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The electrifying invoice, another ebXML application

Perhaps the single most used business document is the invoice that provides the customer with a detailed list of goods and services delivered and the funds the supplier expects to receive. Because of the invoice's fundamental role and pervasive use, e-business authorities have focused on this document as an early target for implementation. Now several implementations of electronic invoices using ebXML have started taking root.

Deceptively simple
Invoices seem simple enough at first, but defining an electronic invoice can become a difficult experience. Invoices for tangible, concrete goods, as one might expect, look much different from invoices for services that are often billed in increments (e.g. hours) of people's time. Invoices can include terms of payment, adding in incentives for early payment or penalties for past due accounts. Invoices used in international trade need to specify currencies.

But despite these complications, an electronic invoice offers opportunities for real savings to the parties exchanging the document. At one level, the savings in time gained from electronic delivery and reduced paper handling at both ends helps speed up cash flow for the supplier (assuming that the customer will pay on time). For this reason the X12 and UN/EDIFACT standards made the invoice one of their early documents. But beyond these immediate gains, XML-based invoices encourage greater integration with business systems creating even more benefits. Most major small business accounting packages have the ability to send and receive electronic invoices and many banks offer electronic bill presentment services.

Having an electronic format for the invoice is one thing, having a common format is yet another. The EDI authorities may have defined electronic invoicing formats, but individual industries tailored these overall standards into specifications which were often incompatible with one another. A company may set itself up to receive electronic invoices, only to find its raw materials and transportation suppliers using entirely different formats. Governments would send its tax bills is still another format, and its MRO suppliers, yet another. Integrating data from these formats creates rather than solves problems for the recipients.

And companies receiving electronic invoices would have to install greater safeguards than they had before. Capturing an electronic invoice is fine, but checking the files to make sure it is not a duplicate can erase any of the time and process savings. Also, companies have to be certain the supplier sending the invoice is who the party claims to be, particularly when payments are made to lock-boxes or directly to electronic bank accounts.

Since ebXML offers a framework for e-business, it does not by itself define an invoice document, but the ebXML framework does help address the integration and semantics issues, and as a result the business world has started implementing ebXML for invoicing. Europe is probably further along with electronic invoicing because of a European Union directive in 2001 to simplify value added tax (VAT) calculation rules and thus encourage cross-border trade. This directive encouraged development of a common Europe-wide invoicing format. Member states had until January 2004 to implement this directive.

In July 2003, the European Committee for Banking Standards (ECBS) released its electronic Payment Initiator (ePI) standard to provide a common yet simple electronic invoice for use by enterprises across Europe. ECBS developed the standard in conjunction with SWIFT, the international banking industry consortium, to encourage compliance with the EU VAT/invoicing directive. But an electronic invoice also encourages more electronic banking transactions by making it easier to conduct related invoice transactions in electronic form.

Scandinavia taking the lead
In Finland, the nation's banking community has taken the ePI specification and implemented it in XML with ebXML messaging . Called Finvoice, many of Finland's banks offer their customers the use of their secure communications lines for transmitting the documents with ebMS message transport. While its developers encourage the electronic integration of the invoicing data, the Finvoice format is designed for human-readable and printed output as well. The Finnish Bankers Association reports 22 IT companies supporting Finvoice. The electrical power industry in Finland has also adopted Finvoice, and specifies ebXML messaging [linked document in Finnish].

In Sweden local government authorities have define an electronic invoice and and ordering as part of a program of e-business interactions between the public sector and industry called Single Face to Industry (SFTI). As in Finland, the invoice is written in XML, and uses ebXML messaging for transport. The SFTI site lists three vendors supporting the program.

Accountis , a British company, offers outsourced invoicing services that use ebXML for secure transport. The company offers software plug-ins to several of the major small-business accounting packages - QuickBooks, Microsoft Money, MYOB, Peachtree and SAGE - to generate invoices and integrate the function with the customer's accounting system. Accountis then transmits the invoices over ebMS transport for secure (PKI encrypted) and reliable delivery. Accountis also offers free Web-based invoicing for smaller trading partners without the volume to justify the software plug-in, which encourages all trading partners to participate.

The last remaining obstacle for electronic invoicing is the need to cross-reference the semantics used by different industries, but here again, ebXML offers solutions through its core components. The core components specifications provide the basis for the Universal Business Language (UBL) and the Context-Inspired Component Architecture or CICA developed by ASC X12. Both standards offer common business documents (in the case of UBL) or business document elements (CICA) with the ability to relate the different semantics used in different industries. UBL includes an invoice as one of its first business documents and X12/CICA has pilot tested its approach on an invoice transaction.