1. From paper to e-Invoicing and Legal Compliance
San Diego ACH Meeting February 2011
Bruno Roussel

2. Agenda Paper to e-Invoicing: Legal Compliance Invoicing today
SIS is not just an IT project
IS-Web vs. IS-XML
SIS e-Invoicing
Best practices
Legal Compliance
Legal framework
Digital Signature
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

3. Paper Invoicing in ICH world today
Airline Financial System
Accountant
Typical paper process
AP Clerk
Finance
Print Paper
Invoice
Mail
Invoice
Invoice Data
Entry
Receives Paper Invoice
Supporting documents are compare to the invoice
Photocopy
The invoice enters the validation workflow for approbation
Engineering
Accountant
Supporting
document
Scan
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

4. Electronic Invoicing in ACH
Airline Financial System
Invoice
Accountant
AP Clerk
Electronic process
Finance
Generate a
file
Invoice Data
Entry
Receives Electronic Invoice
Supporting documents are compare to the invoice
The invoice enters the validation workflow for approbation
Engineering
Accountant
Supporting
document
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

5. Problems with the paper or e-paper cycle
Needs people to consolidate the invoices and supporting docs
Needs people to put it in envelopes etc
Needs to be sent somewhere, possibly delivered to a collection point first
Needs to be AWBd, couriered or posted
Needs someone at the other end to receive it, take it out of envelopes and distribute it
Needs someone to check it’s all there
Needs someone to check it reconciles with settlements
Etc etc etc
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

6. SIS e-Invoicing benefits
Reduce cost of paper process
Improve efficiency:
Data quality
Speed of information
Automation
Access to detailed information
Audit trail
Uses IATA IS-XML e-Invoice Standard
Contributes to the green initiative
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

7. SIS is not just an IT project
You have to reengineer the current process to adapt to SIS:
Will you generate Invoices in each department or centrally ?
How will you Capture detailed information of the invoice at the source?
Which level of automation would you like to achieve?
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

8. SIS is not just an IT project
How to reconcile the invoices against clearing house settlement?
Today claims may not match IDEC or invoice
Tomorrow all the information will be consistent
Will you reconcile invoices against purchase order?
Reconcile the invoices against your account posting based on:
Your operational system
Contract database
Aircraft schedules
Define your objective
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

9. IS-Web vs. IS-XML IS-XML:
Could be generated/ processed from different systems including ERP or financial systems
Easy to handle large amount of invoices
Ease the use of workflow validation
Increase IT project requirements
IS-WEB:
Allows multiple locations to capture their invoices easily
Suitable for small amount of invoices
Workflow validation could be set up in SIS
Simplify SIS implementation
Payable invoices as PDF view
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

10. SIS e-Invoicing SIS will allow legal e-Invoicing
NOTE – not legal in some countries yet
PDF or XML could be used as the legal invoice.
PDF by Default
XML when legally required
In case of an XML invoice an additional XML file will be created
Legal XML is a subset of the IS-XML
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

11. SIS e-Invoicing The files may need a Digital Signature (DS)
This digitally signed file should be archived in accordance with legal rules
You may have to print the incoming invoice in your country if the electronic format is not considered as legal:
You can do this yourself, or
You can ask the billing entity to send you a paper copy, but this will be charged as defined in IATA RAM Chapter A13 or per bilateral agreement.
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

12. SIS e-Invoicing with DS and Validation
Billing information file
Digitally sign the
invoice and
Validation of DS
Integrated Settlement
Settlement Processes
ICH
ACH
IS-WEB
IS-WEB
Billed
Airline
Germany
Billing
Entity
USA
Digital Signature
And Validation 3
IS-XML
IS-XML 1 1
Overall Processes
Overall Processes
Billing & Invoicing Processes
IS-IDEC
IS-IDEC
Central
Repository 2
Legal PDF
Usage File 5
Processes at time of Sales
NFP
engine
ARC
COMPASS™
Legal XML
Legal PDF 4
Create the invoice
e-Invoice
Legal XML
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

13. SIS e-Invoicing with Digital signature
Sign the invoice
Integrated Settlement
Billing information file
Settlement Processes
ICH
ACH
IS-WEB
IS-WEB
Billed
Airline
USA
Billing
Entity
Germany
“Digital
Signature”
Company 3
IS-XML
IS-XML 1
Overall Processes
Overall Processes
Billing & Invoicing Processes
IS-IDEC 2
IS-IDEC
Central
Repository
Legal PDF
Usage File 5
Processes at time of Sales
NFP
engine
ARC
COMPASS™
Legal XML
Legal PDF 4
Create the invoice
e-Invoice
Legal XML
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

14. Charge Category One charge category only allowed per invoice
Invoices are standardized and structured
12 Charge Categories
Airport Mail
ATC Miscellaneous
Cargo Partner Alliance
Engineering Property
Flight Ops Service Provider
Ground Handling
IT Services
One charge category only allowed per invoice
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

15. Charge Code Several charge codes allowed per invoice
84 different possibilities to classify an invoice
Example charge category Engineering
charge code:
Handling LM
Lease
Loans
Misc
MRO - Maintenance
MRO - Repairs & Overhaul
Pool
Several charge codes allowed per invoice
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

16. Invoice Structure Composed of : Invoice Header Line Item
Line Item details (replace supporting document)
Including :
Legal fields
Required by law
Mandatory fields
Substitution allowed for one year
Recommended fields
R for recommended for one year and will become mandatory
RA for recommended always
Optional fields
Additional information not required to reconcile, may be used within Alliance
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

17. Ground Handling / Catering Invoice sample
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

18. Supporting document
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

19. SIS e-Invoicing fields Mandatory: Ground Handling / Catering
LocationCode
Invoice or Line Item Level AN 5 M
IATA airport code or UN/LOCODE or city code if non-airport.
AircraftTypeCode
LineItemDetail 3
IATA aircraft types
Dictionary defined (IATA aircraft type codes) '0' (Numeric Zero) will also be allowed as substitution value
FlightNo 8
Unique flight identifier: Shown in field 7 of the ICAO flight plan consisting of either the aircraft reg. or the flight number (which itself consists of the two or three character airline designator code followed by an up to 4 digit number with optional Quebec single suffix letter).
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

20. SIS e-Invoicing fields Recommended: Ground Handling / Catering
ProductID
LineItemDetail AN 25 R
Supplier code for the product or service.
ContractNo
CabinClass A 1 RA
Values: C,Y,F plus any other value
FlightDateTime DT
Date&Time allowing to identify the flight the service is related to
YYYY-MM-DDThh:mm:ss Time is optional
AddOnChargeName 30
Name of the AddOnCharge
Possible Values: Discount; Fees etc
AddOnChargeAmount N
18,3
Amount of the AddOnCharge.
This can have a negative value for discount
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

21. Original invoice is missing:
Mandatory fields:
Charge Category: Ground Handling
AircraftTypeCode: Substitution “0”
FlightNo: CHARTER
Recommended fields
CabinClass
ContractNo
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

22. SIS invoice view
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

23. SIS supporting document
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

24. Best Practices
e-Invoicing is a complete change for your organization, benefit from that to design optimal processes
Use of Charge Category and Charge Code allows appropriate routing of the invoice for validation, and GL posting
Use segregation of tasks to ensure better controls on overall validation process
The sooner the better, project could be implemented in several phases, but be ready to process incoming billing from day one in an electronic manner
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

25. Best Practices
Automate the reconciliation with the maximum of electronic data possible, general ledger posting against CH settlement...
Automate the matching of PO and invoices or contract
Generation and integration of electronic data should be automated.
Leveraging your existing ERP system will ensure an all electronic data world
Use the IATA IS-XML e–Invoice standard, develop once, connect to all.
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

26. Question & Answer e-Invoicing contact in IATA:
for any request to add information in the IS XML such as charge category charge code or new business requirement
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

27. Agenda Paper to e-Invoicing: Legal Compliance Invoicing today
SIS is not just an IT project
IS-Web vs. IS-XML
SIS e-Invoicing
Best practices
Legal Compliance
Legal framework
Digital Signature
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

28. Role of Integrated Settlement
Replace paper
IS will be legally mandated by billing carriers to “create”, “transport” and deliver the invoice
Where necessary, submitted billing data is “transformed” to a legal invoice by creating the digital signature as appropriate and/or adding the reference data
IATA will use a “trusted company” to help comply with local laws and to create and verify the digital signatures, and perform legal archive
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

29. Legal framework
What is a legal framework for e-Invoicing that SIS needs to comply to?
Recognition from the tax authorities that electronic invoicing is legal
Technical recommendations for implementation (DS and Archiving)
Framework is country dependant
Should be defined in law and may:
Include means of integrity (e.g. EDI)
Include means of authenticity (e.g. Digital Signature)
Define format to be used, (e.g. XML or PDF)
Require prior authorization from tax authorities
Include any additional specification (e.g. legal Archiving, specific XML layout)
If none exists, either discuss a legal framework definition with tax authorities or agree exemption.
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

30. Legal obligations for e-Invoicing … where applicable
Billing Party:
Apply VAT
Prove conformity with e-Invoicing laws
Create and attach digital signature
Billed Party:
Verify digital signature before processing the invoice
Both Parties
Archive and prevent modification
Log digital signature, validation key
Give auditors access to e-Invoices
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

31. Different jurisdictional requirements 1/2
Requirements are not consistent across countries
IS e-Invoice process is generic:
SIS has a generic invoice template that should meet everybody’s requirements
SIS e-Invoice will be created:
Based on information provided by the billing entity
Based on the member profile of the billing and billed entity
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

32. Different jurisdictional requirements 2/2
Various types of Digital Signature - most restrictive airline legislation prevails
Digital signature:
SIS will use the countries in the from/to address mentioned on the invoice header to define DS to be applied
The DS provider depending in the countries of a cross border invoice will:
Sign with the most restrictive DS if they are compatible OR
Sign with both signatures if they aren’t
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

33. Legal requirements, your responsibility
Provide mandatory information on the invoice e.g. :
The 14 elements that define a legal invoice in most of the jurisdictions (e.g. VAT Registration #, VAT Amount, Billing Carrier’s Address, Billed Carrier’s Address, etc).
Other legal information that is present on your invoice template today (e.g. board of directors…)
Specify in your member profile that Digital Signature is required
Define invoice format according to your legislation
All SIS participants will be required to enter this type of data in their member profile enabling legal invoice creation by default
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

34. Value Added Taxes Context
Tax administrations want long term access to the invoices, as a guarantee of proper VAT treatment of sales transactions
Responsibility
It will be your company’s responsibility to determine whether VAT applies, how much it should be, and where to put it
Some jurisdictions require the proper naming conventions
(Reference list for your information in chapter A13)
To give auditors access to e-Invoices
SIS will ensure technical integrity of your invoice, but not the validity of your submission
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

35. Legal requirements, SIS Responsibility
Technical requirements e.g. :
Digital Signature
Type of DS required ( Advanced, Qualified, Specific Qualified..)
Validation of the DS
Data formatting
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

36. Digital Signature complexity
DS complexity will be handled by SIS and the DS provider
For example:
Advanced Electronic Signature AES
Qualified Electronic Signature QES
There is a hierarchy within Digital Signature
QES has stronger requirements than AES
QES > AES
But two QES signatures may be not equivalent:
IT: Qualified Electronic Signature with time stamp QES IT
CH: Qualified Electronic Signature with local certification authority QES CH
QES IT is not equivalent to QES CH
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

37. Digital Signature matrix samplesFR IT CH
Billed Member FR IT CH IT IT
IT+CH
Billing Member CH
CH+IT CH
FR: Advanced Electronic Signature AES
IT: Qualified Electronic Signature with time stamp QES IT
CH: Qualified Electronic Signature with local certification authority QES CH
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

38. Final note about legal compliance
Integrated Settlement will provide the tools that will help your company ensure legal compliance with regards to invoices
However, it will be your company’s responsibility to know the local laws and enable the options which will make your invoices compliant
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

39. Question & Answer e-Invoicing contact in IATA:
for any request to add information in the IS XML such as charge category charge code or new business requirement
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance

40. Thank you.
SIS Website: 
SIS P3 – ACH – From Paper to e-Invoicing & Legal Compliance 40