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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
• 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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
November 12-14, 2017
Bellagio Resort & Casino, Las Vegas
Barriers to Electronic Payment & Invoice Adoption
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
Barriers to Electronic Payment Adoption
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
November 12-14, 2017
Bellagio Resort & Casino, Las Vegas
Electronic Invoice Processing
Supplier Portal
Prin
t Up
load
Scanner
A/R A/P
Download
Login / View
EDI
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
November 12-14, 2017
Bellagio Resort & Casino, Las Vegas
Observations of the U.S. & Global Markets on E-Invoicing
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
November 12-14, 2017
Bellagio Resort & Casino, Las Vegas
Federal Reserve & Business Payments Coalition
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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.
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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.
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
November 12-14, 2017
Bellagio Resort & Casino, Las Vegas
Increasing E-Invoicing through a Interoperability Framework
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
20
What is an Interoperability Framework for E-invoice & Remittance?
Reality is…….
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
Economic
Roadmap to a E-Invoicing Interoperability Framework
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
Questions?
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
November 12-14, 2017
Bellagio Resort & Casino, Las Vegas
Thank You!
Contact me with additional questions or interest in joining the Business Payments Coalition at
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
November 12-14, 2017
Bellagio Resort & Casino, Las Vegas
Resources
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
November 12-14, 2017
Bellagio Resort & Casino, Las Vegas
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
November 12-14, 2017
Bellagio Resort & Casino, Las Vegas
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/
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
Key Findings from the “Catalog of Electronic Invoice Technical Standards in the U.S.”
paper
©2017 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.
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.”