how e-invoicing adoption can accelerate in the …...slide 9 state of the u.s. market november...

November 12-14, 2018 | Las Vegas

How e-Invoicing Adoption Can Accelerate In The U.S. and it Means to

You

Todd M. Albers

Disclaimer


The opinions expressed are those of the individual presenters & not those of the Federal

Reserve System or any Federal Reserve Bank

Contact Information


Todd M. AlbersSenior Payments Consultant

Federal Reserve Bank of Minneapolis

[email protected]

(612) 204-5543

Provide financial services to

depository institutions & U.S.

government

Establish & execute U.S. monetary

policy

Supervise & regulate financial

institutions

Maintain a stable financial system & contain systemic

risk

Federal Reserve Banks

©2018 Federal Reserve Bank of Minneapolis. Materials are not to be used without consent.

• Tasked with advancing the FRS mission in payments by supporting work in standards, research, education, and other initiatives that increase the efficiency of business-to-business (B2B) transactions

• Standards Work:

– ISO 20022 Payments SEG

– U.S. Mirror Group to TC 68/SC9/TG01

– W3C Web Payments Commerce Group

– OASIS Universal Business Language (UBL) & BDXR Technical Committees

mailto:[email protected]

Learning Objectives



Invoicing trends in the U.S.

Market developments to tackle e-Invoicing on broad scale

Introduce the audience to the Business Payments Coalition

Discussion Topics for Today


Barriers to Electronic Payments and Invoicing

Global Adoption of Electronic Invoices

Approach to Increase e-Invoicing in the U.S.


PROPRIETARY AND CONFIDENTIAL PAGE 6Slide 6


Barriers to Electronic Payments and Invoicing


Does This Look Familiar?


Buyer


Barriers to Electronic Payments


Electronic payments are more complex than check payments

Electronic payments capabilities are not ubiquitous

Small and mid-sized businesses do not always have support of their FIs

Difficult to discover trading partners electronic payment capabilities

Difficultly in exchanging payment related data (i.e. invoices and remittance information)

• Large business still send 50% of their payments via check

• For small and micro businesses it’s even higher at 70% to 90% using paper checks

Paper Checks


State of the U.S. Market


1 – Electronic Invoicing in the U.S.: Challenges and Opportunities, Federal Reserve Bank of Minneapolis, 20162 – Vendor Landscape: B2B Business Networks Landscape 2017 to 2018, Forrester, 2017 (calculated by dividing 6.25B total e-invoices by 3.624 B from the total invoices business network metrics, 2016 table)3- e-Invoicing / E-Billing – Significant market transition lies ahead, Billentis, 20174 – Catalog of Electronic Invoice Technical Standards in the U.S., Business Payments Coalition, 2017

66% of Businesses issue email with PDF invoices, but less than 20% use structured e-invoices3

25% of the 25 Billion B2B invoices are electronic1

58% of electronic invoices are exchanged in a B2B Network2

What is an Electronic Invoice?4

“An invoice that has been issued by the seller, transmitted and received by the buyer in a structured digital format that allows for automated processing.”

Non Electronic

B2B Network

Non B2B Network


Barriers to e-Invoice Adoption


Interoperability

Many

Integration

Points

Inertia

Service providers and businesses have created isolated islands of

e-Invoicing, increasing the difficulty and expense to

integrate.

No common definition of what an “e-Invoice” is.

Many different syntaxes, formats, and methods.

What’s in place “works.” Business case needs to be compelling.

Lack of industry led coordination, collaboration, or leadership to broaden

adoption




Global Adoption Trends


Compliance Requirements Helps Drive Adoption


HighLevels of Complexity

U.K.

Italy

Low

Ad

op

tio

nLo

wH

igh

U.S.

Canada

Mexico

France

Australia

Compliance Requirements:• Archiving• Audit Logs• VAT Reporting• B2G / B2B Mandates• Clearance

Peru

Brazil

European Union


Global Adoption Trends



Observation on the U.S. Market


• Simple invoicing requirements •Complex business processes •Diverse marketplace•No market driven approach to

accelerate e-Invoice adoption

Source: Electronic Invoicing in the U.S.: Challenges and Opportunities


Global Adoption Trends - Forecast


The graph illustrates the impact of 2 different tactics

used to accelerate e-invoicing adoption in Europe and Australia

markets.

Source(s): PayStream Advisors, 2015; Digital Business Council, 2016




Approach to Increase

e-Invoicing in the U.S.


How to Increase e-Invoicing Adoption in the U.S.


What approaches are available?

What are the benefits?

How can you overcome the barriers?

Text

IncreaseE-InvoiceAdoption

In U.S.


What is the state of e-Invoicing Today?



What is an Interoperability Framework?


Examples: Telecommunication and e-Mail Standards

Sprint

T-Mobile

AT&T

Verizon


What is an e-Invoice Interoperability Framework?


The Interoperability Framework standardizes the interconnections between trading partners by using a “four corner model”

• Standardized interconnections deliver documents and messages through an open network over the internet

• Allows multiple types of documents and messages

• A delivery mechanism only; no documents or messages are stored

• Does not disrupt existing relationships between supplier/buyer and providers

Supplier/ Payee

Invoices flow from corner 1 to corner 4

Access Provider

Buyer / Payer

Access Provider

Corner 1

Corner 2 Corner 3

Document Delivery

Address and capability

directories

Corner 4


What are the Benefits for You?


• Reduces costs of integration and on boarding• Reduces technical hurdles and barriers• Increases adoption• Provides flexibility and freedom to change• Increases throughput and speed to pay

Change is focused at service providers, with

minimal change to supplier / buyer

processes

SupplierSupplier’s

Billing System

Provider

Buyer’s Invoice

Processing Provider

Buyer




Business Payments Coalition


Federal Reserve Interest in e-Invoice


1. EvaluateSituation

Direction & Objectives

PreliminarySituation Analysis

StrategicObjectives

MarketAssessment

Next Steps

Evaluate Market Models

Timeline

✓

✓

Conduct PreliminaryAssessment

Strategies for Improving the U.S. Payment System

Next Steps in the Payment Improvement Journey

2015 2016 2017

Electronic Invoicing in the US: Challenges and Opportunities

Catalog of Electronic Invoice Technical Standards in the US


Who is the Business Payments Coalition?


Mission: Work together to solve problems related to processing information associated with B2B payments in order to promote use of electronic payments and straight through processing (STP).

Participation: Formed in 2011, the coalition members consist of national group of associations, small & large businesses, financial institutions, technology and software vendors, standards development organizations and others.


BPC: 3-Year Plan for the e-Invoice Interoperability

Framework


ProjectManagement

3. Next Steps1. EvaluateSituation

2. Detail Assessment

Direction & Objectives

PreliminarySituation Analysis

Preliminary Framework Assessment

Developimplementation plan

StrategicObjectives

MarketAssessment

Next Steps

Governance Plan

Manage project and communications

Semantic Model

Detail Technical Gap Analysis

AccreditationPlan

PublishTechnical Requirements

PublishSemantic Model

Implement Governance Structures

Implement AccreditationProgram

Outreach

4. Develop Requirements

5. Implementation Plans

SolutionDevelopment

Review Assessments with Stakeholders

Outreach to Stakeholder Communities

Technical

Evaluate Market Models

Detail SemanticGap Analysis

Detail Technical & Semantics

Assessment Report

Timeline 2018 2019 2020+

✓✓

✓Conduct Detail

Assessment


BPC: Results from the Preliminary Assessment



Detailed Assessment – Current Status


Semantics• Completed 1st pass through semantic model1

• 80 to 90% of the EU semantic model is applicable to the US• Main “gap” identified was in the tax area (Sales and Use Tax versus Value Added Tax)

• Next Step:• Create a “strawman” semantic model for work group members to review with internal

SMEs and customers over the next 4 to 6 weeks• Review business rules within the semantic model

Technical• Completed review of the e-delivery2 requirements for European and Australian

frameworks• No technical barriers were uncovered during the review

• Next Step: • Define the “technical stack strawman” for an e-delivery network to test the set up and

configuration


Q & A


Thank you for the opportunity to address the 2018 IOFM AP Fall Conference!

Contact Info: [email protected]




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how e-invoicing adoption can accelerate in the …...slide 9 state of the u.s. market november...

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