1 Using UNeDocs to facilitate the transition to electronic, paperless, invoicing Geneva, October 2004

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Using UNeDocs to facilitate the transition to electronic, paperless, invoicing

Geneva, October 2004

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Summary

Electronic, paperless, invoicing can deliver significant savings, facilitate international trade and foster development by reducing the weight of the grey economy

Electronic invoicing is now permitted in the EU, but practical adoption is limited due to the lack of a common standard that can be implemented gradually by both large and small suppliers

UNeDocs, backed by the UNECE, is a document exchange solution designed to overcome this problem

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Electronic invoicing

The UNeDocs solution

Electronic signatures

Annex - UNeDocs documentation

Agenda

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E-invoicing – why the UN cares

The invoice is the most important document exchanged between commercial partners. 25 billion paper invoices a year are billed in the US and Europe alone

Use of the electronic invoice (typically based on the UN/EDIFACT standard) is still limited and confined to large companies

Handling a paper invoice costs about 25 euros between seller and buyer. The European Union estimates that European businesses could save €50bn by moving to e-invoicing (FT, 26 May 2004)

E-invoicing means no more paper, no more manual handling, no more manual data input, no more file cabinets, better tax controls, and simpler administrative requirements for the tax payer

E-invoicing can deliver significant savings, facilitate international trade and foster development by reducing the weight of the grey economy

5* Source: Aberdeen Group, June 2004 - The Invoice Reconciliation and Payment Benchmark Report.

EDI is deployed slowly, on a “one-to-one” basis*,…

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…companies still receive most invoices by mail*…

* Source: Aberdeen Group, June 2004 - The Invoice Reconciliation and Payment Benchmark Report.

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…and input, route and approve them manually*


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Electronic invoicing can improve data visibility,…*


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…automate invoice handling…

Invoice header:- eliminate duplicate payments

Amount due:- manage cash flow effectively

Line items:- automate routing and reconciliation

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…and bring other benefits*


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The EU 115/2001 Directive on e-invoicing

Enforced in Member States by 1/1/2004

Harmonizes the format of the invoice: “invoice” is a document with “invoice” written on top that contains the nine data elements (buyer, seller, invoice number, VAT number,…) required by the law

Member States may not require paper invoices to be signed

Electronic (i.e. paperless) invoicing is allowed provided the invoice is transmitted in EDI or is accompanied by an electronic signature

An “advanced electronic signature” is required to guarantee “authenticity of origin and integrity of contents”

Member States may further require it to be “based on a qualified certificate and created with a secure-signature-creation device”

The electronic signature is a “seal” to prevent fiscal fraud

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The current obstaclesEDI standard is expensive and difficult to use for SMEs. It is “100% electronic” and does not allow gradual implementation

There is no accepted XML invoice standard: XML is an “alphabet”, not a “language” XML “words” (the so-called “tags”) don’t have a predefined semantic meaning

Small suppliers that emit just a handful of invoices per day need simple software to generate invoices in electronic format

Manually attaching electronic signatures one document at a time is very unpractical for companies that emit many invoices

Despite the savings, e-invoicing roll-out is slow due to lack of standards and a reluctance of SMEs to invest in complex systems

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Electronic business standards – why the UN caresThe United Nations promotes trade for its potential to foster economic development and eradicate poverty

UNECE develops, maintains and leads the implementation of trade-related recommendations, standards and tools

This activity is carried out through UN/CEFACT (the United Nations Centre for Trade Facilitation and Electronic Business) which is open to the participation of businesses and governments

UN/EDIFACT and the UN Layout Key/ISO 6422 (on which the EU Single Administrative Document, and the IATA airway bill are based) are standards for international trade developed by UNECE

UNECE’s involvement assures that the standard will be open and technology neutral, and will cater to the needs of large and small

companies, of developed and developing countries alike

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Agenda

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Designed with the objective of letting SMEs participate in advanced supply chains

Built upon the UN Layout Key

Based on UNTDED/ISO7372 (United Nations Trade Data Elements Directory) and UN/CEFACT core components

UNeDocs documents incorporate UN/CEFACT trade facilitation recommendations and best business practices

Key documents for trade (invoice, custom declaration, shipping instruction, forwarding instruction,…) already implemented

A simple and low cost approach to the exchange of document-based data

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UNeDocs – the basics

UNeDocs documents can be opened with any Internet browser

UNeDocs documents can be generated in paper, PDF or XML format using Adobe Reader

UNeDocs document templates can be personalized [and UNeDocs documents can be generated] using Microsoft Office Infopath, Adobe products or open source XML editors

Electronic signatures can be attached to UNeDocs documents

Companies that generate significant volumes of invoices using software applications, can install software interfaces to generate the documents in UNeDocs XML format

UNeDocs is an open and technology-neutral solution

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Core advantages of UNeDocs

UNeDocs is a powerful migration tool from a paper to a paper-less environment, with the option of “falling back” to paper at any time

UNeDocs simplifies the compatibility issues associated with electronic data interchange, by associating a standard XML code to each type of document

UNeDocs can be easily implemented by SMEs and large companies alike

Designed for implementation

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Using UNeDocs

The UNeDocs invoice document is designed for international trade

To be used in the EU, it must incorporate three data elements required by the 115/2001 Directive

The standard will thereafter be maintained through an international process linked to ISO that ensures that industry-specific requirements are inserted without risk of duplication

UNeDocs is already fully functional, with a short “time to market”

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Data elements required by EU 115/2001

1. Invoice date of issue 2. Invoice number3. Suppliers' VAT number4. Suppliers' and customer's full name and address 5. Description of the quantity and nature of goods supplied or services rendered 6. Date of completion of the supply of goods

or rendering of services 7. Break-down of VAT amount payable, unit

price of the goods or services exclusive of VAT, discounts or rebates unless included in the unit price8. VAT rate applied9. VAT amount payable

The UNeDocs invoice document is already close to EU requirements

Already in UNeDocs Data element

must be added

must be added

must be added

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Making UNeDocs an international standard

The EU has appointed a work group in CEN (European Committee for Standardization) to develop the electronic invoice standard

The CEN work group refers to UN/CEFACT core components as essential elements of its task, and key figures of CEN are members of UN/CEFACT

An universal object as the invoice must be standardized at a global level

The invoice standard must be consistent with UMM (UN/CEFACT Modeling Methodology), that will enable companies to

exchange data throughout the entire supply chain cycle

ISO and UN/CEFACT intend to set-up a work group to develop UNeDocs into an international standard

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Problems addressed by UNeDocsEDI standard is expensive and difficult to use for SMEs. It is “100% electronic” and does not allow gradual implementation

There is no accepted XML invoice standard: XML is an “alphabet”, not a “language” XML “words” (the so-called “tags”) don’t have a predefined semantic meaning

Small suppliers that emit just a handful of invoices per day need simple software to generate invoices in electronic format

Manually attaching electronic signatures one document at a time is very unpractical for companies that emit many invoices

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Agenda

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The problem with electronic signatures

Cross-border applications must meet the most stringent EU requirements (“advanced electronic signature based on a qualified certificate”)

Electronic signatures – though not “new” – are still rarely used (“hardly anyone actually uses them”, The Economist, 18 September 2004), especially in “high volume” applications The market offers software and hardware solutions that directly interface with the invoice-generation application and automatically attach the electronic signature to each document

Legal, business and technology issues must be understood and properly addressed

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The EU 93/1999 Directive

Establishes a legal framework to facilitate the use of electronic signatures, and contribute to their legal recognition:

- An “electronic signature” is data in electronic form, associated with other electronic data and used as a method of authentication

- An “advanced electronic signature” guarantees the authenticity and the integrity of contents of the document, not sender’s identity

- A “qualified certificate” is provided by a “certification-service-provider” and guarantees the identity of the sender

- “Certification-service-providers” and “secure-signature-creation- devices” must fulfil pre-defined requirements. Member States cannot subject the provision of certification services to prior authorization

Defines the rules for mutual recognition of non-EU certificates

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Why certificates?

Public keys are stored in public databases anyone can introduce a public key claiming they are someone else

Digital certificates can be compared to passports a traveller arriving at a foreign country is authenticated by trusting the passport issuer (the Certification Authority)

Certification Authorities are third-party entities that issue certificates to ensure the authenticity of the signer

In trusted, secure environments, where the parties already know each other, organizations can host a PKI certificate authority

within their own infrastructure

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Agenda

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UNeDocs documents…

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…comply with the UN Layout Key standard…

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…and completion guidelines

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They can be generated with Infopath,…

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..or with Adobe acrobat Reader,…

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… in paper, PDF,…

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…XML,…

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…and EDI format,…

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…using web-based code validation,…

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…format translation and delivery services

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UNeDocs documents’ data model…

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…is based on UML (Unified Modelling Language)…

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…and incorporates UN/CEFACT Core Components

Documents

1 Using UNeDocs to facilitate the transition to electronic, paperless, invoicing Geneva, October 2004