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22-23 Oct 2008, Rome2008 ICH User Group Meeting 1 SIS e-Invoicing Legal Aspects Jean-Christophe Rossand Manager, e-Invoicing Services.

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Presentation on theme: "22-23 Oct 2008, Rome2008 ICH User Group Meeting 1 SIS e-Invoicing Legal Aspects Jean-Christophe Rossand Manager, e-Invoicing Services."— Presentation transcript:

1 22-23 Oct 2008, Rome2008 ICH User Group Meeting 1 SIS e-Invoicing Legal Aspects Jean-Christophe Rossand Manager, e-Invoicing Services

2 22-23 Oct 2008, Rome2008 ICH User Group Meeting 2 Agenda  Introduction  Introduction to E-Invoicing  e-Invoicing with Integrated Settlement  Legal Aspects of e-Invoicing  Legal Obligations of e-Invoicing

3 22-23 Oct 2008, Rome2008 ICH User Group Meeting 3 Introduction to e-Invoicing

4 22-23 Oct 2008, Rome2008 ICH User Group Meeting 4 The typical paper process is fragmented and discontinuous e-invoicing process Supplier Airline AP System Transmit Invoice Electronically Transmit Invoice Electronically Print Paper Invoice Mail Invoice Supplier Receives Paper Invoice Checks Invoice on Paper Airline Manager Invoice Data Entry AP Clerk Airline AP System Typical paper process The Internet XML 01110001101010010011101 0111000110101001001110101011

5 22-23 Oct 2008, Rome2008 ICH User Group Meeting 5 e-Invoicing in the aviation industry Carriers are already using an e-invoicing platform:  Over 270 participating airlines  Over 5,500 participating suppliers (fuel, ground handling, etc)  Plus various bilateral relationships  But carriers don’t currently use e-invoicing for settlements between themselves – just to pay suppliers  But similar relationship (supplier – customer)

6 22-23 Oct 2008, Rome2008 ICH User Group Meeting 6 e-Invoicing with Integrated Settlement

7 22-23 Oct 2008, Rome2008 ICH User Group Meeting 7 SIS follows a 2 pillar strategy to address the challenges of e-invoicing implementations  Address the content of e-invoicing (What information is part of the invoices):  Development and maintenance of Invoice Standards together with industry experts  e-Invoicing WG is modifying the “IATA Aviation Invoice Standard”  Address the communication part of e-invoicing (How are invoices exchanged and processed):  A web service to support and promote the exchange of e-invoices  SIS selects supplier with e-invoicing tool

8 22-23 Oct 2008, Rome2008 ICH User Group Meeting 8 e-Invoicing with IS Billed Airline Integrated Settlement (IS) Billing Airline Enabling Processes Billing & Invoicing Processes Central Repository “Digital Signature” Company Enabling Processes Settlement Processes ICHACH Processes at time of Sales NFP engine ARC COMPASS™ Prorate Engine IS-WEB IS-XML IS-IDEC Other IS-WEB IS-XML IS-IDEC Billing File / Data (similar to today) Billing File / Data (similar to today)  Create invoice file (where applicable)  Optionally create and verify digital signature  Optionally store e-invoice in a legal archive  Settle claims via ICH / ACH  Make invoice (incl. optional digital signature and verification) available for download

9 22-23 Oct 2008, Rome2008 ICH User Group Meeting 9 Legal Aspects of e-Invoicing

10 22-23 Oct 2008, Rome2008 ICH User Group Meeting 10 What makes an e-invoice a legal document?  Legal document with all required information (based on jurisdiction), e.g.:  Specific fields (e.g. Billing Company Address or VAT Registration Number)  Digital signature (if required)  “Stamp” (if required)  Depending on legal requirements, the same submission file could be a legal invoice or just simple billing data

11 22-23 Oct 2008, Rome2008 ICH User Group Meeting 11 Required Data & IS  Some jurisdictions require 14 elements on a legal invoice (e.g. VAT Registration #, VAT Amount, Billing Carrier’s Address, Billed Carrier’s Address, etc)  Some jurisdictions require the proper naming conventions (e.g. “IVA” instead of “VAT”)  Some jurisdictions require digital signature, which is string of text that is computed and sent with the signed document in order to prove: 1. Identification of invoicing party (“Authenticity of origin”) 2. File content is unchanged (“Integrity of content”)  With Integrated Settlement, the required data can be provided in two ways:  Billing carrier leaves blank, IS supplies data from airline profile  Billing carrier submits (IS will check against airline profile and, if they don’t match, will send a notification)

12 22-23 Oct 2008, Rome2008 ICH User Group Meeting 12 Life in the global environment  Problems  Variable technical skills and IT infrastructure  No universal standard applicable everywhere  Legislation not consistent, or not existent, e.g.:  EU – comprehensive rules, and strictly applied  US – fairly easy-going  Much of world – no rules at all  A few countries – specifically not legal

13 22-23 Oct 2008, Rome2008 ICH User Group Meeting 13 Some rays of hope  The way airlines bill and settle is somewhat linked to the Air Service Agreement  IATA’s ability to get airlines to agree common standards provides support in local discussions  Many airlines are still government owned or supported flag- carriers, and non-compliance with international standards can lead to exclusion

14 22-23 Oct 2008, Rome2008 ICH User Group Meeting 14 What to do…  Do you have a legal framework for e-Invoicing in your country?  If you have one, you need to understand it, and prepare to compare it with the IS specifications, when they are finalised  If you have requirements that are not covered, your first line is to discuss this with your authorities, and explain the international billing and settlement framework  RAM, ICH, IDEC, etc  How all the airlines apply these as a common international standard  What the impacts may be for your airline if you are unable to use the industry standards  Possible loss of interline relationships due to the need to bill and settle outside the ICH  Possible loss of revenue, etc

15 22-23 Oct 2008, Rome2008 ICH User Group Meeting 15 What not to do… If you have no legal framework for e-invoicing in your country:  Do not offer to meet EU standards simply because IS can!  This adds cost and complexity, possibly unnecessarily  It is necessary for airlines billing and settling with EU members to meet these standards  It should not be necessary for airlines billing and settling between e.g. SG and ZA to meet EU standards  Go for simplicity wherever possible

16 22-23 Oct 2008, Rome2008 ICH User Group Meeting 16 Impact of different jurisdictional requirements  Requirements discussed are not consistent across countries  Legal requirements vary in different regions of the world  European Union – Most Restrictive (VAT)… but on going activities to simplify  United States – Less Restrictive  Other Countries - variable  IS will be configured by each airline  The applicable legislation on an invoice depends on the place of supply for the product or service being invoiced. The determination of the place of supply is complex and requires tax expertise.  To reduce risk, an approach is to systematically use the configuration of the most restrictive airline Billing Carrier U.S.E.U. U.S. E.U. Digital Signature Required? Billed Carrier

17 22-23 Oct 2008, Rome2008 ICH User Group Meeting 17 Legal obligations of e-Invoicing

18 22-23 Oct 2008, Rome2008 ICH User Group Meeting 18 Legal obligations for e-invoicing  Billing Party:  Create and attach digital signature where necessary  Prove conformity with e-invoicing laws  Apply VAT where applicable  Archive and prevent modification (e.g. on a CD-ROM)  Billed Party:  Verify digital signature before processing the invoice  Archive and prevent modification (e.g. on a CD-ROM)  Logging of the digital signature and key, receipt of billing, and the type of archive and any conversion for 10 years

19 22-23 Oct 2008, Rome2008 ICH User Group Meeting 19 Role of Integrated Settlement  legally mandated by billing carriers to “create” or “transport” the invoice  Where necessary, submitted billing data is “transformed” to an invoice by creating the digital signature and/or adding the reference data  IS legally mandated by billed carriers to verify the signature, archive the invoice, and log the receipt  IS also archives keys and signatures  IATA will use a “trusted company” to help to comply with local laws and to create and verify the digital signatures

20 22-23 Oct 2008, Rome2008 ICH User Group Meeting 20 Carriers’ Obligations with IS  Investigate and configure the IS airline profile and submitted files with your country’s requirements for e- invoices  Digital Signature option  E-archiving  Reference data  Etc  Ensure that your carrier complies with your local regulations

21 22-23 Oct 2008, Rome2008 ICH User Group Meeting 21 Thank you. Email: sis@iata.org SIS Web:  www.iata.org/whatwedo/finance/clearing/sis/index.htm www.iata.org/whatwedo/finance/clearing/sis/index.htm


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