











https://fedpaymentsimprovement.org/wp-content/uploads/catalog-electronic-invoice-standards.pdf













E-Invoicing Resources • Standards:

– OASIS – Universal Business Language: https://www.oasis-open.org/committees/tc_home.php?wg_abbrev=ubl

– OASIS – Business Document Exchange: https://www.oasis-open.org/committees/tc_home.php?wg_abbrev=bdxr

• Europe: – European E-Invoicing Service Provider Association (EESPA):

http://eespa.eu/

– Pan European Procurement Online Portal (PEPPOL): http://www.peppol.eu/

• Australia: – Digital Business Council: http://digitalbusinesscouncil.com.au/


Business Payments Coalition – Interoperability Framework Work Groups

Business Payments Coalition

Technical

Advisory Committee

Semantics

Work Group

Technical

Work Group

Business

Advisory Committee

Governance

Work Group

Adoption & Accreditation Work Group


Key Findings from the “Catalog of Electronic Invoice Technical Standards in the U.S.”

paper


Many technical standards in use: • 6 Syntaxes (e.g. PDF, ANSI X12, W3C XML, etc.) • 15 Formats (e.g. UBL, UN/EDIFACT, etc.) • 40+ Variants (e.g. VICs, PIDX, LEDES, etc.)

No definition of what is an E-Invoice?: • Email / PDF / Fax • Portal – Download / Upload • Machine to Machine

Multiple sending / receiving options: • 9 Delivery methods & formats • 4 Validation & conversion providers • 4 Receipt methods & formats

E-Invoice Definition “An invoice that has been issued by the seller, transmitted

and received by the buyer in a structured digital format which

allows for automated processing.”

Documents

How E-Invoicing Adoption Can Accelerate in the U.S., and ... · November 12-14, 2017 Bellagio Resort & Casino, Las Vegas How E-Invoicing Adoption Can Accelerate in the U.S., and What