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It Takes Two to e-Invoice Why IT Should Align with Finance on e-Invoicing
Nigel Taylor
Head of e-Invoicing Solutions, GXS
Agenda
Background
What is electronic invoicing?
A short history of B2B and e-Invoicing
B2B and Finance
Why e-Invoicing aligns the physical and financial
supply chains
Key IT areas CFOs need to understand
Why EDI is tax compliant e-Invoicing
Finance working with Supply Chain – What the CIO
can do
Paper is Still the Problem
Companies continue to send and receive paper invoices
Finance is still a paper-heavy
business function. …nearly
77% of all incoming invoices
are still paper-based…
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
$230bn in corporate savings possible
Reduce
Costs
Automate
Processes
Gain
Strategic
Value
Lower invoice processing costs (60%-80%)
Reduce accounts payable/receivable 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
Regulatory
Requirements
Global e-Invoicing legislation
European late payments legislation
Government e-Invoicing mandates
Why Change?
Compelling benefits across Finance
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?
Different perspectives for the buyer and seller
A Short History of B2B
e-Invoicing has existed for over twenty years
1980 1990 2000 2010
VAN / EDI
Point-to-Point / EDI
A Short History of B2B
Marketplaces and tax compliance
1980 1990 2000 2010
VAN / EDI
Point-to-Point / EDI
e-Procurement (Marketplaces)
e-Invoicing (Tax Compliance)
1994/820/EC 2001/115/EC 2006/112/EC 2010/45/EU
Supply Chain and Finance
Why are these two departments disconnected?
>> EDI optimised the Physical Supply Chain >> Initially this was expensive, mainly large companies >> B2B Technology has matured and commoditised >> The automation of Accounts Payable & Receivable
Platform
Companies
Integration Global Production
Vendor Managed
Inventory
Logistics
Shipping
Containerisation
Warehousing ERP
Cutting Through the Hype
Why isn’t EDI dead..?
Platform
Companies
Integration Global Production
Vendor Managed
Inventory
Logistics
Shipping
Containerisation
Warehousing ERP
>> e-Procurement and e-Invoicing have failed to reach critical mass >> Integration is the key to B2B communication >> B2B is complex – a proliferation in standards & technologies >> EDI has commoditised >> B2B companies offer value add services
Why e-Invoicing Aligns the Physical and
Financial Supply Chains
e-Invoicing Aligns
The physical and financial supply chains
Physical Supply Chain
“Documents such as invoices, payments & finance supporting the physical supply chain“
• Highly paper-based
• Manual processes
• Error prone, re-keying
Platform
Companies
Integration Global Production
Vendor Managed
Inventory
Logistics
Shipping
Containerisation
Warehousing
Financial Supply Chain
ERP
Key B2B Areas CFOs Need to Understand
What Supply Chain teams are already doing
Customisation
Cloud Integration
Community / Collaboration
Complexity
EDI
e-Invoicing is a Managed Service
The physical and financial supply chains
Authenticity & Integrity VAT Data
Invoice data
complies with
country-specific tax
authority rules
Minimum data
required for an
invoice
Guarantees the identity of
the sender and the
integrity of the invoice data
Archiving and Audit
Invoice archive complies
with country-specific tax
authority rules
Stored for a specified
period
Easy, fast Access for tax
authorities
European Compliance Challenges Buyer and Supplier Must Meet Each Tax Authority’s Requirements
And/Or EDI
Electronic Data Interchange is…
The computer to computer exchange, between two companies, of standard business
documents in electronic format
EDI is essentially a data processing concept which is independent of communication
protocols or transmission media
EDI is a framework
Why EDI is Tax Compliant e-Invoicing
Ensure your tax requirements are met
Data
Validation Authenticity Integrity Archive
EDI in VAN
Point-to-Point
EDI
Outsourcing
Web EDI
Compliance
Service
Why EDI is Tax Compliant e-Invoicing
All tax requirements must be met
With over 150 countries VAT/GST is the main transaction tax in the world
A steady transition from sales tax to a VAT system
Source: Deloitte, 2012
Global Compliance Challenges
The global importance of indirect taxation
Finance Working with IT
What questions can the CIO ask?
Assume e-Invoicing is on the agenda…
Are you e-Invoicing already?
Does Finance have consolidation/automation plans?
Is Financial reporting an issue?
Is Finance aware of any legislation that may affect them?
Is Finance affected by late payment fees or
duplicate/fraudulent invoices?
Is supplier credit risk a concern for Finance?
How does your company’s corporate social responsibility
program affect Finance?
Supply Chain
Finance
Optimal financing
for buyer/supplier
communities
Financial
Supply Chain
Automation
Buyer/supplier
workflow automation
and integration
Dematerialisation
B2B
Process automation
Self-service
Regional/Global
Consolidation
Process/system
standardization
Labour arbitrage
Decentralised
High cost
Fragmentation
Non-standard
processes/
systems
Enabling the Future
e-Invoicing is a small part of a big story
PHYSICAL and FINANCIAL SUPPLY CHAIN APPLICATIONS
Invoices
Electronic Invoicing
& Billing
Summary
B2B offers value across the entire order-to-pay process
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
Summary
B2B offers value across the entire order-to-pay process
Additional Resources
www.einvoicingbasics.co.uk
Dedicated to providing you with all of the
information you need on e-Invoicing, the
benefits for you and for your trading
community of customers and suppliers.
• Case studies
• Checklists
• Articles
• Recorded webinars
• Industry reports
Thank You for Your Participation! For More Information…
Contact GXS • Web: www.gxs.eu
• Email: [email protected]
• Phone: +44 (0)1932 776047