From paper to e-Invoicing and Legal Compliance

From paper to e-Invoicing and Legal Compliance

San Diego ACH Meeting February 2011

Bruno Roussel

February 20112SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

Agenda Paper to e-Invoicing:

Invoicing today

SIS is not just an IT project

IS-Web vs. IS-XML

SIS e-Invoicing

Best practices

Legal Compliance Legal framework

Digital Signature


Paper Invoicing in ICH world today

Print PaperInvoice

Mail Invoice

Finance • Receives Paper

Invoice• Supporting

documents are compare to the invoice

Accountant

Invoice DataEntry

AP Clerk

Airline Financial System

Typical paper

process

EngineeringAccountant

Supportingdocument

Photocopy

Scan

•The invoice

enters the validation workflow for approbation


Electronic Invoicing in ACH

Generate afile

E-Mail InvoiceFinance

• Receives Electronic Invoice

• Supporting documents are compare to the invoice

Accountant

Invoice DataEntry

AP Clerk

Airline Financial System

Electronic process

EngineeringAccountant

Supportingdocument

•The invoice

enters the validation workflow for approbation


Problems with the paper or e-paper cycle Needs people to consolidate the invoices and supporting docs Needs people to put it in envelopes etc Needs to be sent somewhere, possibly delivered to a collection

point first Needs to be AWBd, couriered or posted Needs someone at the other end to receive it, take it out of

envelopes and distribute it Needs someone to check it’s all there Needs someone to check it reconciles with settlements Etc etc etc


SIS e-Invoicing benefits Reduce cost of paper process

Improve efficiency: Data quality Speed of information Automation Access to detailed information Audit trail

Uses IATA IS-XML e-Invoice Standard Contributes to the green initiative


SIS is not just an IT projectYou have to reengineer the current process to adapt to SIS:

Will you generate Invoices in each department or centrally ?

How will you Capture detailed information of the invoice at the source?

Which level of automation would you like to achieve?


How to reconcile the invoices against clearing house settlement? Today claims may not match IDEC or invoice Tomorrow all the information will be consistent

Will you reconcile invoices against purchase order?

Reconcile the invoices against your account posting based on: Your operational system Contract database Aircraft schedules

Define your objective



IS-Web vs. IS-XML IS-XML:

Could be generated/ processed from different systems including ERP or financial systems

Easy to handle large amount of invoices Ease the use of workflow validation Increase IT project requirements

IS-WEB: Allows multiple locations to capture their invoices easily Suitable for small amount of invoices Workflow validation could be set up in SIS Simplify SIS implementation Payable invoices as PDF view


SIS e-Invoicing SIS will allow legal e-Invoicing

NOTE – not legal in some countries yet

PDF or XML could be used as the legal invoice. PDF by Default XML when legally required

In case of an XML invoice an additional XML file will be created Legal XML is a subset of the IS-XML


SIS e-Invoicing The files may need a Digital Signature (DS)

This digitally signed file should be archived in accordance with legal rules

You may have to print the incoming invoice in your country if the electronic format is not considered as legal: You can do this yourself, or You can ask the billing entity to send you a paper copy, but this will be

charged as defined in IATA RAM Chapter A13 or per bilateral agreement.


BilledAirline

Germany

Integrated Settlement

BillingEntityUSA

Ove

rall

Proc

esse

sBilling & Invoicing ProcessesCentralRepository

Digital SignatureAnd Validation

Ove

rall

Proc

esse

s

Settlement Processes

ICH ACH

Processes at time of SalesNFPengine

ARC COMPASS™

IS-WEB

IS-XML

IS-IDEC

Usage File

IS-WEB

IS-XML

IS-IDEC

Billing information file

Legal PDF

Legal XML Legal PDF

Legal XML e-Invoice

11

2

5

Create the invoice

Digitally sign the invoice and Validation of DS

4

3

SIS e-Invoicing with DS and Validation


BilledAirlineUSA

Integrated Settlement

BillingEntity

Germany

Ove

rall

Proc

esse

sBilling & Invoicing ProcessesCentralRepository

“DigitalSignature”Company

Ove

rall

Proc

esse

s

Settlement Processes

ICH ACH

Processes at time of SalesNFPengine

ARC COMPASS™

IS-WEB

IS-XML

IS-IDEC

Usage File

IS-WEB

IS-XML

IS-IDEC

Billing information file

Legal PDF

Legal XML Legal PDF

Legal XML e-Invoice

1

2

5

Create the invoice

Sign the invoice

4

3

SIS e-Invoicing with Digital signature


Charge Category Invoices are standardized and structured

12 Charge Categories

Airport Mail

ATC Miscellaneous

Cargo Partner Alliance

Engineering Property

Flight Ops Service Provider

Ground Handling

IT Services

One charge category only allowed per invoice


Charge Code 84 different possibilities to classify an invoice

Example charge category Engineering

charge code: Handling LM

Lease

Loans

Misc

MRO - Maintenance

MRO - Repairs & Overhaul

PoolSeveral charge codes allowed per invoice


Invoice StructureComposed of : Invoice Header Line Item Line Item details (replace supporting document)

Including : Legal fields

Required by law Mandatory fields

Substitution allowed for one year Recommended fields

R for recommended for one year and will become mandatory RA for recommended always

Optional fields Additional information not required to reconcile, may be used within Alliance


Ground Handling / Catering Invoice sample


Supporting document


LocationCodeInvoice or Line Item

LevelAN 5 M

IATA airport code or UN/LOCODE or city code if non-airport.

AircraftTypeCode

LineItemDetail AN 3 M IATA aircraft types

Dictionary defined (IATA aircraft type codes)'0' (Numeric Zero) will also be allowed as substitution value

FlightNo LineItemDetail AN 8 M

Unique flight identifier: Shown in field 7 of the ICAO flight plan consisting of either the aircraft reg. or the flight number (which itself consists of the two or three character airline designator code followed by an up to 4 digit number with optional Quebec single suffix letter).

SIS e-Invoicing fields Mandatory: Ground Handling / Catering


ProductID LineItemDetail AN 25 RSupplier code for the

product or service.

ContractNo LineItemDetail AN 25 R

CabinClass LineItemDetail A 1 RA Values: C,Y,F plus any other

value

FlightDateTime LineItemDetail DT RDate&Time allowing to

identify the flight the service is related to

YYYY-MM-DDThh:mm:ssTime is optional

AddOnChargeName LineItemDetail AN 30 RA Name of the AddOnChargePossible Values: Discount; Fees

etc

AddOnChargeAmount LineItemDetail N 18,3 RAAmount of the

AddOnCharge.This can have a negative value

for discount

SIS e-Invoicing fields Recommended: Ground Handling / Catering


Original invoice is missing: Mandatory fields:

Charge Category: Ground HandlingAircraftTypeCode: Substitution “0” FlightNo: CHARTER

Recommended fields

CabinClassContractNo


SIS invoice view


SIS supporting document


Best Practices e-Invoicing is a complete change for your organization, benefit from

that to design optimal processes

Use of Charge Category and Charge Code allows appropriate routing of the invoice for validation, and GL posting

Use segregation of tasks to ensure better controls on overall validation process

The sooner the better, project could be implemented in several phases, but be ready to process incoming billing from day one in an electronic manner


Best Practices Automate the reconciliation with the maximum of electronic data

possible, general ledger posting against CH settlement...

Automate the matching of PO and invoices or contract

Generation and integration of electronic data should be automated.

Leveraging your existing ERP system will ensure an all electronic data world

Use the IATA IS-XML e–Invoice standard, develop once, connect to all.


Question & Answer

e-Invoicing contact in IATA: [email protected] for any request to add information in the IS XML

such as charge category charge code or new business requirement


Agenda Paper to e-Invoicing:

Invoicing today


IS-Web vs. IS-XML

SIS e-Invoicing

Best practices

Legal Compliance Legal framework

Digital Signature


Role of Integrated Settlement Replace paper IS will be legally mandated by billing carriers to “create”, “transport”

and deliver the invoice Where necessary, submitted billing data is “transformed” to a legal

invoice by creating the digital signature as appropriate and/or adding the reference data

IATA will use a “trusted company” to help comply with local laws and to create and verify the digital signatures, and perform legal archive


Legal framework What is a legal framework for e-Invoicing that SIS needs to comply to?

Recognition from the tax authorities that electronic invoicing is legal

Technical recommendations for implementation (DS and Archiving)

Framework is country dependant

Should be defined in law and may: Include means of integrity (e.g. EDI)

Include means of authenticity (e.g. Digital Signature)

Define format to be used, (e.g. XML or PDF)

Require prior authorization from tax authorities

Include any additional specification (e.g. legal Archiving, specific XML layout)

If none exists, either discuss a legal framework definition with tax authorities or agree exemption.


Legal obligations for e-Invoicing … where applicable

Billing Party: Apply VAT Prove conformity with e-Invoicing laws Create and attach digital signature

Billed Party: Verify digital signature before processing the invoice

Both Parties Archive and prevent modification Log digital signature, validation key Give auditors access to e-Invoices


Different jurisdictional requirements 1/2 Requirements are not consistent across countries

IS e-Invoice process is generic:

SIS has a generic invoice template that should meet everybody’s requirements

SIS e-Invoice will be created:Based on information provided by the billing entityBased on the member profile of the billing and billed entity


Different jurisdictional requirements 2/2 Various types of Digital Signature - most restrictive airline legislation

prevails

Digital signature:

SIS will use the countries in the from/to address mentioned on the invoice header to define DS to be applied

The DS provider depending in the countries of a cross border invoice will: Sign with the most restrictive DS if they are compatible OR Sign with both signatures if they aren’t


Legal requirements, your responsibility Provide mandatory information on the invoice e.g. :

The 14 elements that define a legal invoice in most of the jurisdictions (e.g. VAT Registration #, VAT Amount, Billing Carrier’s Address, Billed Carrier’s Address, etc).

Other legal information that is present on your invoice template today (e.g. board of directors…)

Specify in your member profile that Digital Signature is required Define invoice format according to your legislation

All SIS participants will be required to enter this type of data in their member profile enabling legal invoice creation by default


Value Added TaxesContext Tax administrations want long term access to the invoices, as a

guarantee of proper VAT treatment of sales transactions

Responsibility It will be your company’s responsibility to determine whether VAT

applies, how much it should be, and where to put it Some jurisdictions require the proper naming conventions

(Reference list for your information in chapter A13)

To give auditors access to e-Invoices SIS will ensure technical integrity of your invoice, but not the validity

of your submission


Legal requirements, SIS Responsibility

Technical requirements e.g. :

Digital Signature Type of DS required ( Advanced, Qualified, Specific Qualified..) Validation of the DS

Data formatting


Digital Signature complexity DS complexity will be handled by SIS and the DS provider

For example:Advanced Electronic Signature AESQualified Electronic Signature QES

There is a hierarchy within Digital SignatureQES has stronger requirements than AESQES > AES

But two QES signatures may be not equivalent:IT: Qualified Electronic Signature with time stamp QES ITCH: Qualified Electronic Signature with local certification authority QES CH

QES IT is not equivalent to QES CH


Digital Signature matrix samplesFR IT CH

FR

IT

CH

Billed Member

Bill

ing

Me

mb

er

FR: Advanced Electronic Signature AESIT: Qualified Electronic Signature with time stamp QES ITCH: Qualified Electronic Signature with local certification authority QES CH

CHIT

CH

IT

CH+IT

FR

IT

CH

IT+CH


Final note about legal compliance Integrated Settlement will provide the tools that will help your

company ensure legal compliance with regards to invoices

However, it will be your company’s responsibility to know the local laws and enable the options which will make your invoices compliant


Question & Answer

e-Invoicing contact in IATA: [email protected] for any request to add information in the IS XML

such as charge category charge code or new business requirement


Thank you.

Email:

[email protected]

SIS Website:

www. t .or .sia a g is

Documents

From paper to e-Invoicing and Legal Compliance