Hi everyone,
As a brief introduction to the Community at large, I have been working at SAP for over 16 years in localization product management for Latin America and the United States. In my journey through the areas of financials, logistics and human capital management, I supported the launch of varied solutions ranging from electronic invoicing to tax calculation and reporting. Certainly, electronic invoicing has been one of my favorite topics at the core of my heart for its business criticality and technical challenges to the parties involved.
Two years ago, I had the privilege to join a task force to participate in a market pilot program intended to become the standard for electronic invoicing in the United Stated.
Unlike most countries where there is a government mandate, electronic invoicing in the United States is a private sector business-driven initiative. Currently, there is a wide fragmentation of standards for electronic invoicing with over 55 formats and variants, hindering companies from adopting and scaling digitalization across the Business-to-Business (B2B) space.
What benefits does electronic invoicing bring to the B2B space?
From my product management experience, I have witnessed American, European and Asian companies adopting electronic invoicing with clear return on their investments:
- Seamless communication and exchange of electronic documents between business partners regardless of the IT systems and platforms used
- Time savings (reduction of rework from error-prone manual processes and handling of exceptions) and cost savings (significant reduction in paper use, mailing and handling costs)
- Digital archiving, easy data access and audit-ready document traceability
- Business dispute mitigation by securing the terms and conditions included in the electronic documents, thus contributing to the optimization and transparency of the supply chain.
How is the exchange of electronic documents going to be enabled in the United States?
The benefits that I listed above are going to be achieved thanks to a modern exchange framework for electronic documents called the four-corner network model (see image below). This ensures a seamless, resilient and secure invoice transmission process, regardless of the underlying technology used for processing electronic invoices. Imagine a network where you can connect once and reach anyone anytime following a common open standard. This network and its standard are going to be governed by Digital Business Networks Alliance (also know as "DBNAlliance").
This model contains four types of participants – the supplier (or sender), two access points known as service providers, and the buyer (or receiver).
A supplier sends invoice information to its access point provider. The access point connects to the Exchange Framework and searches for the buyer’s access point. Once located, the supplier’s access point packages the invoice into the exchange data standard, and securely sends the invoice to the buyer’s access point. The buyer’s access point pushes the invoice data into the buyer’s accounts payable system for approval and payment processing.
Background about DBNAlliance (“Digital Business Networks Alliance, Inc.”)
As a result of a collaborative initiative between the US Federal Reserve and a coalition of companies from the private sector, a Market Pilot Program was launched in 2021 to assess and test a proof of concept for the exchange of electronic invoices, similarly to the Open Peppol network. Upon successful completion in 2023, the Digital Business Networks Alliance, Inc. (also known as “DBNAlliance”) was created as the legal oversight entity of the Exchange Framework based on a set of open standards, policies and security mechanisms for the network, intended to accelerate the adoption of electronic invoicing, making digital business transactions the norm, not the exception.
Like modular legos, DBNAlliance has the flexibility and potential to add more functionality blocks like e-remittances and e-payments, thus contributing to a seamless flow in the Order-to-Cash and Procurement-to-Pay processes.
By enabling the exchange of electronic documents between different IT systems and platforms, DBNAlliance offers a straightforward and accessible means for companies of all sizes to implement e-invoicing with their business partners without the need for them to adopt any specific provider or portal.
Localization as a key differentiator for SAP customers
SAP localization is often recognized for its competitive edge by enabling companies to run their business on a global scale with confidence while staying compliant to local requirements. Follow this link for more details on how customers succeed using localized solutions from SAP.
As a founding member of the DBNAlliance network, SAP is currently evaluating plans to develop an Access Point solution. More news to come, stay tuned to my next blog!
If you are interested:
- To join our early adoption program, please, reach out!
- To leave me a feedback or question, please use the comments section below.
Disclaimer: This blog, or any related comment, SAP's strategy and possible future developments, products and or platforms directions and functionality are all subject to change and may be changed at any time for any reason without notice. This blog is not a commitment, promise or legal obligation to deliver any material, code or functionality. This blog is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement.
- SAP Managed Tags:
1 Comment
