IS IT TIME TO EMBRACE 100 PERCENT DIGITAL FINANCE?

There is so much to gain by going digital. But just how easy is it to implement? Fredrik Rosenqvist explains how Pagero supports ERPs and business as they attempt the jump from working locally and manually, to digitally and globally.

A dizzying digital world

There is so much to gain by going digital. We’re told that in a digital world, businesses can communicate quicker, organise better and save more. We hear it all the time, it sounds perfect. But just how easy is it to implement?

For some, it can be a confident transition, but for others, the jump to digital finance solutions such as e-invoicing can be a leap into the unknown. If the transition to digital isn’t smooth, it can fast turn into a nightmare of incomprehensible tech, mind-twisting legislation and a large bill at the end. For some businesses, the digital transition leaves them asking themselves, is this really working for us and are we really any more efficient than before?

“True e-invoices promise transparency and savings previously not possible to realise.”

It is plain that going digital brings with it growing pains. The sheer speed of change can be exhausting for those businesses still finding their feet. To established industrial giants, the change is seismic and can cause all sorts of complications if done wrong.

Why more digital in finance?

One of the fastest digital growth areas lies in e-invoicing. According to the Billentis Report 2017, the total global bill/invoice volume B2C/G2C B2B/B2G/G2B for 2017 was in the region of 400 billion. True e-invoices promise transparency and savings previously not possible to realise.

Statistics have shown that in Europe, roughly 12.3 per cent of all VAT revenue goes missing every year, roughly 150 billion. Governments in Latin America have introduced not only business-to-government but also business-to-business e-invoicing mandates. As a result, there have been considerable gap reductions. In Mexico, the tax gap was reduced by about 50 per cent, and the tax revenue in Brazil has increased by 60 billion euros.

As more and more countries begin to legislate to enforce the use of true e-invoices to both increase transparency and simplify their interaction with suppliers, companies and businesses are also turning to the data-driven paperless invoices. They also see the cost savings and benefits of powerful data use combined with automation when it comes to overall efficiency.

Pagero helps you focus on what you do best

However large or small they are, all businesses with their sights fixed on working internationally have to appraise the best use of their time and resources. Digital financial transactions can prove complicated and time-consuming. Cross-border interactions bring with them differing legal requirements, international customers often use differing systems.

Following the development of the technologies, the changes in the law in each country and staying aware of which systems your customers are using all takes precious time away from your core business. Working internationally can mean that at times, two ends don’t meet.

Pagero is an experienced facilitator for e-business transactions. Pagero recognises that compliance is one of the keystones in effectively digitising your financial transactions internationally. It can be difficult to follow a country or market rules. If a business doesn’t adequately follow the rules the business will be lost. Pagero offers clients our best practice and interpretation of each market.

“We take the pain out of the process by efficiently processing your data transparently and in real-time.”

Once compliance is up to date and maintained, another area any growing business is concerned with as it operates at a larger scale is reach. Pagero has roaming agreements with many other networks, including PEPPOL, to ensure maximum business reach. Importantly, Pagero works transparently to ensure each business fully understands how to communicate with each other.

Data accuracy and real-time operation

Once systems are 100 per cent digitised, great savings and efficiencies can be made, such as the VAT gap reduction. However, when so much data is involved, it is important for businesses to be careful of data loss or loss of control.

Maintaining businesses data and it moves digitally internationally from ERP to ERP is one of Pagero’s key strengths. We take the pain out of the process by efficiently processing your data transparently and in real-time with nothing being kept on off-line systems.

Once a business is certain that all its data is accurate (such as pricing details, invoices etc.), it is possible to gather more of control and ultimately save more. If you are not data accurate and are receiving data on multiple formats, there is the possibility of losing data. Pagero can ensure that no data is lost during transactions.

Once partnered with your ERP system, Pagero’s knowledge of compliance, interoperability and global reach, and its emphasis on data accuracy will ensure that you will be able to operate confidently in an ever more interconnected and digitised business landscape.

ALL YOU NEED TO KNOW ABOUT PEPPOL

PEPPOL is on everyone’s lips these days as the magic month of April 2019 approaches. But what is PEPPOL, how does it work and how does Pagero differ from other PEPPOL service providers? Hanna Sterner gives you the answers.

In search of a simplified e-procurement process

In the early 2000s, it became clear that a technology standard for e-business needed to be developed across Europe.

Although some governments and regions had already introduced the process of electronic procurement, the systems varied from industry to industry, state to state and often region to region. Additionally, they often operated with closed networks, leading to inefficiencies and confusion when working with organisations outside of their networks. In short, there was little – or else very resource-heavy – interoperability.

In 2008, a common framework was initiated to simplify e-procurement across borders. The framework was named PEPPOL, or Pan-European Public Procurement On-Line. The overall objective was to enable businesses to communicate electronically with all their European counterparts in the procurement process, to increase efficiencies and reduce costs.

OpenPEPPOL and PEPPOL Access points

The non-profit organisation OpenPEPPOL (a consortium of interested businesses) makes sure that PEPPOL is an effective infrastructure for working with digital documents. It ensures that the infrastructure and technology are in keeping with both current and soon-to-be-passed EU law.

The infrastructure is further strengthened by the qualification process which solution providers that wish to connect to the PEPPOL network must go through. To become a PEPPOL Access Point, they must go through an accreditation process, either with OpenPEPPOL directly or with a local PEPPOL Authority (see next section). Businesses and government entities must use the services of an accredited access point to receive or send e-documents through PEPPOL.

“In 2008, a common framework was initiated to simplify e-procurement across borders.”

OpenPEPPOL works closely with the EU Commission and closely follows the development of EU directives and guidelines. It is also in close contact with representatives from each country’s government who have adopted PEPPOL as their chosen infrastructure.

Its close collaboration with different stakeholders from a multitude of interest groups means that organisations working in partnership with accredited access points can be confident that their e documents will be fully compliant.

Local PEPPOL Authorities

Not only are access points overseen by OpenPEPPOL, they must also follow guidelines and rules set out by the local PEPPOL Authority. If a European country decides to adopt PEPPOL, it can decide either to either adopt all PEPPOL regulations as detailed by OpenPEPPOL, or to create its own PEPPOL Authority under OpenPEPPOL. By creating its own authority, it can introduce local regulations and rules to closely regulate regional e document traffic.

Although it is not possible to change the rules as set out by OpenPEPPOL, it is possible to adapt them to ensure that e documents comply with any additional or differing regional laws. Norway, an early adopter of e-invoicing mandates, set up its own authority, Difi (Direktoratet for forvaltning og ikt), to allow it to adopt, adapt and tighten the rules and regulations within its borders.

When an authority does adapt the rules, it is crucial that PEPPOL Access Points with traffic in the set region closely follow these changes to ensure interoperability and compliance.

PEPPOL’s yellow pages

Members of the integrated network created as a result of PEPPOL are listed in the PEPPOL directory, also known as the “yellow pages” of the PEPPOL network. It is a free-to-browse, Open Source service, built and operated on behalf of OpenPEPPOL, making it easy for PEPPOL participants to find each other in the network and identify each other’s capabilities.

A template for e-documents

When discussing PEPPOL, the infrastructure is commonly confused with the PEPPOL BIS (Business Interoperability Specifications) format. The PEPPOL BIS format was developed by PEPPOL to be used as the default format for traffic through the PEPPOL infrastructure. It was developed as a result of a workshop, Business Interoperability Interfaces for Public Procurement in Europe.

PEPPOL BIS is designed for common e-procurement processes to standardise the electronic documents exchanged. It is validated through an open and secure network, between sending and receiving Access Points for public sector buyers and their suppliers across Europe.

“Pagero’s platform is built to keep up-to-date with the latest PEPPOL requirements in any region.”

In short, PEPPOL is the infrastructure for transferring e-documents, and PEPPOL BIS is a set of rules on how to structure the information in the e-documents, similar to a template. In the latest PEPPOL BIS version 3.0, PEPPOL Authorities have been given room to introduce regional rules to the format, allowing them to adapt it to their region instead of feeling the need to add a region-specific format to the network.

A close and effective relationship

Pagero is an active member of OpenPEPPOL and we represent our clients in different working groups. We bring to the table our extensive experience with the different infrastructures and networks used throughout Europe and actively work to help our clients to be compliant in all regions.

Pagero is accredited and approved for traffic in all PEPPOL regions, which is not true of all PEPPOL Access Points. We do not believe in limiting our clients to any specific region, but instead, ensure that we provide the full extent of PEPPOL’s reach to all our clients.

Further, the Pagero platform is built for seamless updates to keep up-to-date with the latest PEPPOL requirements in any region. This ensures clients are not left with all the heavy lifting when it comes to watching the ever-changing digital landscape.

WHY TRUE E-INVOICING IS ESSENTIAL FOR BUSINESS

Trent Targa examines why true e-invoicing is the way forward for companies that want to maintain their competitive edge and for governments that want to reduce their VAT gap.

Stuck in no man’s land

Let’s face it, invoices got stuck in no man’s land when the digital revolution hit. The humble invoice, essential to business transactions, found itself left at the back of the queue as the office modernised around it. Invoices were saved as PDFs, attached and sent then printed and filed. Somehow, they never entirely left their hard copy paper confines.

Surely this vital document should be one of the most efficient, effective and up-to-date documents in the modern office? However, for many businesses, invoices have still not graduated the e-document school.

“E-invoicing” vs true e-invoicing

Bruno Koch states in his Billentis Report 2017 that “The legislation in many countries (in Europe, North America, Pacific etc.) considers paperless invoices in any electronic format to be e-invoices.” This means that in some countries, a PDF invoice is considered as an e-invoice. However, true e-invoices offer far more control and possibilities to ensure data accuracy than PDF invoices.

“A true e-invoice is an invoice that is issued, received and processed electronically.”

A true e-invoice is an invoice that is issued, received and processed electronically. It is digital from its creation in the financial system by the issuer, until it is received, processed and archived by the recipient. In other words, true e-invoicing is electronic throughout its entire life cycle.

As more and more companies become aware of the advantages of true e-invoices, they realise that there only is one option if they wish to improve efficiency and profitability and maintain their competitive edge.

Scalability and human error

Since PDF invoices require manual intervention and manual processing, they take more time to handle than automated true e-invoices. PDF invoices often need to be scanned, printed and filed. However, even the best OCR and scanning tools can’t compensate fully for low-quality PDF’s, or the risk of human error in a still partially manual process. Nor are they able to accurately capture all information provided in the invoice. As a result, the frequency of errors and the need for manual interference is higher than with e-invoices.

As the number of PDF invoices increases, the time and human resources it takes to process them also naturally increases. With e-invoices, it is possible to process a considerably larger number of invoices with little or no impact on the efficiency of the processing, whereas the opposite is true when you work with traditional invoices.

Touchless invoices

Even with a true electronic invoice flow, there is a risk for errors in the invoices, errors that create the need for manual intervention. Information such as invoice reference, purchase order number or the correct VAT code might be missing, which causes the invoice to get stuck in the flow.

Pagero provides solutions to help reduce this type of errors, enabling seamless integration and touchless operations.

“Both the private and the public sector sees the possibilities with true electronic invoicing.”

Our validation service controls the e-invoices before they even reach the recipient, and if they don’t fulfil the pre-set requirements, they are returned to the sender to be corrected before they are resent. If the financial system can’t add certain information to the invoices that is required by the recipient, Pagero’s enrichment service can automatically add the required information to the invoice before it reaches the recipient.

Thanks to these services, little or no manual intervention is needed, which enables a fully automatic end-to-end process between the buyer and the supplier.

Reducing the tax gap

Both the private and the public sector sees the possibilities with true electronic invoicing. Statistics have shown that in Europe, roughly 12.3 per cent of all VAT revenue goes missing every year, roughly 150 billion euros. By using e-invoices, the tax gap can be effectively reduced by giving governments the possibility to cross-reference every invoice and, if necessary, then audit companies where the numbers don’t add up.

This has been seen by governments in Latin America who have introduced not only business-to-government but also business-to-business e-invoicing mandates. As a result, there have been considerable gap reductions. In Mexico, the tax gap was reduced by about 50 per cent, and the tax revenue in Brazil has increased by 60 billion euros.

Modern systems for true e-invoicing

At Pagero we strive to promote the use of true e-invoicing to help businesses and governments effectively and efficiently modernise their invoicing services and systems. Only by the most up to date systems will organisations large or small be able to truly combat fraudulent behaviour, maximise profit margins and efficiencies.

HOW INTEROPERABILITY AND OPEN NETWORKS MAKE BUSINESS EASIER

With ever more complex systems, the need for these systems to work together through interoperability is clear. But what exactly is interoperability and why is it important to take into consideration when choosing an e-invoicing service provider? Read on as Pagero’s Hanna Sterner explains.

OPERATION WITHOUT INTERRUPTION

To enjoy the benefits of e-invoicing, interoperability is essential. But what do we mean when we talk about interoperability, exactly? Telecommunications is an example of an industry that had to embrace interoperability, and it benefitted us all. Consider using your phone, do you question if you’ll reach the person at the other end of the line? Whichever operator you use, you make the natural assumption that you will be able to speak to each other.

It was not always quite so simple. In the past, operators tried to restrict customers to their services. They charged them for calling outside of their network. Soon it became clear that for the industry to move into the future, each network needed to communicate with each other seamlessly, or the industry would fall apart. They created an interoperable network.

“Telecommunications is an example of an industry that had to embrace interoperability, and it benefitted us all”

In our industry, interoperability is a young idea. However, we are quickly approaching the same tipping point as the telecommunications sector did. We need to be able to work together in a fluid manner with the fewest possible obstacles, to do this we need to break down barriers.

OPEN OR CLOSED THAT IS THE QUESTION…

Just as we are seeing in so many other areas, there’s a debate about open and closed or proprietary systems when it comes to e-invoicing.

Closed networks, often representing countries, regions or industries, represent isolated communities. Each community, in turn, has their own separate systems and standards. These isolated communities make it complex and difficult for trading parties to connect.

An open system gives businesses a network that extends beyond your service provider and your network, giving you maximum reach to as many business partners as possible.

A truly open network is also designed to integrate seamlessly with new technologies and solutions as they emerge. This brings value to businesses, as they then have the full freedom of choice for their own operations, without the burden of needing to consider what systems or processes their business partners are using.

WORKING TOGETHER FOR COMMON STANDARDS

Organisations such as EESPA (the European E-Invoicing Service Providers Association, OpenPEPPOL (Pan-European Public Procurement On-Line), TIEKE (the Finnish Information Society Development Centre) and NEA (the Electronic Business Network), all work to help standardise and smooth the e-invoicing process between businesses, institutions and across borders.

“Ultimately, modern, outward-looking, open networks are preferable overall”

Pagero works with each forum and organisation to gain both a broader understanding of the market but also to make it easier for our customer to connect with their business partners. Further, through our involvement, we manage to stay informed of the latest trends as well as bring our long and successful experience in working towards global reach to the wider community.

PAGERO BELIEVES IN AN OPEN NETWORK

At Pagero we have been committed to interoperability from the start, and we are keen to help our customers streamline their flow of business documents. Pagero has agreements with a large number of other operators, and our network is constantly growing. Our goal is to make it possible for our customers to reach as many other companies as possible in both the private and public sectors, worldwide.

As we all move towards a more open business community, why choose closed networks? Pagero has always believed in openness and it is what we invest in.