From paper to e-Invoicing and Legal Compliance
San Diego ACH Meeting February 2011
Bruno Roussel
February 20112SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Agenda Paper to e-Invoicing:
Invoicing today
SIS is not just an IT project
IS-Web vs. IS-XML
SIS e-Invoicing
Best practices
Legal Compliance Legal framework
Digital Signature
February 20113SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Paper Invoicing in ICH world today
Print PaperInvoice
Mail Invoice
Finance • Receives Paper
Invoice• Supporting
documents are compare to the invoice
Accountant
Invoice DataEntry
AP Clerk
Airline Financial System
Typical paper
process
EngineeringAccountant
Supportingdocument
Photocopy
Scan
•The invoice
enters the validation workflow for approbation
February 20114SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Electronic Invoicing in ACH
Generate afile
E-Mail InvoiceFinance
• Receives Electronic Invoice
• Supporting documents are compare to the invoice
Accountant
Invoice DataEntry
AP Clerk
Airline Financial System
Electronic process
EngineeringAccountant
Supportingdocument
•The invoice
enters the validation workflow for approbation
February 20115SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Problems with the paper or e-paper cycle Needs people to consolidate the invoices and supporting docs Needs people to put it in envelopes etc Needs to be sent somewhere, possibly delivered to a collection
point first Needs to be AWBd, couriered or posted Needs someone at the other end to receive it, take it out of
envelopes and distribute it Needs someone to check it’s all there Needs someone to check it reconciles with settlements Etc etc etc
February 20116SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
SIS e-Invoicing benefits Reduce cost of paper process
Improve efficiency: Data quality Speed of information Automation Access to detailed information Audit trail
Uses IATA IS-XML e-Invoice Standard Contributes to the green initiative
February 20117SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
SIS is not just an IT projectYou have to reengineer the current process to adapt to SIS:
Will you generate Invoices in each department or centrally ?
How will you Capture detailed information of the invoice at the source?
Which level of automation would you like to achieve?
February 20118SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
How to reconcile the invoices against clearing house settlement? Today claims may not match IDEC or invoice Tomorrow all the information will be consistent
Will you reconcile invoices against purchase order?
Reconcile the invoices against your account posting based on: Your operational system Contract database Aircraft schedules
Define your objective
SIS is not just an IT project
February 20119SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
IS-Web vs. IS-XML IS-XML:
Could be generated/ processed from different systems including ERP or financial systems
Easy to handle large amount of invoices Ease the use of workflow validation Increase IT project requirements
IS-WEB: Allows multiple locations to capture their invoices easily Suitable for small amount of invoices Workflow validation could be set up in SIS Simplify SIS implementation Payable invoices as PDF view
February 201110SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
SIS e-Invoicing SIS will allow legal e-Invoicing
NOTE – not legal in some countries yet
PDF or XML could be used as the legal invoice. PDF by Default XML when legally required
In case of an XML invoice an additional XML file will be created Legal XML is a subset of the IS-XML
February 201111SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
SIS e-Invoicing The files may need a Digital Signature (DS)
This digitally signed file should be archived in accordance with legal rules
You may have to print the incoming invoice in your country if the electronic format is not considered as legal: You can do this yourself, or You can ask the billing entity to send you a paper copy, but this will be
charged as defined in IATA RAM Chapter A13 or per bilateral agreement.
February 201112SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
BilledAirline
Germany
Integrated Settlement
BillingEntityUSA
Ove
rall
Proc
esse
sBilling & Invoicing ProcessesCentralRepository
Digital SignatureAnd Validation
Ove
rall
Proc
esse
s
Settlement Processes
ICH ACH
Processes at time of SalesNFPengine
ARC COMPASS™
IS-WEB
IS-XML
IS-IDEC
Usage File
IS-WEB
IS-XML
IS-IDEC
Billing information file
Legal PDF
Legal XML Legal PDF
Legal XML e-Invoice
11
2
5
Create the invoice
Digitally sign the invoice and Validation of DS
4
3
SIS e-Invoicing with DS and Validation
February 201113SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
BilledAirlineUSA
Integrated Settlement
BillingEntity
Germany
Ove
rall
Proc
esse
sBilling & Invoicing ProcessesCentralRepository
“DigitalSignature”Company
Ove
rall
Proc
esse
s
Settlement Processes
ICH ACH
Processes at time of SalesNFPengine
ARC COMPASS™
IS-WEB
IS-XML
IS-IDEC
Usage File
IS-WEB
IS-XML
IS-IDEC
Billing information file
Legal PDF
Legal XML Legal PDF
Legal XML e-Invoice
1
2
5
Create the invoice
Sign the invoice
4
3
SIS e-Invoicing with Digital signature
February 201114SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Charge Category Invoices are standardized and structured
12 Charge Categories
Airport Mail
ATC Miscellaneous
Cargo Partner Alliance
Engineering Property
Flight Ops Service Provider
Ground Handling
IT Services
One charge category only allowed per invoice
February 201115SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Charge Code 84 different possibilities to classify an invoice
Example charge category Engineering
charge code: Handling LM
Lease
Loans
Misc
MRO - Maintenance
MRO - Repairs & Overhaul
PoolSeveral charge codes allowed per invoice
February 201116SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Invoice StructureComposed of : Invoice Header Line Item Line Item details (replace supporting document)
Including : Legal fields
Required by law Mandatory fields
Substitution allowed for one year Recommended fields
R for recommended for one year and will become mandatory RA for recommended always
Optional fields Additional information not required to reconcile, may be used within Alliance
February 201117SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Ground Handling / Catering Invoice sample
February 201118SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Supporting document
February 201119SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
LocationCodeInvoice or Line Item
LevelAN 5 M
IATA airport code or UN/LOCODE or city code if non-airport.
AircraftTypeCode
LineItemDetail AN 3 M IATA aircraft types
Dictionary defined (IATA aircraft type codes)'0' (Numeric Zero) will also be allowed as substitution value
FlightNo LineItemDetail AN 8 M
Unique flight identifier: Shown in field 7 of the ICAO flight plan consisting of either the aircraft reg. or the flight number (which itself consists of the two or three character airline designator code followed by an up to 4 digit number with optional Quebec single suffix letter).
SIS e-Invoicing fields Mandatory: Ground Handling / Catering
February 201120SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
ProductID LineItemDetail AN 25 RSupplier code for the
product or service.
ContractNo LineItemDetail AN 25 R
CabinClass LineItemDetail A 1 RA Values: C,Y,F plus any other
value
FlightDateTime LineItemDetail DT RDate&Time allowing to
identify the flight the service is related to
YYYY-MM-DDThh:mm:ssTime is optional
AddOnChargeName LineItemDetail AN 30 RA Name of the AddOnChargePossible Values: Discount; Fees
etc
AddOnChargeAmount LineItemDetail N 18,3 RAAmount of the
AddOnCharge.This can have a negative value
for discount
SIS e-Invoicing fields Recommended: Ground Handling / Catering
February 201121SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Original invoice is missing: Mandatory fields:
Charge Category: Ground HandlingAircraftTypeCode: Substitution “0” FlightNo: CHARTER
Recommended fields
CabinClassContractNo
February 201122SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
SIS invoice view
February 201123SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
SIS supporting document
February 201124SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Best Practices e-Invoicing is a complete change for your organization, benefit from
that to design optimal processes
Use of Charge Category and Charge Code allows appropriate routing of the invoice for validation, and GL posting
Use segregation of tasks to ensure better controls on overall validation process
The sooner the better, project could be implemented in several phases, but be ready to process incoming billing from day one in an electronic manner
February 201125SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Best Practices Automate the reconciliation with the maximum of electronic data
possible, general ledger posting against CH settlement...
Automate the matching of PO and invoices or contract
Generation and integration of electronic data should be automated.
Leveraging your existing ERP system will ensure an all electronic data world
Use the IATA IS-XML e–Invoice standard, develop once, connect to all.
February 201126SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Question & Answer
e-Invoicing contact in IATA: [email protected] for any request to add information in the IS XML
such as charge category charge code or new business requirement
February 201127SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Agenda Paper to e-Invoicing:
Invoicing today
SIS is not just an IT project
IS-Web vs. IS-XML
SIS e-Invoicing
Best practices
Legal Compliance Legal framework
Digital Signature
February 201128SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Role of Integrated Settlement Replace paper IS will be legally mandated by billing carriers to “create”, “transport”
and deliver the invoice Where necessary, submitted billing data is “transformed” to a legal
invoice by creating the digital signature as appropriate and/or adding the reference data
IATA will use a “trusted company” to help comply with local laws and to create and verify the digital signatures, and perform legal archive
February 201129SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Legal framework What is a legal framework for e-Invoicing that SIS needs to comply to?
Recognition from the tax authorities that electronic invoicing is legal
Technical recommendations for implementation (DS and Archiving)
Framework is country dependant
Should be defined in law and may: Include means of integrity (e.g. EDI)
Include means of authenticity (e.g. Digital Signature)
Define format to be used, (e.g. XML or PDF)
Require prior authorization from tax authorities
Include any additional specification (e.g. legal Archiving, specific XML layout)
If none exists, either discuss a legal framework definition with tax authorities or agree exemption.
February 201130SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Legal obligations for e-Invoicing … where applicable
Billing Party: Apply VAT Prove conformity with e-Invoicing laws Create and attach digital signature
Billed Party: Verify digital signature before processing the invoice
Both Parties Archive and prevent modification Log digital signature, validation key Give auditors access to e-Invoices
February 201131SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Different jurisdictional requirements 1/2 Requirements are not consistent across countries
IS e-Invoice process is generic:
SIS has a generic invoice template that should meet everybody’s requirements
SIS e-Invoice will be created:Based on information provided by the billing entityBased on the member profile of the billing and billed entity
February 201132SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Different jurisdictional requirements 2/2 Various types of Digital Signature - most restrictive airline legislation
prevails
Digital signature:
SIS will use the countries in the from/to address mentioned on the invoice header to define DS to be applied
The DS provider depending in the countries of a cross border invoice will: Sign with the most restrictive DS if they are compatible OR Sign with both signatures if they aren’t
February 201133SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Legal requirements, your responsibility Provide mandatory information on the invoice e.g. :
The 14 elements that define a legal invoice in most of the jurisdictions (e.g. VAT Registration #, VAT Amount, Billing Carrier’s Address, Billed Carrier’s Address, etc).
Other legal information that is present on your invoice template today (e.g. board of directors…)
Specify in your member profile that Digital Signature is required Define invoice format according to your legislation
All SIS participants will be required to enter this type of data in their member profile enabling legal invoice creation by default
February 201134SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Value Added TaxesContext Tax administrations want long term access to the invoices, as a
guarantee of proper VAT treatment of sales transactions
Responsibility It will be your company’s responsibility to determine whether VAT
applies, how much it should be, and where to put it Some jurisdictions require the proper naming conventions
(Reference list for your information in chapter A13)
To give auditors access to e-Invoices SIS will ensure technical integrity of your invoice, but not the validity
of your submission
February 201135SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Legal requirements, SIS Responsibility
Technical requirements e.g. :
Digital Signature Type of DS required ( Advanced, Qualified, Specific Qualified..) Validation of the DS
Data formatting
February 201136SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Digital Signature complexity DS complexity will be handled by SIS and the DS provider
For example:Advanced Electronic Signature AESQualified Electronic Signature QES
There is a hierarchy within Digital SignatureQES has stronger requirements than AESQES > AES
But two QES signatures may be not equivalent:IT: Qualified Electronic Signature with time stamp QES ITCH: Qualified Electronic Signature with local certification authority QES CH
QES IT is not equivalent to QES CH
February 201137SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Digital Signature matrix samplesFR IT CH
FR
IT
CH
Billed Member
Bill
ing
Me
mb
er
FR: Advanced Electronic Signature AESIT: Qualified Electronic Signature with time stamp QES ITCH: Qualified Electronic Signature with local certification authority QES CH
CHIT
CH
IT
CH+IT
FR
IT
CH
IT+CH
February 201138SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Final note about legal compliance Integrated Settlement will provide the tools that will help your
company ensure legal compliance with regards to invoices
However, it will be your company’s responsibility to know the local laws and enable the options which will make your invoices compliant
February 201139SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Question & Answer
e-Invoicing contact in IATA: [email protected] for any request to add information in the IS XML
such as charge category charge code or new business requirement
February 201140SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance
Thank you.
Email:
SIS Website:
www. t .or .sia a g is