The development of the e-Invoice
In past years it was common practice to send paper invoices by post or fax. But since then, invoices have usually been created and transmitted digitally, for example as PDF documents that are sent by email. In the course of digitalisation, the need for automation of existing processes is increasing. For this reason, and due to legal regulations, more companies are switching to e-Invoices, which can be created, sent and processed automatically. Invoicing is carried out fully automatically using a structured exchange format (e.g. XML) between the IT systems of the participating companies – without any human interaction. This process not only saves time and money, but also reduces the susceptibility to errors.
Governing institutions are increasingly focusing on e-Invoices, which must be created in a certain processable format. This started primarily in Latin America to combat tax fraud. Since the use of the regulations has proven itself successful and authorities can thus act more effectively, European countries now also use similar guidelines.
The EU Directive 2014/55 / EU requires public authorities in Europe to receive and process electronic invoices. This resulted, for example, in the German CIUS (Core Invoice Usage Specification) XRechnung. The Italian Government went one step further on January 1st 2019 by obliging all companies in Italy to invoicing through the SDI system (Sistema di Interscambio). Likewise, there are already signs in Spain that the B2G e-Invoicing guidelines will be extended to the B2B sector.
E-Invoices in Use
Companies are therefore faced with the challenge of implementing various laws for sending and receiving invoices in IT systems. Depending on the country, different invoice formats are used and different transmission channels for e-Invoices are required. In particular, government institutions often rely on Web service-based approaches to transmit invoices – see, for example, the submission of ebInterface invoices in Austria or FatturaPA invoices in Italy.
Another challenge is the ongoing monitoring of e-Invoice processes: were invoices created and converted correctly? Has the client received the invoice? Faulty invoices are a cause for complaint by the issuer and a well-used reason for not prompting the payment of the invoice immediately.
When settling invoices through central governmental regulators (such as FatturaPA), the integrity check of invoices is already done by the authority. Invalid invoices will not be accepted and will not reach the recipient.
However, companies should focus primarily on their core business and therefore need a strategy that will allow them to work safely and efficiently for a long time, at the most up-to-date invoicing standards.
If an SAP system is used in the company as an ERP system, a component of this strategy can be the use of the SAP eDocument Framework in conjunction with the SAP Application Interface Framework (AIF). This framework is further discussed below.
SAP and e-Invoicing: Overview of the eDocument Framework
In order for SAP to better serve e-Invoicing customers, the eDocument Framework (also known as SAP Document Compliance) was developed for SAP ECC and SAP S / 4HANA. This solution makes it easier for companies to meet e-Invoicing requirements in different countries.
Documents from logistics, sales and accounting can be converted into common e-Invoice formats (e.g. XML files) with the eDocument Framework. In order to be able to respond to specific requirements of individual countries, the SAP Application Interface Framework (SAP AIF) can be used, which converts generated eDocuments into the required target format, such as the XRechnung for Germany or FatturaPA for Italy. In order to be able to map country-specific requirements in the AIF, "Packaged Solutions" must be imported. These build on the AIF and realize different requirements – e.g. for FatturaPA in Italy. In the case of FatturaPA, for example, these notes are to be entered separately in "Global AIF Settings & BC Sets" and "Italy-specific AIF Settings and BC Sets".
To give the accounting system an overview of all eDocuments, SAP offers the eDocument Cockpit (EDOC_COCKPIT).
Converting electronic invoices with SAP into popular formats is a great relief for companies and the first step in minimizing the burden of issuing e-Invoices. However, creating or processing a correct invoice is only one challenge.
The second challenge is the correct transmission of invoicing data from the sender to the recipient. In the case of government prescribed e-Invoicing procedures such as FatturaPA in Italy, the exchange must also be carried out via a central service.
Electronic Data Exchange with SAP
The eDocument Framework alone does not yet allow e-Invoices to be sent through specific services such as PEPPOL . To convert and then submit eDocuments to the desired target format, companies have several options:
1) Convert eDocuments with AIF and send them via the SAP Cloud Platform
The SAP Application Interface Framework (AIF) is an SAP module for converting eDocuments into country-specific formats, such as the XRechnung. For the transmission of the created invoicing data the SAP Cloud Platform can be used, from which the invoices are forwarded to the receiver.
The SAP Cloud Platform Integration (CPI) is a communication platform with which data from SAP ERP or S / 4HANA can be exchanged with other systems. Web services are used to send and receive documents and messages to external systems. To use CPI, a subscription to the service is required.
2) Convert eDocuments with AIF and send via a service provider
Once e-Invoices have been converted to the desired target format using the AIF, they can also be sent using a service provider. In order to accomplish this, a middleware is needed that links the customer’s SAP system with the service provider’s software. A lightweight and slim middleware, for example, is the EPO connector. If another SAP middleware such as SAP PI or SAP PO is available, this can also be used for the connection to the service provider. The following figure shows the principle used.
As soon as an invoice arrives in the system of the service provider, the required data for the delivery of the invoice are read out, in order then to be able to send the e-Invoice to the recipient. In the case of XRechnungen, the documents are delivered to the recipient’s PEPPOL access point, such as a German authority. But also, receiving data, such as an Order via PEPPOL, is possible in this way.
If only the AIF is used in conjunction with the EDOC_COCKPIT, the invoices are only stored on the application server and must be manually downloaded and sent from there.
In the solution with the connection to the EPO Connector, the dispatch and receipt of the invoices as well as the transfer of the invoicing data to and from the SAP takes place fully automatically and without manual interaction. This allows complete automation of the invoicing process.
3) Convert and send eDocuments with the help of a service provider
SAP AIF is part of SAP Business Suite or S / 4HANA and standard in modern SAP releases. However, to use the "SAP Document Compliance, On-Premise Edition" you need a separate license. Depending on the size and needs of a company, consideration should also be given to outsourcing the conversion of eDocuments to other formats. Especially if a service provider is already connected to SAP ERP, the required process can be implemented quickly and easily. The following example shows an integration of SAP eDocument in conjunction with the EPO Connector.
In the process, eDocuments are sent to the service provider via the EPO Connector, which then automatically determines the required invoice format and – if necessary – converts the document accordingly. It is then sent to the recipient as described in the previous section.
4) Convert e-Invoices using the EPO Connector and send them via a service provider
Companies can also do without the eDocument Framework entirely. The conversion of the SAP data into another format, such as InvoicePA, takes place via EPO Connector. The invoice data is transmitted directly from SAP ERP to the EPO Connector. The EPO middleware handles the conversion of the invoice into the required format and forwards the final document to the service provider. This takes care of the correct addressing and delivery of the e-Invoice, such as the Spanish platform FACe . The following figure shows the principle used.
The main advantage of this approach is the financial savings with the low cost and lightweight EPO connector solution. When using the AIF solution, many SAP notes must be imported, which require a large number of further manual adjustments. For SAP consultants who work on a time and material basis, this can quickly become very expensive.
The solution with the EPO Connector in conjunction with ecosio eliminates expensive time and material costs and the company can work with predictable fixed costs. The final e-Invoice solution is handed over key in hand and the exchange of electronic invoices can be fully automated.
Benefits for Companies Using a Service Provider
The service provider not only takes care of the conversion and transmission of e-Invoices: The monitoring of the running processes is a central component of the service, because only then can invoices that do not meet the required standard be corrected immediately. In addition, converted invoices are validated before they are sent to ensure that the recipient has no reason to contest the invoice.
As mentioned at the beginning, e-Invoicing is subject to constant change due to changing legal requirements. Companies that hire a service provider can count on the system to be up to date. If new requirements are imposed by the legislator, these are implemented by the service provider and the company can make full use of the modified solution. There is no additional implementation effort for the company.
With the eDocument Framework, SAP offers a good basis for converting e-Invoices into popular formats. With the help of further SAP add-ons, the invoices can then be transmitted to the recipients.
The EPO Connector in conjunction with a central service provider such as ecosio provides an easy to implement and cost effective alternative. This allows current and future e-Invoicing requirements to be implemented quickly and easily.