“…an electronic invoice should contain data from the supplier in a format that can be entered (integrated) into the buyer’s Account Payable (AP) system without requiring any data input from the buyer’s AP administrator”
E-invoicing is the common B2B (Business to Business) and B2G (Business to Government/Public Service) business practice of paperless invoicing.
The above is a widely-accepted definition of an electronic invoice. The requirement for processing without human intervention (only exceptions are allowable) is essential so the true economic and systemic benefits of e-invoicing are realised.
Traditionally, suppliers have been asked to send XML or EDI invoice files from their billing application to their customer (receiver). As there is no single standard for an invoice file structure, a market has evolved where e-invoicing service providers (a three corner model) offer value added mapping services.
For most organisations adopting e-invoicing, the process is:
Supplier: uploads XML or EDI invoice file (e.g. Tradacoms EDI) to the e-invoice service provider.
Service Provider: maps the data from the supplier’s file to the structure required by the receiver / buyer (e.g. Tradacoms > cXML). Validation checks are applied to the data and file structure by the service provider.
Buyer: receives a validated e-invoice file (e.g. cXML). The objective of most e-invoicing projects is to remove paper from the receivers finance department and increase visibility and controls within their purchase to pay function.
The buyer rarely cares how the supplier sends their invoice to them. As long as they receive the same, validated file structure every time from the service provider and a high quality and cost effective service is received, they are happy.
Referring back to the original definition, when a supplier sends an XML or EDI file the document is rarely “in a format that can be entered (integrated) into the buyer’s Account Payable (AP) system without requiring any data input from the buyer’s AP administrator”.
That’s where e-invoicing and EDI service providers come in. They map the invoice data from the file the supplier has generated into a structure that can be integrated into the buyer’s Accounts Payable system.