E-invoice exchange via internet

Transcription

1 E-invoice exchange via internet Stojan Košti Faculty of organizational sciences, University of Maribor Intriduction The main subject of this diploma assignment is to identify the problem, represented by examined organizations. Studied organization is Intersocks inc. Their activity is to distribute their products (socks) on Slovenian and cross border markets. They have ERP solution Navision installed to support their business process in order to put to profitable use. One of the main goals is to become leading organization on e- commerce field usage. That means also to exchange e-documents, like e-invoice, by the electronic means using internet. BID inc. is the partnership organization. They are exclusive agent of examined organization, what's mean to entail a lot of exchanging documents. They are a small size organization, but they have their own accounting. Including accounting, their business process is supported by ERP system Vasco based on Windows platform. Care about IT is on enviable level. Following new fields of e-commerce like e- invoicing means, to will get important advantage of their competitors. Problem, goals and method descriptions Every business event between partnership organizations based on exchanging business papers. This old fashioned process means a lot of handmade work, increase the costs. They have a strategy of e-commerce developed in organizations in order to increase business efficiency. Using Navision applications, Commerce Gateway and Commerce Portal, almost all transactions between partners will be electronic. The problem occurs with e-invoice transaction. E-invoices have a pivotal role in the VAT system for many Member States, including Slovenia. They indicate the possibility of VAT refund by the recipient of an invoice and the VAT regime applied. Content of e-invoice is also strictly qualified by the legal framework. Also integrity of the contents and authenticity of origin of the e-invoices, as well as their readability, must be guaranteed throughout the storage period (CEN/ISSS, 2003; ZEPEP, 2000). Problem with different ERP system also occur. Systems uses the different data formats and standards. That's means internal format e-invoice must be convert into a format appropriate for internet transmission, and finally being convert into a format using ERP system of partnership organization. 1

2 The diploma is following two main goals: to find out the actual conditions and circumstances to exchange the e-invoices between the partnership organizations in Slovenia and suggest a certain solution and to work out a proper prototype considering newest technology achievements and legal regulations. Authors Gričar and Piskar (1988) mentioned, that the problem is a goal focused condition. One of the method they suggest is system engineering method. It defines step sequence proceeding to solve the problem (Gričar and Piskar, 1988, page 109): problem situation analysis, goals definition, solutions planning, formality analysis of solutions, evaluation of solutions, to produce the solutions. Using the problem situation analysis, I will find out the reasons of defined problem. Analysis give us the answer on actual situation appropriateness (Kern and Možnar, 2992, page 663). Together with involved persons, I will define the goals they want to achieve with proper solution. I will represent the current process by graphic illustration and theoretical study in order to create model and work out a proper prototype. All technical elements using in proper prototype, will be researched and detail explained. Some national examples of e-invoicing from Member States will be given too. At the final, I will present and test a proper prototype solution and give some further research and practical use recommendations. Goals expressed with reference to e-invoicing The solution that put off the problems connected with existing condition is expected by the involved organizations. The solution should offer competitive advantage, greater identification and grow over the market. With reengineering business process and efficient use of up-to-date Information technology, studied partnership organizations want to reduce costs and mistakes over the existing process and increase electronic communication to each other. Standard procedures should be done automatic by computer. In this aspect, more time to CRM should be remains. The main goals expressed by studied partnership organizations using e-invoicing solution; I could unit to following goals: E-invoicing process automatic control Reduce costs of invoicing process for 80% Reduce time of realization invoicing transaction for 90% Reduce incorrect issue of invoices E-Invoicing process integration 2

3 E-commerce strategy and legal aspects E-commerce is a wide format notion, frequently meet in our everyday life. Simply said, this is a paperless operation (Gričar, 2002). It including technology (computer, applications and communications) and business organization operations. Only both of them together, could support goals of enterprise business system (Toplišek, 1998; Gričar, 2002; Osojnik et al., 2002). The definition of e-commerce we meet in ZEPEP said: e-commerce include business operations in electronic format on distance, using information and communication technology and e-sign. No one develop focused organization should overlook moment of e-business, if they don't wont to get into trouble. Avoiding this, organizations have need a strategy of e-commerce based on further points (Gričar, 2002): Management must have vision about their e-business Management must know what it happens on this activity worldwide Management must be acquainted with competitiveness and know, what they prepare They must know what to do to prepare their organization for a global keen competition Organizational, technological and cadre policy must be defined Necessary activity must be planned E-person responsible for e-business must be appointed E-invoice is a document, exchanging between organizations least of all documents. Some researches in the year 2002/03 presented that invoicing of SME 1 still base on exchanging paper documents majority. However, the European policy is increasingly focused on promotion business practices and new ways of working that will increase the competitiveness of organizations and provide the economic and social foundation for the knowledge economy in Europe. The e-europe Action plan also provided the basis for targeted actions to stimulate the use of internet for accelerating e- commerce. One of the common factor that affect on undeveloped of exchanging e-invoices between SME is lack of contenting standards. Authors Guštin and Lesjak (2003) mentions, that standards are one of the key elements influencing on costs and rapidity of increasing e-commerce in organizations. Slovenia is now introducing with e-slog standards provided by chamber of commerce and industry of Slovenia. E- SLOG schema for simple invoice designed for SMEs, is one of them. The second thing influencing on increasing e-commerce is legal requirements. Invoices are among the most important document in business. They are subject to accounting, tax, business and even linguistic rules. VAT legislation forms are core of 1 SME Small and Medium Size Enterprises. 3

4 this rules. However, the rules governing invoicing vary widely from Member State of the EU to another. Slovenian main law regulation that fits this area is ZEPEP 2. It is harmonized with EU council directive 1999/93/EC. Slovenian accounting standard (SRS) and tax authorities regulations also establishing a common legal framework for e-invoicing. Slovenian companies also should declare electronic way of invoicing to the tax authorities. Special form needed for e-invoicing. According to the recommendation no.31 of UN/CEFACT, special agreement of e-commerce between both parties should be taken. It could represent the framework for later electronic transactions between them. Electronic signature Recent years have seen a considerable amount of new legislation governing the way organizations and consumers do business in electronic environments. No waiting to hinder the development of this significant economic area, governments all over the world have introduced legislation that will change the face of global commerce. In this process, the e-signature has made much progress towards gaining the same legal recognition as its hand-written, paper-based counterpart. E-signature have been accepted as a means to identify e-commerce participants and thus constitute a common approach to identification and authentication in e-commerce. Sending e-invoices over unprotected network, such as the Internet, creates risks which can compromise both the authenticity of their origin and the integrity of their contents. In order to full fill these conditions, an e-invoice must bear an advanced e- signature. However, in Slovenia, the advanced e-signature must be based on a qualified certificate and created by a secure-signature-creation device. How it works? An advanced e-signature is based on asymmetrical encryption use PKI 3 infrastructure. We need a personal signing certificate issued by CA 4. Creating our certificate involves creating a public-private digital key pair. The private key is something we keep only for ourself. We sign a document with our private key. Special application make a hash of document. Some authors (Jerman-Blažič et al., 2001) see hash like a "finger print" of a document. The hash is pinned to a document (what means an e-signature) and send to a recipient (see fig. 1). Also we give our public key to recipient who wants to verify our signature. Sender can't deny his signature, because it was uncovered by public key. 2 Law, covering e-business and electronic signature. 3 PKI Public Key Infrastructure 4

5 Figure 1: How e-signature works (Source: Ponikvar et al., 2003) E-invoicing best practice Some examples of integrated solutions are presented in some details by EU Recommendations and Reports (CEN/ISSS, 2003) as they feels the models could be used in other Member States rather than similar local development being developed. Finnish national example based on consortium constituted by major banks and other e-invoicing service providers. The invoice issuer and invoice recipient can choose their invoicing service provider or bank for sending and receiving invoices. The model id based on well tested EDI procedures and systems. It covers also XML messages and other electronic messages based on standards. E-invoicing is based on agreements between parties. Verification of origin is established using VPN protocol, which secures the origin, integrity and confidentiality of the message. In FTP connections users ID and password is required. In the other hand, Finnish tax authority legislation doesn't include the requirements of e-signature for e-invoices. And by the way, there has not been any taxation problem in e-invoicing. In Slovenia, we just started with web portal solution named MojaPošta, established by Slovenian Post. Users have an own box created on MojaPošta provider server, where they can receive and send from, his e-signed e-documents. All transactions and operations going over personal e-box are e-signed and e-stamped. Also other examples and models of e-invoicing is known in Slovenia. B2B exchanging of e-invoices between Slovenian chamber of commerce and industry and Atlantis company as well as exchanging of e-invoices using Internet are known as good models for better development of e-invoicing in Slovenia. Prototype solution Prototype model I had worked out, is based on exchanging of e-invoices over Internet well used . The solution mostly apply existing IT installed in partnership organizations. Only the parts necessary need being adapted for. I just installed a test 4 CA Certificate Authority 5

6 version of CreaSignSMTP application, I've been got from Crea company. The solution is cost-efficiently and don't need expensive hardware and software equipment. Solution could be integrated quickly and is acceptable specially for SMEs. The document (e-invoice) begins in ERP Navision system, by entering data into accounting system. By confirm correct data, BizTalk server automatic transfer the internal e-invoice from Navison database into "outbox" folder of CreaSignSMTP server. This server then convert internal format of e-invoice file to an e-slog format of e-invoice using XSLT and e-slog simple invoice template. The next step is to convert e-slog e-invoice into a format we can see (HTML). HTML document carrying XML e-slog format of e-invoice inside, is then e-signed and send as attach file by to the recipient. The scenario is show on fig.2. When recipient gets the , he can see the attach file only if e-signature of sender is valid. To do this, application for e-sign verification must be installed on recipients PC. Recipient have two options: he can print the document and archive it like ordinary paper document or save XML e-slog document to adequate medium or directly to his ERP system, special adapter needed. I did my prototype in the following steps: 1. I installed my personal Qualified certificate to a PC 2. I installed and setup service CreaSignSMTP to a PC 3. I setup BizTalk server for transmitting e-invoice files to "outbox" folder 4. I tested prototype solution Figure 2: Prototype solution process Most of time I spent for setting up CreaSignSMTP service. Service doesn't have GUI, therefore XmlSpy tool needed. Configuration parameters to be found in "Config" folder. I setup parameters as show on fig. 3. 6

7 <!-- SMTP parameters --> <!-- SmtpServerNameOrIP: IP Address or FQDN of server where SMTP is installed. --> <add key="smtpservernameorip" value="smtp.siol.net"/> <add key="smtpfrom" value=""intersocks d.o.o." <add key="smtpbcc" <add key="smtpsubject" value="račun-prototip"/> <add key="smtpishtmlmail" value="1"/> <add key="smtpsigningcertificatesimplename" value="stojan KOSTI"/> <add key="smtpsigningcertificateuselmstore" value="1"/> Figure 3: Service set up for testing prototype solution Additionally, I selected a adequate XSLT metadata for transformation from internal to e-slog XML format (internaltoeslogsimpleinvoice.xslt). The name of this metadata I also entered as a setup parameter. There was also another metadata needed to made an e-invoice visible (createfinalhtml.xslt). Selecting and setting up this metadata, I was to indicate location, where the e-slog scheme for transformation exist. Also other files, needing for creating nice look HTML file, like logo.jpg, were being indicated there. There was only to write an message (MailBody.htm) being sent, left. To make internal XML invoice being transferred to "outbox" folder, I simply use and setup BizTalk server applying BizTalk Messaging Manager tool. After all setups and file definitions, testing was come. CreaSignSMTP service enables evidence the was successfully send to the recipient in log files. Content of the well tested prototype log file is show on fig.4. Figure 4: Content of log file after exchanging When recipient has been got with attached file (e-invoice), he just clicked on it, and the e-invoice was opened in a browser window. Conclusion The development of EDI means that the secure e-invoicing is now possible, and this technology has already been accepted in many EU countries, although, until recently only by a few large organizations. Now a much more flexible technology is emerging based on the Internet which will be equally accessible to SMEs. This 7

8 development, however, raises questions about technical security. Sending invoices over an unprotected network, such as Internet, creates risks which can compromise both the authenticity of their origin and the integrity of their contents. In addition, there will soon be a significant shift in scale. E-invoicing, which was long the exception, is set to become the rule, particularly given the substantial cost savings it can bring. In my opinion is, that the problem is, that invoicing obligations are entirely based on the idea of a paper invoice and cannot easily be transposed to deal with e-invoicing. For example, the obligation to keep a copy of each document is difficult to transpose to invoices issued using a "virtual" medium. Also e-signature in Slovenia not only fulfil the conditions of authenticity and integrity of invoice, but any resulting e-signature are just as legally valid as a hand-written signature. Talking about entanglement of e-signature, non-secure internet transactions, and complicated technology can do the exchange of e-invoices over internet, less interesting, specially for SME-s. I think, that through encouraging technical security in e-invoicing is a good goal, legislation should not include mandatory requirements that are too strict. To increase e-commerce including e-invoicing, in Slovenia should not be any taxation problems in e-invoicing, also the national legislation may not include the requirement of e-signature for e-invoicing. In this directions, banks and other financial institutions, which peoples and organizations trust to them, can do the important step. Bibliography [1] CEN/ISSS e-invoicing Focus Group (2003): Report and recomendations of CEN/ISSS e-invoicing Focus Group on Standards and Developments on electronic Invoicing relating to VAT Directive 2001/115/EC, final report, European Committee for Standardization (CEN/ISSS), Brussels. [2] Gričar, J.; Piskar, S. (1988): Sistemski inženiring, Zavod za organizacijo poslovanja, Ljubljana. [3] Gričar, J. (2002): Poslovni informacijski sistem, Study material, Univerza v Mariboru, Fakulteta za organizacijske vede, Kranj. [4] Jerman-Blažič, B.; Perše, Z.; Klobučar, T.; Nedeljkovič, D. (2001): Elektronsko poslovanje na Internetu, GV založba, Ljubljana. [5] Kern, T.; Božnar, M. (2002): Vpliv informacijske tehnologije na organiziranost podjetja s poudarkom na procesih, Organizacija, 35(10), [6] Osojnik, M.; Gračman, S.; Grobelnik, A.; Kanduč, A.; Konda, Z.; Kunšek, I.; Zupančič, D. (2002): Skrivnosti elektronskega poslovanja, priročnik za mala in srednja podjetja, Gospodarska zbornica Slovenije, Ljubljana. [7] Toplišek, J. (1998): Elektronsko poslovanje, Založba Atlantis, Ljubljana. [8] ZEPEP (2000): Zakon o elektronskem poslovanju in elektronskem podpisu št.:043-03/00-1/1, supplement A of book Skrivnosti elektronskega poslovanja (GZS). 8