Wednesday, April 28, 2010

Electronic Invoicing and ERP Processes, Part 1

The world is a finite place.  Companies have finite resources.  We all have a finite amount of time on this earth.  How can a third party electronic invoicing service hub be all-things-to-all-people?  The answer is, it can't.  The complexities that are mandated by the various country initiatives and tax authorities impact the way the business is run which is outside the expertise of third party e-invoicing service providers.

Let's first discuss independent and ERP agnostic, third party service providers like OB10, GXS, and Sterling Commerce.  These service providers often promote their any-to-any data formatting capabilities that enable their clients to send or receive invoices without having to agree on formats, file specifications, or communication methods.  That is a good feature, but it does not ensure compliance with electronic invoicing requirements.  The biggest challenges in supporting the electronic invoicing requirements of many countries around the globe are business process driven issues in the ERP which companies like OB10 cannot address.  Why?  Without knowing the intimate details of the customer's ERP they can't possibly manage compliance.

Let's take a quick look at Brazilian Nota Fiscal Eletronica (NF-e) requirements.   Under the new regulations, companies must prepare an outgoing invoice in an XML format mandated by the Ministry of Finance (SEFAZ) and have it authorized before a shipment can be delivered. The SEFAZ issues an electronic authorization key that must be transformed into a barcode and printed on the bill of lading (DANF-e) accompanying the shipment. Police or Customs Officials may stop the delivery truck and scan the DANF-e to ensure that the products on the truck match the authorization on file in the SEFAZ database. If there is any discrepancy, the company may face severe penalties or fines.

Notice that the SEFAZ requirement is for the XML formatted invoice to be authorized "before shipment."  Yikes!  This impacts all kinds of processes!  How does this new step in the process get added to your SAP ERP and transportation and logistics processes?  The key point to understand is that many of the business processes that are required to support electronic invoices happen inside the ERP, not in a third party ERP agnostic service provider's SaaS or hosted environment.  ERP experts must be involved in order to support many of these e-invoicing requirements.

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Author: Kevin Benedict
Principal Consultant/Founder
SAP EDI Consultant, Mobile Industry Analyst and Web 2.0 Marketing Consultant
Netcentric Strategies LLC
 ***Full Disclosure: I am an independent consultant that has worked with and for many of the companies mentioned.

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