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COMPLIANCE AUTOMATION AND MONITORINGCase study Electronic Invoicing

Anna Nordén


WHAT DOES IT MEAN?

• Compliance Automation - Meeting legal requirements in business processes without manual intervention

• Monitoring - Mechanism to ensure that changes in legal requirements are detected and fed into the change management process

Presentatör

Presentationsanteckningar

Process for feeding changes into the automated process


WHY E-INVOICING AS A USE CASE?Compliance fragmentation

Standard audit file

Clearance

Presentatör


WHY COMPLIANCE AUTOMATION NEEDED IN E-INVOICING? In e-invoicing, multiple requirements in various areas, differ among jurisdictions – COMPLEX COMPLIANCE PICTURE Vat by far the most significant indirect tax for nearly all the world’s trading nations. Roughly speaking, VAT contributes more than 30% of all public revenue.


INVOICE CONTROLS – REGIONAL ANALYSIS

USA

ASIA (-TURKEY)

LATAM (-BRAZIL)

TURKEY

RUSSIA

BRAZIL

EUROPE

COMMONWEALTHTax authorization needed

E-invoicing mandate

Prescriptiveness

Integrity & authenticity

Archiving

DigSig/Timestamp mandatory

Mandatory XML

Clearance (CL)

CL + buyer acknowledgement

Full cycle CL

Accounting doc compliance

Localization

Presentatör


This slide summarizes information from our country research (next two slides), bringing out regional differences and showing some well-known country examples in relation to these regions. The requirement categories we use here are not exhaustive, nor does a long bar show that a country is more complex as such; however it shows that a country has regulation covering more areas of electronic invoicing. As regards REGIONS, the USA with only archive requirements can be explained because this country has no VAT or GST. For the countries that do, the order starting with the broadest regulatory scope is LATAM, Asia, Europe and finally Commonwealth countries. Since we took three individual countries out of these averages, the ranking shown here isn’t complete however; we show Brazil, Russia & Turkey out to show that some countries sharply exceed averages. CLEARANCE COUNTRIES REGULATE MORE AREAS AND THE EFFECT IS THAT ALL FUNCTIONALITY IS INTEGRATED FROM ISSUANCE OF THE INVOICE, VALIDATION, AUDIT, REPORTING -VERY STRONG NEED FOR AUTOMATION


E-INVOICING REGULATORY SYSTEMS

“POST AUDIT” “CLEARANCE” Not Regulated


CLEARANCE IN E.G. LATAMCompliance automation by law!

Presentatör


CLEARANCE COUNTRIES REGULATE MORE AREAS AND THE EFFECT IS THAT ALL FUNCTIONALITY IS INTEGRATED FROM ISSUANCE OF THE INVOICE, VALIDATION, AUDIT, REPORTING -VERY STRONG NEED FOR AUTOMATION


COMPONENTS OF A COMPLIANT SERVICE

Presentatör


Look behind the scene.


MONITOR INTERPRET

ADJUST

TESTAU

DIT

DEPLOY

KEEPING IT UNDER CONTROL

Standard audit file

Presentatör


THE CHALLENGE IS HOW TO KEEP IT UNDER CONTROL OVER TIME.


TREND: OUTSOURCING B2B PROCESSES

Presentatör


WITH CURRENT OUTSOURCING TREND THE NEED TO AUTOMATE COMPLIANCE IS STRONGER THAN EVER


Tradingorganization

ERP-system(corporate)

SCM (VMI)

IB (EDI, VAN, Trading Grid)

P2P (direct, indirect)

ECM (scan/OCR)

IB (EDI, VAN, Trading Grid)

O2C

CCM

E-commerce “O2C”

CRM

AR BPO

AP BPO

Pure-play e-invoicing

Pure-play e-invoicing

B2B SEGMENTS FOR LARGE ENTERPRISES

Presentatör


A NUMBER OF FUNCTIONALITIES THAT USED TO BE IN THE ERP SYSTEM IS MOVING TO SERVICE PROVIDERS Specialized functions Intergration broker EDI fully automated e-invoicing in the 80’s Phillips P2P 90’s – need web powered portals Pure play e-invoicing vendors SAP, Oracle – sell cloud-based ERP, penalize software sales


YESTERDAY

External and in-house experts

Licensed softwareOwn operations

Presentatör


Tax experts would monitor legal evolution and work directly with the business and IT to ensure the necessary compliance change management. as IT and processes were still within the enterprise’s direct control.


OUTSOURCING B2B PROCESSESNecessitates also moving compliance

Presentatör


Difficult to move B2B processes to the cloud and keep compliance aspects in-house of with an external legal counsel. Risks being fragmented and the whole picture not taken into account. If you outsource your processes you are no longer in control of the compliance aspects. The organization and the service providers must agree on who takes responsibility for compliance maintenance. The service provider will often be under pressure to take of the management of compliance with requirements that are closely associated with the functionality it provides. OLD MANUAL COMPLIANCE PROCESS DOES NOT WORK – THE ENTERPRISE MUST INSTEAD REQUIRE IN-BUILT COMPLIANCE FROM THE SERVICE PROVIDER


GENERIC COMPLIANCE IN THE CLOUDNon-customer specific compliance automation a necessity for cloud service providers

Presentatör


Integrity&authenticity, file format, clearance platform exchange orchestration


CONCLUSIONS COMPLIANCE AUTOMATION

• Driving forces towards Compliance Automation in e-invoicing:– Increasing need for Compliance Automation due to the complex legal

requirements– Mandatory Compliance Automation in clearance countries– Outsourcing of business processes necessitates management of compliance

by the service provider, which is difficult to handle without Compliance Automation

• Customized compliance replaced by generic Compliance Automation in the Cloud


MONITORING

Mechanism to ensure that changes in legal requirements are detected and taken into account in the change management process


˃ Today summary level and manual – web and paper ˃ Increasing frequencyand transaction-orientedautomation˃ ‘e-audit’ requirements: SAF-T/export capabilities/ certification

˃ Supplier & buyersignatures and time-stamps˃ Many differentformats, CAs

˃ Localisationrequirements in e.g. EU, Turkey˃ Auditability and accessrequirements˃ Search criteria˃ New certifications e.g. Belgium

˃ Massively differentplatforms & integrations(country, region or city level)˃ End-to-end orchestration: invoices, credit notes, cancelation, contingency invoices,

˃ Many different B2G platforms in the EU˃ Mandatory delivery methods and response messages

˃ Tax rate & code determination˃ Applicable law-driven mandatory notices in invoices

˃ Many different compulsory formats ˃ Mandatory data

worldwide˃ Mandatory human-

readable renditions (audit, transport..)

˃ E-invoicing notification or prior approval˃ Trading partner agreements˃ Third party e-invoice issuance authorizations˃ Storage abroad or foreign operator notification/derogation requests˃ Buyer consent rules

REQUIREMENTS


Continuously detectand analyze changes to

laws, practices and specifications in

relevant countries

CHANGE MANAGEMENT


0 200 400 600 800 1000 1200

MonacoMorocco

New ZealandNorway

PakistanParaguay

PhilippinesPortugalRomania

SerbiaSlovak Republic

South AfricaSpain

SwitzerlandTanzaniaTunisia*Ukraine

United KingdomUSA

VietnamEcuadorPanama

I&A CL full cycle Archiving E-invoicing mandate

Clearance (CL) CL accounting doc Mandatory XML Presciptiveness

CL + buyer acknowledgement DigSig/Timestamp mandatory Tax authorization needed Localization

Presentatör


Quite demanding. No cross-border monitoring services.


Continuously detectand analyze changes to

laws, practices and specifications in

relevant countries

Decide and document what legal changes actually mean in practice, for yourspecific circumstances

Plan and develop the software, hardware and process changes required to meet the upcomingrequirement changes

Before deployment in production, performmodern test suites to avoid any disruption of real business processes

Put changes in production in a timely

manner withoutaffecting the normal

course of business

Have the new system components, configuration and processes

audited by a third party to ensurecontinuous externally-verifiableadherence to best security and

quality practice


INVOICE SUPPLIER FLOWS INVOICE BUYER FLOWS

INTERPRETMONITOR

ADJUST

AUDIT

DEPLOY

COMPLIANCE CHANGE MANAGEMENT UNRELATED TO BUSINESS CHANGE MANAGEMENT

HUB PROCESS

TEST

AVERAGE 65 REQUIREMENTS PER COUNTRY, 2 CHANGES PER YEAR AND COUNTRY. DIVERSE TRANSACTION ORCHESTRATION PER COUNTRY


CONCLUSIONS MONITORING

• Compliance Automation useless without the Monitoring function - vital to know which legal requirements to adhere to

• Compliance change management decoupled from business change management


Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Buyers

Buyers

Buyers

Buyers

Buyers

Buyer

CONTRACTS ORDERS INVOICES TRANSPORT DOCUMENTS

…. ….

Trading partnere-signatures

##

#

Clearance platformintegration

TAX

Legal archiving

Legal archiving

…other trust services…

Automated compliance for 58 countries


TAX AND CERTIFICATION AUTHORITIES

BUYER SERVICES

VALIDATE ARCHIVEAPPLY

SIGNATURES & TIME-STAMPS

ARCHIVE


SUPPLIER SERVICES

DATA & COUNTRY PARAMETERS

HUB PROCESS

Presentatör


Send invoice data + a country code - > service ensures compliance with the legal requirements for an electronic invoice An electronic invoice is automatically, digitally signed using a compliant signature, processed according to requirements if any (clerance), validated and archived



BUYER SERVICES



ARCHIVE


OR TIME-STAMPSUPPLIER SERVICES

REQUEST CLEARANCE, CERT STATUS


HUB PROCESS


BUYER SERVICES

VALIDATE ARCHIVE

SUPPLIER SERVICES

PACKAGE ARCHIVE



CLEARANCE OK, REVOCATION DATA

OR TIME-STAMP

ISSUED INVOICE

HUB PROCESS



BUYER SERVICES

VALIDATE ARCHIVE

SUPPLIER SERVICES

SIGN ARCHIVE


ARCHIVETIME-STAMPS

INVOICE, META-DATA

HUB PROCESS



VALIDATE ARCHIVE

SUPPLIER SERVICES

SIGN ARCHIVE


TIME-STAMPBUYER SERVICES

CHECK CLEARANCE, CERT STATUS OR

INVOICE PLUS COUNTRY PARAMETERS

HUB PROCESS


BUYER SERVICES

VALIDATE ARCHIVE

SUPPLIER SERVICES

SIGN ARCHIVE


TAX AND CERTIFICATIONAUTHORITIESCLEARANCE OK,

REVOCATION DATA OR TIME-STAMP

VALIDATE INVOICE

HUB PROCESS



BUYER SERVICES

VALIDATE ARCHIVE

SUPPLIER SERVICES

SIGN ARCHIVE


ARCHIVE TIME-STAMPS

INVOICE, META-DATA

HUB PROCESS


Anna Nordén, General Counsel

TrustWeaver

[email protected]

www.trustweaver.com

case study electronic invoicing anna nordén study electronic invoicing anna nordén. ... p2p...

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