eInvoice in Finland Heli Salmi, M. Sc. (Econ) Coordinator, Expert Services

Elma Electronic Trading SP-operator specialized in B2B e-Commerce –Electronic Commerce Service Provider Founded in 1991 –Founded by a group of 27 Finnish companies within industry and trade Presently –A leading operator within e-Commerce in Nordic region and one of the top players in Europe –On the cutting edge of product development –Rapidly growing IT-company with a strong tendency towards internationalization

Elma’s clientele In excess of 150 ”TOP 500” rated Nordic companies Trade: Arrow Nordic Components, AGA Industry: ABB, Aspocomp, Uponor Group Transport: Schenker BTL, Finnlines Public Authorities Thousands of SME’s mainly in Finland Thousands of e-commerce connections on international level Tens of thousands business transactions within a day’s time

What is eInvoice? Modern, reliable and paperless way of invoicing Invoice data from invoicer’s system to invoicee’s system Based on Internet techniques The invoice is visualised for electronic handling (checking and possible approvals) processes Covers both B-to-B and B-to-C invoicing

Supply Chain Management vs. Procurement Invoices Purchase Order Processing Purchase Ledger Order Order response Delivery Invoice Agreement

Electronic Billing and Payment Definition (IDC, 2001) ‘ Electronic billing and payment refers to the electronic presentation of financial statements, bills, invoices and related information sent by a company to its customers or a third-party, and corresponding payment for goods or services. The information in the bill or monthly financial statement can also be located from the biller’s own or a third-party organization Web site and thus end users will be able to view and pay the bill over the Internet. Consolidator/Bill Service Provider. A consolidator consolidates bills from organizations and other consolidators and then delivers them to consumers, businesses or others for bill presentment. The consolidator also converts the billing data into the requested form and archives it. The consolidator can deliver data to different authorities such as tax authorities as well.’

Electronic Invoicing in Finland Long EFT (Electronic Funds Transfer) history -> 99% of payments in B-to-B are electronic Advanced NetBanking solutions, over 2 million users in Internet banks EDI (Electronic Data Interchange) over 15 years (with national standards over 30 years) New techniques - XML (eXtensible Markup Language)

Other prerequisites Modern legislation ’The information on a voucher can be used in accounting in a way that only the link information (e.g. the server) of the storage is sent to the accounts of the company. The link can be used in collecting the image and the data of the voucher.’ Accounting Advisory Board, Ministry of Trade and Industry, General quides on methods in electronic acconting (Translation HS). Rationalisation requirements also in accounting Importance of customer service Image factors, a modern company uses modern systems in invoicing

WHY eInvoice? There are around 120 B2B invoices and 180 million B2C invoices in Finland Part of invoices are electronic, EDIFACT Cost of handling one invoice - both the issuer’s and recipient’s cost 16 EUR Cost savings around 80%

The consortium

Elma Invoicing channels Invoicing company Elma eCom Connection Data format conversions and channeling 1) ElmaEDI 2) Elma eInvoice 3) ElmaInvoice b) Cooperation partners Proha ProCountor.Com Novo c) Bank batch transfer connections Sampo Nordea OKO Bank d) Net banks Sampo Nordea OKO Bank Printing services Capella Atkos Novo Direct connections Data repository Medium-sized businesses Invoice recipients Small businesses and consumers Partners’ clients Large businesses Elma eCom Connection Large businesses a) Direct connections

Security is important The usability requirements for the system is high (like banking services) Errorless, functioning well In cooperation with the banks the level required by the bank! MAC, SSL, SSH, VPN

Sender VPN data.einvoice data.eInvoice-xml data.xml data.hmtl data.pdf data.tiff data.epl data.edi data.inhouse Bank Internet bank Customer Purchase ledger Payment transfer system Customer SSL, MD5 PATU (MAC) VPN XML, PDF XML, HTML TCP/IP Direct payment, PDF Printing operator Elma EPL TCP/IP eInvoice EDI Customer PATU (MAC)

Council Directive 2001/115/EC of 20 December 2001 amending Directive 77/388/EEC with a view to simplifying, modernising and harmonising the conditions laid down for invoicing in respect of value added tax Data content of an invoice Invoices issued pursuant to point (a) may be sent either on paper or, subject to an acceptance by the customer, by electronic means Plus other regulations e.g. storage of invoices

Council Directive 2001/115/EC Invoices sent by electronic means shall be accepted by Member States provided that the authenticity of the origin and integrity of the contents are guaranteed: by means of an advanced electronic signature within the meaning of Article or by means of electronic data interchange (EDI) as defined in Commission Recommendation 1994/820/EC Invoices may, however, be sent by other electronic means subject to acceptance by the Member State(s) concerned.

Commission Recommendation 1994/820/EC Article 2 Definitions 2.1. For the purpose of the Agreement, the following terms are defined as follows; 2.2. EDI Electronic data interchange is the electronic transfer, from computer to computer, of commercial and administrative data using an agreed standard to structure an EDI message EDI message: An EDI message consists of a set of segments, structured using an agreed standard, prepared in a computer readable format and capable of being automatically and unambiguously processed UN/Edifact: As defined by the UN/ECE (1), the United Nations rules for electronic data interchange … (continues) 2.5. Acknowledgement of receipt: The acknowledgement of receipt of an EDI message is the procedure by which, on receipt of the EDI message, the syntax and semantics are checked, and a corresponding acknowledgement is sent by the receiver.

Something new in Finland Electronic signatures through banks (2002) Electronic signatures using a mobile phone (spring 2003?)

PRESS RELEASE June 10, 2002 The State Treasury and Elma Pilot Electronic Invoicing The Finnish State goes over to electronic invoicing The State’s 118 offices, ministries, research institutes and universities are transferring to electronic invoicing. Some 20 organisations are already launching development projects for this in Finland is the first European country to progress this far with electronic State financial administration.

Attachments…. Improving the invoice data -> no attachments Including the attachments in the invoice Some special cases where a paper invoice is required -> printout of the invoice

Other transactions Reminders/Collecting - traditional ways, no integration needed Late payment interest invoice - like any other invoice Information/Marketing(?) - links from the invoice to: –agreements –customer service –new products –statistics –graphics

Advantages to the invoice issuer Outsourcing of invoicing (sending) All channels available, only one connection needed Value added services from the invoice data Electronic archives Customer service A modern way of doing things

Advantages to the recipient No manual typing => cost savings, no errors Automated bookings for general ledger Invoices in the repository => no lost papers, invoice can look on the screen just alike a paper invoice Automated controls/services => value added services from invoice data