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SIS e-Invoicing Legal Aspects Jean-Christophe Rossand Manager, e-Invoicing Services. Agenda. Introduction Introduction to E-Invoicing e-Invoicing with Integrated Settlement Legal Aspects of e-Invoicing Legal Obligations of e-Invoicing. Introduction to e-Invoicing. Airline AP System.

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slide1

SIS

e-Invoicing Legal AspectsJean-Christophe Rossand

Manager, e-Invoicing Services

2008 ICH User Group Meeting

agenda
Agenda
  • Introduction
  • Introduction to E-Invoicing
  • e-Invoicing with Integrated Settlement
  • Legal Aspects of e-Invoicing
  • Legal Obligations of e-Invoicing

2008 ICH User Group Meeting

slide3

Introduction toe-Invoicing

2008 ICH User Group Meeting

the typical paper process is fragmented and discontinuous

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 typical paper process is fragmented and discontinuous

Airline AP System

The Internet

e-invoicing process

0111000110101001001110101011

01110001101010010011101

XML

Supplier

Transmit

Invoice

Electronically

Transmit

Invoice

Electronically

2008 ICH User Group Meeting

e invoicing in the aviation industry
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)

2008 ICH User Group Meeting

slide6

e-Invoicing with Integrated Settlement

2008 ICH User Group Meeting

sis follows a 2 pillar strategy to address the challenges of e invoicing implementations
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

2008 ICH User Group Meeting

e invoicing with is

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)

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)

2008 ICH User Group Meeting

slide9

Legal Aspects ofe-Invoicing

2008 ICH User Group Meeting

what makes an e invoice a legal document
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

2008 ICH User Group Meeting

required data is
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 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)

2008 ICH User Group Meeting

life in the global environment
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

2008 ICH User Group Meeting

some rays of hope
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

2008 ICH User Group Meeting

what to do
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

2008 ICH User Group Meeting

what not to do
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

2008 ICH User Group Meeting

impact of different jurisdictional requirements
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

Billed Carrier

Digital Signature

Required?

2008 ICH User Group Meeting

slide17

Legal obligations ofe-Invoicing

2008 ICH User Group Meeting

legal obligations for e invoicing
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

2008 ICH User Group Meeting

role of integrated settlement
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

2008 ICH User Group Meeting

carriers obligations with is
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

2008 ICH User Group Meeting

thank you
Thank you.

Email:

sis@iata.org

SIS Web:

www.iata.org/whatwedo/finance/clearing/sis/index.htm

2008 ICH User Group Meeting