What’s going on in e-invoicing
e-invoicing Trends, Digitalization, Business Network, E-invoicing
In this blog we usually pick up one piece of news and take a closer look at it. This month I will take a closer look at two topics.
We will first visit India who has just announced that they want to move towards the clearance model. This happens through an in the beginning optional e-invoicing model but most probably in a bit distant future a classical mandatory B2B clearance model will evolve. It’s just last month that we discussed here how France and possibly other countries are moving towards the clearance model and with India, we already have a new country potentially joining this road. And speaking of France, we will also reflect a bit on how France and Germany for once have something in common. Namely that both are not yet ready to give up their vision for Hybrid Invoices.
Yet another country going for the clearance model and potentially mandatory e-invoicing
As mentioned, India is moving forward toward a mandatory e-invoicing model. In practice this means that e-invoicing will be already in use on a voluntary level from next year onward. This move has been approved by the Indian Goods and Services Tax Network (GST). The GST ensures that countries are using e-invoicing standards to ensure interoperability of e-invoices across their entire network.
Even though I refer to it as 'classical clearance model' there are still many unique aspects in it - and that is the challenge of the world today - all of the implementations of clearance models are pretty much unique and so is the Indian. However, I am personally happy to see that at least their standard for development will be based on UBL. This means there are at least some common elements but it leaves room for more, for sure.
Germany and France have a dream for E-Invoicing that is
As promised, I’d also like to take some time in this blog to reflect on a topic we haven’t talked too much about earlier: hybrid invoices. Historically speaking Germany and France don’t share much regarding E-Invoicing. Maybe the common denominator between both countries are that they are both big economies and both countries are early adopters of EDI. However, there is one more thing that those two countries have in common. Both countries seem to have a common strive toward hybrid invoices. In Germany the standard for hybrid invoices is called ZugFerd and in France it’s Factura-X.
Let’s first take a look at the definition. According to the EESPA glossary, a hybrid invoice is ‘a method of embedding structured electronic invoices inside a PDF’. The name hybrid comes from the fact that the invoice includes both the structured data that machines read to automate invoicing workflows but also the image, or what we know commonly as PDF, that can be read by us to quickly glance what the invoice is all about. Having xml data and the invoice image in the same file is nothing new as invoice images are often embedded to invoice XML files but this time the order is different - PDF is the carrier container and XML is inside.
And here lies the reason why countries like France and Germany still hold on to the hybrid model. This is a model that makes it easier for SMEs to deal with invoices because they might not have an invoice receiving tool in place but can still look at the invoice and pay it. And in the end that’s what the whole invoicing thing is about, it’s not about the format it’s about making sure that businesses dealing with each other are getting paid. And at the same time, the hybrid invoice can very well be sent to a global company because it contains all the xml data that then can be processed by invoice workflows that the invoice receiver might have in place. This is different from structured PDF because those typically contain the data in an open format that still needs to be interpreted. The hybrid invoices are fully structured and there are rules where which data has to be, of course there are as it’s a German innovation. There are different data levels they can cover - from very basic VAT directive pointed obligatory data but also full EN compliant XML so something for everybody.
And it also looks like the hybrid invoice wants to play nice with its European counterparts. France just made a new release for Factur-X that now is fully supporting the new EU e-invoicing standard. As mentioned, Factur-X is a German/French joined standard for hybrid invoices. France is also using a unique national e-invoicing portal called Chorus Pro, which has been developed by the Ministry for Finance and Economy. Chorus Pro allows all public sector suppliers to submit their invoices through the portal and also check on their status.
And this is where we come full circle. Enabling hybrid invoices makes it easy for French and German SMEs to submit their invoices and essentially follow the mandate to use e-invoicing.
So where does this leave us with the hybrid invoice? Which type of e-invoicing standard wins, will there even be a battle of the invoicing standards? In my opinion, it's actually a bit of a curious thing this hybrid invoice. I feel the industry smiles always a little bit at it. But we need to ask ourselves, are we prisoners of our own mind here. Do we rather value technical solutions over solutions that are the easiest for the user? I believe Germany and France are two countries with a strong SME sector. That’s probably because there are simply more SMEs in those countries than for example in the Nordics. And I believe the exciting thing here is really to see a true manifestation of the European thought: Countries adapt to EU wide practices based on their own national needs but they still reap the benefits from creating a Europe (and who knows maybe even world-wide) network. Even though it is targeted for SME suppliers, I could also see the benefits for global companies - in case hybrid invoice would be widely adopted then big supplier could use one output for all of its buyers.
I can’t predict the future but I am excited to see how France and Germany are developing with their invoice models. I have to be honest - when I started to write this blog I was pretty doubtful towards this on my own but the more I think about it, the more I start to like it - I feel it has its place in the market. Who knows, maybe I will try to send soon first hybrid invoice on my own as well.
Ahti Allikas has been active in the e-invoicing industry since the year 2000. He currently works as Head of Partners and Networks at OpusCapita, and is responsible for the development of the e-invoicing ecosystem. Ahti is a member of the executive committee of the European E-invoicing Service Providers Association (EESPA), member of management committee of the OpenPeppol Association (PEPPOL) and also member of E-Invoicing expert group in the European Multi-Stakeholder Forum on E-Invoicing (EMSFEI).
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