Despite the economic downturn, e-invoicing has continued to develop impressively in the EU,
largely by its own momentum.
In the B2B sector, large corporate buyers continue to drive growth using third-party service
providers and forcing suppliers to comply with their formats and rules. The market is fiercely
competitive on prices as e-invoicing becomes more and more of a commodity.
However, one major issue in the EU is how to bring the ‘small fish’ into the net – namely the 99%
of European industry made up of SMEs and micro enterprises, most of which are too small and too
costly to bring onboard using the regular methodologies.
Banks are still trying to break into the market and play the game, but to date, with some notable
exceptions, they have not succeeded in becoming competitive players. Many are reviewing their
strategy and adopting a collaborative approach with existing platforms in their role as suppliers of
financial services, their original mission.
The EBA has a plan to provide a European hub for cross-border e-invoices channelled through
bank networks, but too little is known about it, while SWIFT is offering its network to banks and
providers. Bottomline Technologies and Tieto are exchanging e-invoices using the ISO 20022
financial invoice content standard and SWIFT’s network.
In B2C, more and more consumers view and pay their bills on internet bank portals. Banks are
ideally suited to capture this market, but from the billers and consumers’ perspective, multibank
consolidator portals would make more economic sense.
In B2G, more PAs have announced they will require mandatory e-invoicing from their suppliers
but have yet to implement their schemes. Therefore, the supposed ‘prime the pump’ effect of PAs
in expanding the market has yet to be felt.
The European Commission (EC) itself has been busy with two projects: PEPPOL (the EU-level
electronic public procurement initiative) and e-PRIOR (an e-invoicing pilot project).
In the meantime, the industry is getting organised in order to be represented in Brussels and have
more of a voice in future legislation: a group of 13 major EBPP service providers has formed the
European E-Invoicing Service Providers Association (EESPA) while a group of certification
authorities and experts of security and digital signature have created Digital Trust and Compliance
Europe (DTCE).
Mass adoption
Since 2007 the EC has taken an active interest in the subject and tried to create conditions for mass
adoption, especially by SMEs. The major obstacles were identified in a complex and excessively
prescriptive legislation (Directive 2006/112/ EC), which was transposed, with many differences,
into national legislations, thus creating problems and uncertainties in cross border e-invoicing, in
addition to the lack of technical standardisation and interoperability among service providers.
Initiatives have included the Informal Task Force in 2007, the Expert Group in 2008-2009, and in
2010 the new VAT Directive was approved, to be enforced in member states from 1 January 2013.
The latest action is the E-invoicing Multi-stakeholder Forum (EMF) to assist the EC in
coordinating actions at Member State-level while identifying measures that facilitate the mass
adoption of e-invoicing at EU level.
Meanwhile, the new E-invoicing Directive represents a radical shift from rule-based to principlebased
legislation in an effort to facilitate adoption by SMEs and citizens, and has proven very
controversial.
It introduces the concept of “equal treatment of paper and electronic invoice” and requires no
mandatory e-signature as “business controls” are considered sufficient to guarantee authenticity
and integrity of invoice data. Generally, it poses less legal and technical prescriptions.
The updated Article 233 in the Directive has been the focus of controversy between two factions:
the Nordic countries plus banks vs continental Europe. The former that believes the e-signature is
complex, expensive and a deterrent for SMEs, and there is an absolute need for a single invoice
standard. But both these assumptions are false. Digital certificates are the easiest and safest
instrument to protect data while a common invoice standard is a "nice to have " situation to have
but definitively to guarantee identity and protect data, not a showstopper, as service providers
regularly translate formats.
The current Article 233, the result of a fierce battle that stalled the directive for a year, is the
uneasy truce reached by negotiators. It is a masterpiece of compromise and ambiguity but allows
both parties to claim they saved the day.
As it stands, the final decision remains with the recipient of the e-invoice and, in many cases, this
will simply leave things as they are. It is still too early to assess the adequacy and costeffectiveness
of business controls as a substitute for e-signature.
There were serious concerns that the uncertainty about the expected changes in legislation and,
once approved, the changes themselves, would stall new investment, but the fear did not
materialise. One could say the market has kept moving regardless or in spite of legislation.
The tasks ahead
The Mult-iStakeholder Forum ( EMF ) has a three-year mission, meets twice a year and breaks up
into four activity areas or Task Forces: monitoring the market and implementation of community
legislation and technical rules; benchmarking to create successful interoperable e-invoicing
solutions; spotting problems with cross border e-invoicing; supporting and monitoring work
leading to the adoption of an e-invoice standard data model.
The group consists of representatives of 28 member states and a handful of experts from different
stakeholder groups. Banks are under-represented. The EMF is also the end point of national einvoicing
fora, that the national representatives must organise in their countries. Sixteen of 28
Member States had one in place at the end of 2011.
The EMF had its first meeting on September 13 this year. As a representative of the European
Association of Corporate Treasurers (EACT), in my five-minute speech, I pointed out that, in my
view, development of a new standard XML invoice is not a real priority for corporates – an
excellent XML standard, UBL, exists and covers all messages of the supply chain (UBL 2.1 has
61). It has sufficient flexibility to cover industry extensions and is already used by many
corporates, PAs and the EC in its PEPPOL project.
Nevertheless, bending to the will of UN/CEFACT to develop an XML successor to EDI EDIFACT
and to the banks’ desire to have their own standard, the EC actively supports development of the
Cross Industry Invoice (CII) standard. Its proponents argue that UBL is too complex for SMEs, a
misconception, since complexity is hidden from end users, embedded in the application and in
interfaces provide by vendors.
So does CII have a future? As far as corporates are concerned, it is no match for UBL in flexibility
and completeness. However, CII is not alone. CEN (the European standardisation agency working
for the EC) has the mandate to develop a ‘core invoice’, a subset of CII, which apparently is not
simple enough for SMEs. Meanwhile, banks, not totally happy with CII, have decided to have yet
another standard invoice, the so-called ‘financial invoice’ developed by ISO 20022.
The right direction
Despite concerns, the EC seems to have learned from past experience and is moving in the right
direction. CEN and the European Telecommunications Standards Institute (ETSI) have been given
more authority and funds as European standard bodies, to enable them to define the technical rules
that support and help realise the goals of legislation and EC’s digital agenda.
The EMF, too, seems to be moving off on the right foot, in terms of participation and practical
objectives – let’s see how the work done by EMF Task Forces in the six months until the next
meeting shapes the future.
Alphabet soup: deconstructing e-invoicing
- Directive 2010/45/EC: Increases electronic invoicing use, reduces burdens on business,
supports SMEs and helps EU member states to tackle fraud.
- ISO 20022: The ISO standard for financial services messaging.
- PEPPOL (Pan-European Public eProcurement Online): Allows any company in the EU to
communicate electronically with any EU governmental institution for all procurement
processes.
- e-PRIOR: An open-source e-procurement platform developed by the European Commission
that helps implement interoperable European electronic services in any public administration.
- EDI EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport):
The UN-developed EDI standard provides syntax rules to structure data, an interactive
exchange protocol (I-EDI) and standard messages to foster multi-country, multi-industry
exchange.
