Benefits of electronic invoice

MADE TO TRADE.Benefits of electronic invoice

Mikhail SklyarovHead of finance divisionMETRO Cash & Carry Russia

MADE TO TRADE. Mikhail Sklyarov: June 2010 | © METRO AG 2010

METRO Group structure at a glance

International, high-performing retailing company

Successful DAX-30 enterprise

About 2,100 locations in 32 countries

Approx. 300,000 employees from 150 nations

Operational strengths of the four sales divisions Metro Cash & Carry: self-service wholesale Real: hypermarkets Media Markt and Saturn: consumer electronics stores Galeria Kaufhof: department stores

Active real estate management with independent profit centre

Focused on profitable growth as well as sustainable and consistent value enhancement


METRO Cash & Carry Russia

Key facts:

Operative:

Sales 2009, EUR

Employees

Stores 52

13.000

2.6 bn

2001


Content

1 Benefits of e-invoice

2 E-invoice as part of EDI

3 Implementation of e-invoice

4 Summary


1-3 thousand hectares of forest is cut each year to produce paper for VAT invoices


The weight of this paper is 300 tons

To store this paper we need 1000 pallets or 30 trucks or 5000 sqm warehouse

Official requirement is to keep documents at least 5 years

MCC RU store 60 million pages of VAT invoices per year


Comparison of e-invoice and paper process

Retail companySupplier

ERP system

Invoice

Invoice control

Documents

receiving

Paper Process

Retail companySupplier EDI invoice

EDIproviderERP system

EDI invoice

EDI Process

ERP system

ERP system


Paper invoice E-invoice

Document delivery- +

Lost paper invoices- ++

Invoice entry- ++

Invoice check and approval

- +

Time for invoice processing

- ++

Invoice storage - ++

Master data quality - ++

Investment + -

Benefits of e-invoice


Cost comparison for invoice processing

Paper invoice e-invoice

Invoice receiving 5 0

Invoice scanning 5 0

Invoice entry 20 0

Invoice approval 30 0

Claims management 35 0

Invoice storage 5 0

EDI support 10

Total: 100 10


• Electronic document is not changeable

• Secure access to the information for Tax inspection

• Checking of electronic data is faster and more convenient than checking of paper invoices

• Protection of environment

• Modernization and competitiveness of the economy

Government

Electronic document flow implementation will bring significant benefits both for business and for Government:


EDI advantages

Electronic document flow implementation will bring significant benefits both for business and for Government:

Business

• Invoices are issued electronically, less efforts and mistakes for document creation

• Fast exchange of information

• Nearly no cost for document delivery

• Invoices are processed automatically

• The lack of mistakes during invoice entering and processing

• Little invoice storage costs


Content




4 Summary


EDI is a standard of electronic message exchange between supplier and retailer

ORDERS – Electronic order

RECADV – Confirmation of delivery

DESADV – Dispatch advice

INVOIC – E-invoice

* Together with paper

EDI Provider

90%

30%

2%*

30%


Content




4 Summary


Country rollout of EDI Invoice

RU

TR

PLDE

HUFR

PT ES

BE

UA

Germany Live 01/1989France Live 12/2005Belgium Live 12/2005Hungary Live 10/2007Russia Live 07/2009

Portugal Test 01/2008Live 02/2010

Spain Test 11/2008Live 01/2010

Turkey in progressPoland in progress


EDI invoice implementation in Russia (in parallel with paper)

Aim of the project: Implement EDI invoice with suppliers. As soon as necessary law changes are adopted immediately switch to EDI invoice without paper.

Current status: 63 suppliers are in production, another 600 suppliers are in test including Kraft foods, Nestle, WBD.

Target 2010: receive 5% of the invoices by EDI


EDI process together with paper

Paper invoice

Sup

plie

r

Reconciliation of EDIand paper invoice

Retail chain

Invoice payment

Input of total data

Goods receiving data

Store

Archive

EDI invoice

Paper invoice


Legislation is still an open issue

Make amendments to article 169 of Tax code

Make amendments to accounting law

From legislation point of view

E-invoice = Paper invoice


E-invoice pilot with provider Taxcom

The following processes have been tested:

Creation of E-invoice

E-invoice interchange between supplier and customer

E-invoice request by tax office

E-invoice format remained an open issue


E-invoice format should be EDI compatible to be integrated in EDI process

ORDERS –

Electronic order

DESADV –

Dispatch advice

RECADV –

Confirmation of delivery

INVOIC – E-invoice


Content




4 Summary


Summary

E-invoice is a strategic project which is supported by business as well as government

E-invoice brings a lot of benefits for all parties involved

Legislation and data format are main open issues