22-23 oct 2008, rome2008 ich user group meeting 1 sis e-invoicing legal aspects jean-christophe...
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22-23 Oct 2008, Rome2008 ICH User Group Meeting 1
SISe-Invoicing Legal Aspects
Jean-Christophe Rossand Manager, e-Invoicing Services
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Agenda
Introduction
Introduction to E-Invoicing e-Invoicing with Integrated Settlement
Legal Aspects of e-Invoicing Legal Obligations of e-Invoicing
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Introduction toe-Invoicing
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The typical paper process is fragmented and discontinuous
e-invoicing process
Supplier
Airline AP System
TransmitInvoice
Electronically
TransmitInvoice
Electronically
Print PaperInvoice
Mail Invoice
Supplier• Receives Paper
Invoice• Checks Invoice
on Paper
Airline Manager
Invoice DataEntry
AP Clerk
Airline AP SystemTypical
paper process
The Internet
XML01110001101010010011101 0111000110101001001110101011
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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)
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e-Invoicing with Integrated Settlement
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SIS follows a 2 pillar strategy to addressthe 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
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e-Invoicing with IS
BilledAirline
Integrated Settlement (IS)
BillingAirline
Enab
ling
Proc
esse
s
Billing & Invoicing ProcessesCentralRepository
“DigitalSignature”Company
Enab
ling
Proc
esse
sSettlement Processes
ICH ACH
Processes at time of SalesNFP
engineARC COMPASS™
ProrateEngine
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
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Legal Aspects ofe-Invoicing
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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
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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)
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Life in the global environment
ProblemsVariable technical skills and IT infrastructureNo universal standard applicable everywhereLegislation 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
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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
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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
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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
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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
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Legal obligations ofe-Invoicing
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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
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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
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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
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Thank you.
Email:
SIS Web:
www.iata.org/whatwedo/finance/clearing/sis/index.htm