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How Manufacturers Can Support e-Invoicing in Europe,

Latin America and Mexico

How Manufacturers Can Support e-Invoicing in Europe,

Latin America and Mexico

Agenda

• Industry trends

• E-invoicing implementation choices

• Regional & country specific regulations

• Industry focused e-Invoicing initiatives

• Case studies

Manufacturing Industry Today

Rebooting Today’s Global Supply Chains

Global recession, wage strikes, natural disasters and changing consumer demand are leading to manufacturers having to

restructure their global supply chains

Slide 4

What is Going on in Manufacturing Supply Chains?

Sales

Manufacturing

Sales

Manufacturing

Back Office

EngineeringR&D

Western Global Expansion

Near-Shoring China Expansion

Back Office

EngineeringR&D

RegionalMarketing &

Finance

EngineeringR&D Sales

Manufacturing

Sales Manufacturing

GlobalHQ

The Manufacturing Industry Faces Interesting B2B Challenges

B2B Consolidation or

ModernisationExtensive M&A activity

requires B2B network

consolidation to reduce

costs and improve

efficiencies

Provide Global

Interoperability Increasing need to provide

connectivity to global

manufacturing hubs in both

established and emerging

markets

Improve Integration to

ERP SystemsConsolidation of ERP

instances and upgrade to

new modules is driving new

ERP/B2B integration

projects

The Manufacturing Industry has some Interesting B2B Challenges

Improve Visibility of

Global Shipments Improve visibility of

shipped goods, for

example aftermarket

service parts, to improve

customer satisfaction

levels

Increase Supply Chain

ResilienceRecent natural disasters

have led to companies

needing to improve supply

chain disaster response

procedures

Support Expansion into

Emerging Markets Introduction of new global

manufacturing hubs is

leading to a need to

improve on-boarding and

ensure 100% supplier

automation

GXS Trading Grid Provides a Single Integration Point Into Your Enterprise

Plant 1

HQ

Plant 2

B2B Complexity In Manufacturing Extends to e-Invoicing

• Understanding the different regional

specific e-Invoicing standards &

requirements

• Traditional EDI or a dedicated e-Invoicing

service provider?

An Introduction to e-Invoicing for Manufacturers

Finance is still a paper-heavy business function. …nearly 77% of all incoming invoices are still paper-based

Paper invoice processing: €17- €60 per invoice,10-55 day cycle

Approx. 16bn B2B invoices in Europe

€200bn in corporate savings possible

Approx. 12bn B2B invoices in the US

$230bn in corporate savings possible

Paper is Still the ProblemCompanies continue to send and receive paper invoices

Reduce Costs

AutomateProcesses

Gain StrategicValue

Lower invoice processing costs (60%-80%) Reduce AP/receivable labour (40% - 50%) Reduce late payment fees/fraud

Reduce invoice cycle times Eliminate invoice data entry and errors Improved data quality & matching Simple financial reporting Increase prompt payment to terms Speed dispute resolution

Competitive advantage Optimise working capital Manage supply chain financial risk Corporate social responsibility

Regulatory Requirements

Global e-Invoicing legislation European late payments legislation Government e-Invoicing mandates

Why Change?Compelling benefits across Finance

Cost of processing paper for the buyer€17.60 per invoice

Buyer e-invoicing cost€6.70 per invoice, 62% savings

Cost of processing paper for the seller€11.10 per invoice

Seller e-billing cost€4.70 per invoice, 57% savings

Source: Billentis, 2012

Why Change?Compelling cost savings potential

You order the goods or services

You get the invoice

You pay the supplier

Order to Pay(Buyer Side) Order to Cash

(Seller Side)

You ship the goods or services

You send the invoice

The customer pays YOU

Your Business

What is the Invoicing Process?Different perspectives for the buyer and seller

Creation of invoice by vendor

Delivery of invoice to buyer

Sorting and routing of invoice to A/P

Entry of invoice into A/P system

Verify and augment vendor data

Validate math on invoice

Match invoice to order,

receipt & contract

Assign to cost centres

Ensure correct tax treatment

Determine approval authority

Circulate invoice for approval

Resolve disputes with vendor

Monitor status of approval

Record expense in general ledger

Store and archive for audit purposes

Respond to vendor status inquiries

Evaluate and negotiate trade

discounts

Aggregate payments due to

vendor

Release payment

Send instructions to bank

Distribute remittance advice

to vendor

Challenges for BuyersThe cost of processing paper

Challenges for SellersThe cost of processing paper

With over 150 countries VAT/GST is the main transaction tax in the world

A steady transition from sales tax to a VAT system

Source: Deloitte, 2012

Global Compliance ChallengesThe global importance of indirect taxation

e-Invoicing Requirements - Europe

Data• Invoice data complies with country-specific tax

authority rule• Minimum required for an invoiceAuthenticity & Integrity• Guarantees identity of sender & integrity of invoice

data• Electronic data interchange• Digital signatures• Business controls & clear audit trailArchiving & Audit• Invoice archive complies with country-specific tax

authority rules• Stored for a specified period• Easy, fast access for tax authorities

e-Invoicing Requirements - Brazil

E-Invoicing is MandatoryData• Invoice format & data complies with country-specific

tax authority rulesAuthenticity & Integrity• Federal e-Invoicing Project (NF-e Project)• Each taxpayer has unique tax ID and digital certificate issued

by ICP-Brasil (or secondary)• Nota Fiscal Electronica (NF-e) is signed then validated and

authorized by the SEFAZ• An auxiliary paper invoice (DANFE) must be issuedArchiving & Audit• Invoice archive complies with country-specific tax authority

rules• Stored for a specified period• Access for tax authorities

e-Invoicing Requirements - Mexico

E-Invoicing is MandatoryData• Invoice format & data complies with country-specific tax

authority rulesAuthenticity & Integrity• Federal e-Invoicing Project• Each taxpayer has a certificate (FIEL) as a unique ID, and

a digital seal certificate (CSD) to sign invoices• A Factura Electronica is signed by tax payer & issued to a

PAC, validated, authenticated, unique ID assigned, then signed by the PAC (Timbrado)

Archiving & Audit• Invoice archive complies with country-specific tax authority

rules• Stored for a specified period• Access for tax authorities

Dematerialisation

B2BProcess automation

Self‐service

Regional/GlobalConsolidation

Process/systemstandardisationLabour arbitrage

Decentralised

High costFragmentationNon‐standardprocesses/systems

Enabling the Futuree-Invoicing is a small part of a big story

Supply ChainFinance

Optimal financing for buyer/supplier

communities

Financial Supply ChainAutomation

Buyer/supplierworkflow automation

and integration

Dematerialisation

B2BProcess automation

Self‐service

Regional/GlobalConsolidation

Process/systemstandardisationLabour arbitrage

Decentralised

High costFragmentationNon‐standardprocesses/systems

Enabling the Futuree-Invoicing is a small part of a big story

PHYSICAL and FINANCIAL SUPPLY CHAIN APPLICATIONS

Invoices

Electronic Invoicing & Billing

Summarye-Invoicing is a small part of a big picture…

PHYSICAL and FINANCIAL SUPPLY CHAIN APPLICATIONS

DocumentsOrders Logistics

Community Connectivity Payments

InvoicesCatalogues

Data Quality Treasury

End-to-End Message Tracking and Alerting

Purchase Order Management

Global Shipping Track and Trace

Electronic Invoicing & BillingProduct List Sharing

Expert On-Boardingand Community Intelligence 20 Connectivity

Solutions Electronic Payments Complex Business Rules and Data Quality Global Cash Management

SummaryB2B offers value across the entire order-to-pay process

Customisation

Cloud Integration

Community / Collaboration

Complexity

EDI

SummaryKey B2B Areas - What Supply Chain Teams are Already Doing

e-Invoicing Initiatives & Case Studies

New e-Invoicing Initiatives

VDA, the German automotive industry association, is

introducing a new global message set based on EDIFACT.

VDA4938 provides a recommendation for implementing the

GLOBAL INVOIC standard.

Odette organisation has introduced auto-gration, an open

source ‘connector’ which allows the exchange of standard

XML messages. Primarily targeting smaller suppliers in the

upstream supply chain and companies in the aftermarket.

EDIFICE high tech industry association has introduced a

new message set called enliteB2B. As with auto-gration,

enliteB2B helps to encourage smaller suppliers to

exchange e-Invoices and other B2B documents.

Case Studies

• This company manufactures its broad range of food, drink and confectionery products across 450 locations and distributes across 86 countries. Each region had a different e-Invoicing solution in place and they decided to consolidate on to one platform

• GXS Active Invoice With Compliance was chosen as the preferred solution to allow 550 suppliers to be able to send invoices electronically by predefined web forms.

• This company is now able to meet numerous invoice compliance regulations including Bulgaria where the AIC platform has been recently rolled out.

CPG Manufacturer

E-invoicing in EMEA• This company is a global supplier of

interior systems to the automotive industry with 260 manufacturing locations around the world. Many of their customers including Ford and GM have established new plants in Mexico, one of the world’s fastest growing automotive hubs.

• GXS Active Invoice With Compliance was chosen as the preferred solution to allow this company to adhere to the specific e-Invoicing regulations in Mexico.

• GXS has also been chosen as the preferred e-Invoicing provider to support their other manufacturing locations around the world.

Automotive Supplier

E-invoicing in Mexico• This company is one of the world’s

largest manufacturers of tyres supporting customers in multiple industries. They support their customers on a truly global basis and have 69 production locations in 18 countries.

• GXS Active Invoice With Compliance was chosen as the preferred solution to help distribute tax compliant invoices to their customers in France. Longer term they will expand the solution to nine other countries and they will also be able to receive tax compliant e-invoices from their suppliers.

• This company is now able to work towards their corporate initiative of eliminating paper and reducing their current 18% invoice error rate.

Tyre Manufacturer

E-Invoicing in EMEA

Slide 28

Further Information on e-Invoicing

www.einvoicingbasics.co.uk

Thank You For Your Participation

Phones

US: 1-800-334-2255, option 3

EMEA: +44 (0) 1932 776047

Brazil: +55 11 2123-2300

GXS web sites

US: www.gxs.com

EMEA: www.gxs.eu

Brazil: www.gxs.com.br