SIS – Simplified Interline Settlement

1. SIS – Simplified Interline Settlement E-Invoicing & Legal Aspects RA42 Presentation Michael Uebber, LH

2. Overview of this Presentation • Introduction • Introduction to E-Invoicing • E-Invoicing with Integrated Settlement • Legal Aspects of E-Invoicing • Legal Obligations of E-Invoicing SIS – Materials – E-Invoicing

3. Introduction toE-Invoicing SIS – Materials – E-Invoicing

4. Airline AP System Typical paper process Airline Manager AP Clerk Supplier Print Paper Invoice Mail Invoice • Receives Paper Invoice • Checks Invoice on Paper Invoice Data Entry The Internet e-invoicing platform Airline AP System e-invoicing process 0111000110101001001110101011 01110001101010010011101 XML email Supplier Airline AP Manager Transmit Invoice Electronically Transmit Invoice Electronically • Receives Email • Can view Invoice On-Line The typical paper process is fragmented and discontinuous SIS – Materials – E-Invoicing

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) SIS – Materials – E-Invoicing

6. E-Invoicing with Integrated Settlement SIS – Materials – E-Invoicing

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 modifies 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 SIS – Materials – E-Invoicing

8. Settlement Processes ICH ACH Central Repository Processes at time of Sales NFP engine ARC COMPASS™ E-Invoicing with IS • 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 Integrated Settlement IS-WEB IS-WEB Billed Airline Billing Airline “Digital Signature” Company IS-XML IS-XML Enabling Processes Enabling Processes Billing & Invoicing Processes IS-IDEC IS-IDEC Prorate Engine Other Billing File / Data (similar to today) Billing File / Data (similar to today) SIS – Materials – E-Invoicing

9. Legal Aspects ofE-Invoicing SIS – Materials – E-Invoicing

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 SIS – Materials – E-Invoicing

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: • Identification of invoicing party (“Authenticity of origin”) • File content is unchanged (“Integrity of content”) • With Integrated Settlement, the 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) SIS – Materials – E-Invoicing

12. Different Jurisdictional Requirements • Requirements discussed are not consistent across countries • Legal requirements depend on the most restrictive country • European Union – Most Restrictive But new Activities • United States – Less Restrictive • Other Countries - ??? • IS will be configured by each airline • The transaction depends onthe configuration of the mostrestrictive airline Digital Signature Required? SIS – Materials – E-Invoicing

13. Legal Obligations ofE-Invoicing SIS – Materials – E-Invoicing

14. 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 SIS – Materials – E-Invoicing

15. Role of Integrated Settlement • IS 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 SIS – Materials – E-Invoicing

16. 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 SIS – Materials – E-Invoicing

17. Thank you. Email: sis@iata.org SIS Website: www.iata.org/whatwedo/finance/clearing/sis/index.htm SIS – Materials – E-Invoicing