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: sales@gxs.eu

• Phone: +44 (0)1932 776047