COMPLIANCE AUTOMATION AND MONITORING Case study Electronic Invoicing

COMPLIANCE AUTOMATION AND MONITORING Case study Electronic Invoicing Anna Nordén 1

WHAT DOES IT MEAN? Compliance Automation - Meeting legal requirements in business processes without manual intervention Monitoring - Mechanism to ensure that changes in legal requirements are detected and fed into the change management process 2

WHY E-INVOICING AS A USE CASE? Compliance fragmentation Clearance Standard audit file 3

INVOICE CONTROLS REGIONAL ANALYSIS COMMONWEALTH EUROPE BRAZIL Tax authorization needed E-invoicing mandate Prescriptiveness Integrity & authenticity Archiving RUSSIA TURKEY LATAM (-BRAZIL) ASIA (-TURKEY) USA DigSig/Timestamp mandatory Mandatory XML Clearance (CL) CL + buyer acknowledgement Full cycle CL Accounting doc compliance Localization 4

E-INVOICING REGULATORY SYSTEMS POST AUDIT CLEARANCE Not Regulated 5

CLEARANCE IN E.G. LATAM Compliance automation by law! 6

COMPONENTS OF A COMPLIANT SERVICE 7

KEEPING IT UNDER CONTROL MONITOR INTERPRET AUDIT ADJUST Standard audit file DEPLOY TEST 8

TREND: OUTSOURCING B2B PROCESSES 9

B2B SEGMENTS FOR LARGE ENTERPRISES IB (EDI, VAN, Trading Grid) IB (EDI, VAN, Trading Grid) SCM (VMI) Trading organization O2C Pure-play e-invoicing P2P (direct, indirect) ECM (scan/ocr) AP BPO ERP-system (corporate) CCM CRM E-commerce O2C Pure-play e-invoicing AR BPO 10

YESTERDAY External and in-house experts Licensed software Own operations 11

OUTSOURCING B2B PROCESSES Necessitates also moving compliance 12

GENERIC COMPLIANCE IN THE CLOUD Non-customer specific compliance automation a necessity for cloud service providers 13

CONCLUSIONS COMPLIANCE AUTOMATION Driving forces towards Compliance Automation in e-invoicing: Increasing need for Compliance Automation due to the complex legal requirements Mandatory Compliance Automation in clearance countries Outsourcing of business processes necessitates management of compliance by the service provider, which is difficult to handle without Compliance Automation Customized compliance replaced by generic Compliance Automation in the Cloud 14

MONITORING Mechanism to ensure that changes in legal requirements are detected and taken into account in the change management process 15

REQUIREMENTS Many different compulsory formats Mandatory data worldwide Mandatory humanreadable renditions (audit, transport..) Today summary level and manual web and paper Increasing frequency and transaction-oriented automation e-audit requirements: SAF-T/export capabilities/ certification Tax rate & code determination Applicable law-driven mandatory notices in invoices Localisation requirements in e.g. EU, Turkey Auditability and access requirements Search criteria New certifications e.g. Belgium Massively different platforms & integrations (country, region or city level) End-to-end orchestration: invoices, credit notes, cancelation, contingency invoices, Many different B2G platforms in the EU Mandatory delivery methods and response messages Supplier & buyer signatures and timestamps Many different formats, CAs E-invoicing notification or prior approval Trading partner agreements Third party e-invoice issuance authorizations Storage abroad or foreign operator notification/derogation requests Buyer consent rules 16

CHANGE MANAGEMENT Continuously detect and analyze changes to laws, practices and specifications in relevant countries 17

Monaco Morocco New Zealand Norway Pakistan Paraguay Philippines Portugal Romania Serbia Slovak Republic South Africa Spain Switzerland Tanzania Tunisia* Ukraine United Kingdom USA Vietnam Ecuador Panama 0 200 400 600 800 1000 1200 I&A CL full cycle Archiving E-invoicing mandate Clearance (CL) CL accounting doc Mandatory XML Presciptiveness CL + buyer acknowledgement DigSig/Timestamp mandatory Tax authorization needed Localization 18

Continuously detect and analyze changes to laws, practices and specifications in relevant countries Have the new system components, configuration and processes audited by a third party to ensure continuous externally-verifiable adherence to best security and quality practice Decide and document what legal changes actually mean in practice, for your specific circumstances Plan and develop the software, hardware and process changes required to meet the upcoming requirement changes Put changes in production in a timely manner without affecting the normal course of business Before deployment in production, perform modern test suites to avoid any disruption of real business processes 19

MONITOR INTERPRET AUDIT AVERAGE 65 REQUIREMENTS PER COUNTRY, 2 CHANGES PER YEAR AND COUNTRY. DIVERSE TRANSACTION ORCHESTRATION PER COUNTRY ADJUST DEPLOY TEST COMPLIANCE CHANGE MANAGEMENT UNRELATED TO BUSINESS CHANGE MANAGEMENT INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 20

CONCLUSIONS MONITORING Compliance Automation useless without the Monitoring function - vital to know which legal requirements to adhere to Compliance change management decoupled from business change management 21

Automated compliance for 58 countries other trust services Legal archiving # Suppliers # # Trading partner e-signatures Buyer Suppliers TAX Buyers Suppliers Clearance platform integration Buyers Suppliers Buyers Legal archiving Suppliers Buyers Suppliers. CONTRACTS ORDERS INVOICES TRANSPORT DOCUMENTS. Buyers 22

TAX AND CERTIFICATION AUTHORITIES SUPPLIER SERVICES BUYER SERVICES APPLY SIGNATURES & TIME-STAMPS VALIDATE DATA & COUNTRY PARAMETERS INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 23

TAX AND CERTIFICATION AUTHORITIES REQUEST CLEARANCE, CERT STATUS OR TIME-STAMP SUPPLIER SERVICES BUYER SERVICES APPLY SIGNATURES & TIME-STAMPS VALIDATE DATA & COUNTRY PARAMETERS INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 24

TAX AND CERTIFICATION AUTHORITIES REQUEST CLEARANCE, CERT STATUS OR TIME-STAMP SUPPLIER SERVICES BUYER SERVICES APPLY SIGNATURES & TIME-STAMPS VALIDATE DATA & COUNTRY PARAMETERS INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 25

TAX AND CERTIFICATION AUTHORITIES CLEARANCE OK, REVOCATION DATA OR TIME-STAMP SUPPLIER SERVICES BUYER SERVICES PACKAGE VALIDATE ISSUED INVOICE INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 26

TAX AND CERTIFICATION AUTHORITIES SUPPLIER SERVICES TIME-STAMPS BUYER SERVICES SIGN VALIDATE INVOICE, META-DATA INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 27

TAX AND CERTIFICATION AUTHORITIES SUPPLIER SERVICES CHECK CLEARANCE, CERT STATUS OR TIME-STAMP BUYER SERVICES SIGN VALIDATE INVOICE PLUS COUNTRY PARAMETERS INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 28

TAX AND CERTIFICATION AUTHORITIES SUPPLIER SERVICES CHECK CLEARANCE, CERT STATUS OR TIME-STAMP BUYER SERVICES SIGN VALIDATE INVOICE PLUS COUNTRY PARAMETERS INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 29

TAX AND CERTIFICATIONAUTHORITIES CLEARANCE OK, REVOCATION DATA OR TIME-STAMP SUPPLIER SERVICES BUYER SERVICES SIGN VALIDATE VALIDATE INVOICE INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 30

TAX AND CERTIFICATION AUTHORITIES SUPPLIER SERVICES BUYER SERVICES TIME-STAMPS SIGN VALIDATE INVOICE, META-DATA INVOICE SUPPLIER FLOWS HUB PROCESS INVOICE BUYER FLOWS 31

Anna Nordén, General Counsel TrustWeaver anna.norden@trustweaver.com www.trustweaver.com 32