Understanding E-Invoicing: Insights from Avalara's Webinar

[Music] hello and welcome to avalara's latest e invoicing webinar partner with avalara

building Integrations by way of background I'm Alex B a senior director at avalara I

head up our product team and I'm also responsible for our relationships with government and influence of bodies I'm a

member of the European commission's e invoicing Advisory Group and I'm also a board member of the US's digital

business Network Alliance I'm going to talk about that in a bit more detail later on I'm really pleased to be joined

today by my colleague e Kane Eileen can you please introduce yourself hi everyone um my name is

Eileen Kane I'm one of our senior managers in our um Business Development partner team um my role is uh working

with our partners to help build Integrations to our technology with a focus on E invoicing and and live

reporting thank you Eileen so in terms of today's agenda I'm going to kick off with bit of a recap on why we're here

the the rise of e invoicing around the globe I'm also going to provide a snapshot on the latest e invoicing news

the major mandates to look out for as well as some recent updates we're then going to provide an

overview bit of a recap on avalara's E invoicing and live reporting SAS solution we're then going to look at our

API which is built on Universal Business language and talk about how you as partners can connect to our solution to

provide services to your customers and we're going to provide a demonstration of the solution so

hopefully you know about Avalar already um we've been disrupting the status quo of Global Tax management since

2004 headquartered and founded in the US today we're very much a global company we work with businesses to

reduce risk streamline processes and openly help businesses achieve compliance and this is very much built

on our strong Partnerships all across the globe Avalar provides endtoend indirect tax compliance Solutions across

the entire life cycle so everything from registrations for vat GST sales tax as well as registering for P for invoicing

we have solutions for classification so identifying the correct HS code that drives customs duty and import

vat we're best known for our tax calculation engine avax so this has a wealth of knowledge for

sales and use tax vat GST as well as customs duty and in fact in 2022 over 39.6 billion calls were made to our API

we also provide invoicing through our e invoicing and live reporting solution and obviously that is the focus of

today's webinar um this covers business to business business to Consumer as well as public procurement under business to

government the solution also provides realtime live reporting to tax authorities and can

cope with a number of different Global e invoicing models including clearance we can add QR codes we can

create PDF human readable invoices and we're also an access point to various networks including the p

network and then finally the final piece of the indur tax life cycle and puzzle is returns and Reporting so we have a

SAS vat reporting solution that provides the ability to prepare and submit vat GST returns in an

automated Manner and that also covers additional supplementary returns such as EC sales lists inats various Ledges and

safs so following on from the last part in the webinar which you can still watch anytime on demand I'm going to provide a

bit of a recap on the rise of e invoicing glob so why are governments and tax

authorities introducing invoicing any reporting this is the clear direction of travel and almost every region in the

world is seeing mandates crop up almost on a daily basis and one of the the clear reasons

for this is the need to protect and generate more and more tax revenue tax revenue is more important than ever

particularly in a post pandemic environment governments want to reduce the vat Gap the vat Gap is the amount of

tax that should be collected but isn't and at the last count within the European Union the vat Gap stood at over

93 billion euros globally it's estimated that number could be as high as around $400

million and therefore it's a little surprise the tax authorities want to achieve more they want to reduce risk

they want to identify fraud and they also want to prevent errors and at the moment they have very limited

tools the majority of countries still receive periodic vat returns which just have summarized data They Don't Really

provide enough insights and those returns submitted periodically monthly in some countries

quarterly it's really too list or too late so the move to e invoicing e reporting or live

reporting is to provide tax authorities with more granular information in real time they want true visibility on every

single transaction and they want the ability to approve an invoice before it's even issued to the

customer and tax authorities are going on their own digital transformation Journey it's not just our customers

they're becoming more data Savvy they're investing in technology and even the the type of hires and ordes are

changing ATT tax inspector is now just as likely to use data analytics machine learning

AI so we're going to start to see not only a move away from just periodic returns but a whole change in in how tax

authorities will order a business it becomes a continuous compliance cycle every day every single

transaction so on the screen now you'll see a nice graphic from our friends at PWC this

provides a nice overview of the trajectory of the growth of the invoicing so you'll see the flags this

represents countries that have implemented some sort of digital reporting of tax

obligations and if you look you know year on year this just continues to grow over the next 3 to five years this won't

fit on a single slide because just more and more countries if not every country in the globe will implements some form

of E invoicing or live reporting I'm now going to provide a bit of an overview of recent mandate news so an update on

certain mandates in Europe and also a recap of some of the upcoming or latest mandates across Asia Pacific I'm also

going to talk about the US um and while tax may not be the main driver there there's an exciting update on the

Federal Reserves Market pilot free invoicing and the establishment of a brand new organization and network that

will lead to the spread of the invoicing across the US and North America so this is a timeline in a

effect showing the the rise of e invoicing over the last 20 years as well as looking forward across the next five

years if you look at the First Column you know really over the last decade even as far back as 20 years e

invoicing really started to take off in Latin America it was Lam that was the real tra Trailblazer free invoicing

Chile and Brazil soon followed by virtually every single country on the continent and where we saw e invoicing

in Europe it was really limited to public procurement business to government we saw European legislation

creating a common European e invoicing standard we also saw legislation around public procurement forcing governments

government agencies and bodies to be able to receive e invoices and you know then you know

several EU member states then went a step further to actually mandate the receipt of BG e

invoicing but since Italy in 2019 so Italy was the first EU member state to mandate businesso business invoicing

we've seen more and more European countries announce plans for rein voicing Serbia became the second country

in Europe from uh January 2022 and suddenly we're now seeing the spread of e invoicing across the entire

region next year we're going to see Poland mandate e invoicing from July Romania is likely to to announce

and confirm mandatory invoicing next year too France and Spain well we had

anticipated mandates in 2020 before and I'm going to provide a bit of an update on those two countries in a minute it's

likely we're going to see delays there that's been confirmed in France um Spain is likely to follow too but we've also

seen lots of new mandates be announced across the globe Malaysia will start any invoicing mandate starting with very

large companies from July next year Israel has announced a B2B invoicing mandate that will involve the

registration of all invoices over a certain monetary value and that monary value will go down um each year over the

next four to five years and each invoice will be given a unique number a reference and in order for the customer

to be able to recover the v as input tax they need to have that number and there's reporting related to that

too and then as we look further a field you know Germany um is likely to introduce mandatory invoicing from

January 2026 Germany's now received a derogation from the European commission it's just

finalizing its timeline there is draft legislation and draft plan um but that will be a very huge mandate and I know a

lot of German companies are already starting to plan and assess the impact we then have VA or vas in the Dig

age so this was a big proposal released in December last year it's still being discussed in the

European Parliament it will ultimately be put to a vote in the European Council there are currently about 200 proposed

amendments but there is consensus that something will happen and ultimately every single Inc Community

transaction within EU will require e invoice and realtime reporting of that

transaction by both the supplier and the customer so moving away again from that that summary high level EC sales list

reporting that date is slated for January 2028 it's possible that date may be moved out a year or two but the main

message there is that is not the starting gun that VA reform is really the Finishing Line and what it does it

provides clarity to EU member states who haven't yet announced their e invoicing mandates what the rules of the game are

what what the model must look like what the format the standard

and most EU member states are likely to introduce mandatory domestic b2be invoicing as well to compl complement

the mandatory crossb model to so I mentioned there's been a change in France we were anticipating mandatory e

invoicing um for for large companies from the 1 of July 2024 so next year and from that same date all companies and

all businesses of all sizes would need to be in a position to receive ear invoices at the end of

July this year um just ahead um of the vacation period in in France uh the French government released a press

release and this confirmed that the Mandate is being postponed to provide more time businesses to

prepare we also understand the building of the platform the ppf um is going to take a bit longer to roll out so at the

moment this looks like businesses erps service providers are going to have more time to

prair while we don't know the exact date this is likely to be confirmed in the finance bill which is likely to be

released in December there are currently rumors the new date is likely to be July

2026 although we will understand more in the next few months what I would say is that this

project doesn't stop avalara is still working with the French authori ities a member of various working groups and

working as a candidate PDP with the French tax authorities but what this does do it

provides more time for everyone to get ready assess the data understand the flows and really understand the impact

to business process in Spain again you know we were anticipating any invoicing mandate

around the same timeline as France the Spanish Gazette officially published the law that created the the E

invoicing mandat however we're now realizing there's likely to be a delay there's

been a general election in Spain there's been a public consultation on the scope of the Mandate everything from the

process the flows the document types the scope whether there's going to be exemptions for certain businesses

while we've seen some um draft technical requirements and there has been working groups um between the

Spanish authorities and some major Erp providers it's likely there will be delay both the legislation and also the

Mandate coming into Force I can't see this coming into play before Q4 2024 it's now likely and rumored that

the Mandate will now I'm in from January 2025 so again providing more time for the technical requirements to be

released um and both businesses erps and service providers more time to prepare and now wanted to provide a bit of an

overview of pepo because this is very much linked to the rise of the invoicing across the globe so P was originally

just a pan European e invoicing organization it was a network and a common European

Standard implemented for public procurement it was built to meet the new European invoicing standard EM1

16931 if you're not familiar with that standard you will be seen because that plays a very key role in VA vas in the

digital age this common format p biz3 is a compliant implementation of that

standard and therefore any government or Public Authority within in the EU can use that p network to receive e invoices

to meet its obligations under a European directive so it's a common set of standard specifications it's an open

network where buyers and sellers can exchange messages and specifically invoices and it's supported by a legal

framework that defines the governance so for example avalara as a certified P Prov provider has a certificate which is

a key to the network and only certified providers can access the network uring ensuring that it's secure and ensuring

that interoperability is achieved so even though pep was born in Europe it's now very much a Global

Network so pep has been proven and it's been used in 34 countries over the last 12

years and is therefore a little surprise that we've seen it be extended across the globe so Australia New Zealand

Singapore Japan have all set up P authorities and have all promoted pep and pushed pep as the

network of choice and the format to be used invoicing locally so P Works using something called the four corner model

this this is where a service provider a certified P provider such as avalara sits in Corners two or Corner

three and that means that avalara will take um the data the invoice from the supplier from their

system through our API integration we will convert that to the relevant format meet the local standards

we will validate that invoice we will then send that invoice to the trading partners service provider

of course again that could be avalara but it could be um a different service provider and that's one of the great

things it's an open network um there are no roaming charges um you're not penalized if you use a different network

provider so really moving away from the historic Legacy procurement Network model

you know where um you know one trading partner a vendor or customer may put pressure on you commercially to join a

particular Network so I wanted to provide a bit of an update on some of these P countries particularly in Asia

Pacific so first of all Singapore um so Singapore uh does in effect have a

business to government mandate for invoicing um if not in law um in practice um but has been announced that

in the coming years the the only way to e invoice the Singapore government will be through the pep Network Singapore is

really trying to promote the invoice and to help digitalize the economy and in particular get smes issuing and

receiving e invoices so as a help with this there are actually grants available incentives and credits um for both large

Enterprises and smes so for a business um to connect

their Finance Erp system um to the peper network or invoice now as it's known in Singapore you can um receive grant

funding of up to 30,000 Sing dollars um as well as you know further incentives to actually send and receive e

invoices and for smmes there's actually a transaction bonus too so every time they send one e invoice um they can

receive 50 Singapore dollars um up to $1 150 Singapore dollars when they send nine or more so you know really good

incentive there and something that's driving adoption we're seeing this network effect um and for you know any

Erp business platform providers uh if you don't have a p access point if you're not able to join the network if

you're not able to produce compliant invoices across Australia New Zealand Singapore Japan which I'm going to talk

about in a bit more detail please do reach out talk to avalara because we can help you so pepo has also landed in

Japan and the background here is that Japan is implementing a whole new tax invoice system and this is to support

their existing Japanese consumption tax with JCT these changes take effect from the

1st of October 2023 so not long now historically there's been less onerous invoicing requirements um with other

documents and accounting records used evidence JCT but going forward businesses will be

required to retain qualified invoices that fulfill certain conditions and they need to do this in order to recover JCT

so to claim imput tax credits and this also puts a requirement on suppliers to issue these qualified

invoices e invoicing is not being mandated but the pep Network and a new Japanese pint the JP pint standard is

being put forward as an option to meet these new obligations and we're already seeing a lot of demand and interest

across Japan from erps business platforms and Japanese businesses themselves so the JP pin is a new

invoice standard it's based on the P International standard or pint um Jaan has implemented this to meet local

Japanese standards bit of background pin allows shed rules almost on a 80% basis um 15%

localization for the country and then 5% um additional changes maybe at an industry

level this will ultimately support self- billing um and Japan has also developed a standard for non tax invoices as well

so they can those can still be shared on the PPP network if you'd like to learn more

about this and how avalara can support you you know please do Reach Out we'd be more than happy to talk to you about

this in more detail so avalara can be your trusted partner for pepal we are an accredited pep access point in Australia

Australia New Zealand and Japan we're a certified pep service provider with open pepal and with the German pepal

Authority so through an API connection from your Erp Billing System business platform Marketplace you can connect

avalara's invoicing and live reporting solution and we can provide you with an access point into that p

network we're a member of open p and we're very much part of the discussion there too

finally I wanted to talk about what's going on in the US so many of you will be aware there's been something called a

market pilot in the US to in effect build a common network with a common standard to drive further adoption of e

invoicing in the US um this was an initiative with the Federal Reserve um and the business payments

Coalition so this pilot has been a success the is now over and what we've seen is the creation of a not for-profit

called the digital business Network Alliance so this will oversee the the broad ecosystem of operators and

customers within this new e delivery Network it will manage the network the standards the specifications and the

governance ultimately providing certificates to ensure the network secure

um and I'm can announce um I've just been elected uh to the board of directors for

the dbna um which I'm very excited about and very humbled um to be elected um by our fellow service providers a really

good Community um and this is huge because even though tax is not the driver you know we know in the US there

isn't a vat the state and local tax there's over 10,000 different um sales and use tax jurisdictions

but what we're going to see is wide adoption because we're moving away from 3 400 different standards different

networks platforms portals that businesses use for procurement and moving to a single

network with a single standard so this is a huge opportunities for erps to become ready to support the

network and provide this connectivity for all of your customer customers and their trading

partners so the dbna digital Highway for B2B will be available to all businesses VI dbna

accredited service provider later this year next year the network be fully operational and again you know a huge

huge opportunity um and and something we haven't seen in the US before so just to

provide a high level overview of the new US exchange framework and network it's exchange network based on a

four corner model so very similar to pep but it's not P so even if you have access to the pep Network you have a

service provider there this is different it will require a new endpoint um you will still need to use an accredited

dbna service provider the invoice data structure is based on Universal Business language same as Avalar as

API and again very similar to P join the network and you'll have access to issue and receive e invoices to every single

business on that Network so a huge opportunity um for erp's business platforms um to provide this

connectivity for your customers and their trading partners right I'm now going to hand

over to my colleague Eileen who's G to provide an overview of Avalar is invoicing and live reporting Next

Generation solution as well as setting out the different options available to

Partners in order to work with us and take advantage of this opportunity thanks Alex um thanks for that update um

and um looking forward to you know showing you uh or talking through how we can um we can help support our

partners following on from from Alex's is updates I'm sure you can uh understand the um the complexity that is

um is being introduced from the uh the tax authorities across across the globe um and Avala has um really you know

developed a solution to to help um our partners and businesses and and consulting firms to handle this

complexity um through one way to to comply um we have we have built a a a solution that will allow our our

customers and our partners um to uh to support um to to meet the the growing mandates um through um through you know

one one solution rather than managing multiple Solutions across across the globe so avalara's um e invoicing and

live reporting solution um also known as as ELR is a a global solution um we have built a a um Global API which is a

single seamless scalable solutions for business and and software providers so just to to give an overview of of of

avalara's Journey on the the E invoicing um and live reporting um solution we uh acquired a a business who uh imp posia

who were providing a professional service developed um solution and we have now taken that that uh leg

product and we've um moved it into a API first solution um really to support a a scalable solution for our partners to

provide these solutions to their to their customers um to make sure they can handle the growing ch um changes across

the globe so our solution is this one Global API allows for the uh creation and transmission of of e invoicing um as

well as the the receipt of invoicing in a standardized format um the ubl 2.1 we you know also handle all of the

requirements that come along with um with these changing mandates such as digital archiving digital signatures QR

um QR code Creations as as well as supporting any e reporting or live reporting mandates so rather than

businesses and and and um and business platforms having to find local Solutions as mandates come um come into effect

they're able to work with Avala to have one Global solution um so what does that look like avalara's e invoicing live

reporting um solution is a you know integrates into uh our partners business platform so any anywhere that a a uh

invoice is being raised um we can we can uh work with our partners to to build Integrations through our single Global

uh Global API Partners who have built those Integrations will send those data to to Avala e invoicing in the ubl 2.1

format and then we handle everything from there um we take that data we convert it into the um the required

formats uh by each of the tax authorities and then we map and and transmit that data to um to each of

those Tex we're also um as Alex mentioned able to transmit um via the the pepal network um uh and we can um

deliver to uh to end customers as as well um we're also able to receive invoices from those tax authorities

convert that and transmit that back to the um the tax authorities so we really have built a centralized solution that

will allow our partners to um provide the requirements and functionality to their customers through one one

integration so now we'll um we'll show you a pre-recorded demo of of the solution I'm going to talk you through

an endtoend demonstration of the Polish B2B invoicing mandate that utilizes the KF platform in Poland um I'm starting

here in Postman it it is a third party application that does allow us to send invoice information and data via the API

to the ELR e invoice and a live reporting solution so you can see here that I do have um an invoice that's been

pre-created um in the uo 2.1 format and there are two elements of data that we do send and and and we require to be

sent to to ELR the first is metadata this does describe the workflow that's being run also the format of data so you

can see here it does State it's uo it's an invoice and it's 2.1 also the country code which in this case is Poland and

the country mandate this is a unique avalara tag uh We've defined this as Poland B2B e

invoice the second piece of information is the invoice itself um this is an XML structure and it's in the ubl 2.1 format

um across all of our different uh mandates and and countries that we support it is the same uh format of data

obviously the information within that will be uh specific to to that country so then here we do have all of the

information for this polish invoice um that I'm going to going to be sending so what I first do is is click Send this is

just triggering this post API call documents um and this is being sent to to avalara in an Erp system in an

accounting system it's exactly the same principle applies you would just trigger a a button or or some form of way to to

send this invoice to ELR we've now got a unique ID this is an avalara unique ID it tags

this transaction so we can follow it through the Journey what I'm now going to do is flip over to our avalara uh ELR

Monitor and this allows you to to see all of the information around this transaction whether it's been

successfully sent through um also you can you can actually see the the underlining the invoice as well so this

is the the invoice that I've just sent you can see here it's 217 p.m. UK time so just around a minute ago um and it's

my invoice that's been sent to a Polish customer B2B the great news here is it is complete so this means that it's been

sent to the KF platform um and you can see here it is an invoice there are some statuses that you can see and this is

specific again for each country for each mandate but this does describe the process that's taken place and within

this folder you can also see the inbound invoice so this is the the the invoices comes from the source system into ELR in

that ubl format so you can see that if you need to do any troubleshooting but we also do provide

the uh official e invoice that's been now created um in the Polish schema um that's been sent to the KF

platform there's other features within here you can view the insights you can see transactions that's been sent today

you can also see numbers of documents that's been sent by Partners also if there were any errors you and drill

through to those errors um but today we have most incomplete and there's a couple that are are currently pending to

be sent the next step I'm going to do is go into the actual KF platform itself um so I'm going to log in utilizing the uh

the nip number that I've used to send this invoice and this will allow me to see

this this invoice that I've Sent From the Source system which in my case is Postman to the Avalar LR system Avalar

LR has then converted that into the right format for Poland into the correct schema and sent it to the KF platform

and the final piece is we can now look into this invoice list within here and we can see that invoice being created so

this is the invoice number here as you can see it's the same 448 invoice that we're seeing in our monitor within

Poland um the KF platform actually creates a PDF with all the information that's been

sent through within that XML in a in a standard format so every single customer um and supplier will receive exactly the

same format of invoice just data relating to that transaction and you can see the bottom here it is been uh

created by the avalara ear invoicing solution so I hope that gives everyone an overview of of what our solution

looks like and and um we can talk a little bit more now about how how what are the options for our partners to um

to build Integrations there are three primary ways that Partners um engage with aala

uh we have a network of um over um of thousands of Partners who refer business to to Avala um we also have um Partners

who who work with us to to service provide services to our customers so they build out their Professional

Service prati practices by becoming certified implementation Partners um of avaler solutions and then the Third Way

which is where we're focusing today is building Integrations so Partners can develop certified Integrations to our

Solutions and or embed um Avalar Solutions into their technology platforms so we'll go through um the

difference of those those two options today around developing a certified integration or connector and and

embedding uh Avala e invoicing into your into your solution so those Partners who choose to build Integrations are our

techn technology partners and they are connecting our solutions to their to their platforms wherever transactions

occur so um you know Avala is providing the technology to allow businesses to um you know meet their indirect tax

requirements um as Alex discussed at the beginning we can provide that that calculation to e invoicing and Reporting

and we work with technology Partnerships to build connectors and extractors with their system so that they when their

customers need those um uh requirements they have that functionality built within their um their their platform um

so there's two ways that that that uh technology Partners can can work with us and it's you know either building uh

that connector to ELR um to ensure that that Avala is handling their e invoicing and live reporting requirements um

or embedding or or private labeling the the solution within um within their their platform um and depending upon uh

the needs of our partners and their customers uh technology Partners can can choose which way to um which way to

engage with aala um e invoicing solution so what does that mean the difference between you know developing an a a

connector or certified integration and an embedding and and bundling avalara's e invoicing um e invoicing

solution so for any technology build you know the connection to our our solution needs to happen um so you're building

that that uh integration to your your business application and obtaining that that

certification um for for partners who just want to provide options to their their customers they can build that

connector that is certified um we then can work with with those Partners to um uh to you know Mark it to your your

customer base where you're referring those customers to to aala and aala manage them manages the relationship um

directly with your your customers and the bonus or the the added benefit of that for our partners is that we have a

uh a revenue share program for any referred partners that use your Integrations um you are able to uh

benefit from that um Revenue share the the the other option is you know embedding and bundling Avala e

invoicing live reporting in into your technology platform this means that um you are doing a a a more um extensive

development where you have uh built to our our certified connections to our API you're also building to our um uh

business uh API for automatic provisioning um and you are you know fully embedding that our solution into

your platform as a default uh technology for your customers to uh to to handle their e invoicing and live reporting

requirements um the difference between the two is if a partner is just developing a connector and referring

Avala is building that relation is is working with the partner but you know building relationship directly with your

customers when Tech when our partners embed and bundle Avala you know that relationship is between uh Avala and our

partners and they are offering a bundled price then to their customers and Merchants so really becomes an extension

of your platform functionality you continue to own the relationship with your um with your customers um and

you're owning the the user experience with Avala supporting you on the on the technology um so the options you know

are are there for you to to decide what suits you um you know your business platform best and what um

suits your your customers needs um needs appropriately um so you know we're happy to discuss uh you know how each program

works um and and and really understands what would fit your um your needs so to to wrap up there are um three steps for

our partners and their customers to meet the um Global e invoicing and live reporting

mandates um you know the the the first step is really for our partners to work with Avala to integrate that the service

so you know getting that integration to the the the global API um and you know and building that that full integration

um as well as looking at you know potential options to u to embed the solution um the second step is once that

integration is is built and and the functionality is ready is is ready for your um your customers to use is really

how do we onboard those those customers to to Avala so through a direct onboarding relationship or if it's

through an automated provisioning API for our embedded models getting your your customers up and activated to have

aala you know supporting their their um requirements and then the third step is really down

to your you know your users they start they activate the countries that they require they then can start using the

functionality and they're ready to handle you know any of the the the requirements um that are the current

requirements and future requirements and as the uh new and uh mandates are or um come into effect you know avaler will

switch those on and um our your customer will be ready to ready to comply so that's um so that's aer's um e invoicing

and and live reporting Solutions and the options for for um our partners to um work with us to build uh technology

Integrations um so you know please let us know if you you have any questions and Allah um and and we're happy to to

talk through um the the ways of working together that's everything for me thanks everyone for you know your your time

today um you know please you know we get in touch and um over to you Alex thanks Eileen really interesting and so many

opportunities for partners to get involved and collaborate with avalara so I hope you found this webinar

informative and useful as ever if you have questions you know please do get in touch please reach out to your strategic

Alliance manager or you can email us at partner with us at aara.com please do continue to follow me on

LinkedIn where you'll see various technical updates as well as thought leadership on E invoicing live reporting

across the globe we've really enjoyed having you with us today thank you very much thanks

everyone