Invoicing matters are always urgent and critical for any enterprise. In the European legal environment, invoices are subject to strong regulatory requirements as far as their content and the media used for transmission are concerned.

EU directive 2001/115/EC and the more recent directive 2006/112/EC describe the processes and technical means to be used for paperless electronic invoicing (eInvoicing) to ensure integrity and authenticity of the invoicing documents. This has had a profound effect on our industry, but Odette has been developing guidelines to help companies find their way through the maze.

The invoicing process in general has a big impact on the financial status of a company. The first and obvious one is the fact that only correct invoices are likely to be paid. Any error will delay the standard payment process and weaken the financial situation of the invoice issuer.

VAT matters are another big topic. Provided correct invoicing documents are used, the amount of VAT to be paid to tax authorities can be reduced by deducting VAT paid on incoming invoices. However, if a tax audit later finds out that the tax authority requirements on an invoice document are not fulfilled completely, the deducted amount may again become due!

It is the goal of most industry sectors to replace paper invoices by electronic invoices to save time and money. When it comes to the method of invoice exchange, a number of European countries have different requirements, which go beyond the common Directives and which we find are not harmonised.

The simplest method of exchange is an electronic message (e.g. a UN/EDIFACT INVOIC message) exchanged in a given contractual framework between business partners; but other countries set higher requirements including the necessity to use advanced digital signatures based on a qualified digital certificate issued by an accredited certification authority to sign the invoices – even EDI invoices.

This is to prove the authenticity of the sender and to ensure that no changes have been made to the document since it was sent. Subsequently, various steps to validate the signature and to archive the validation and processing steps are required.

Although the EU directive considers either EDI or digital signature on electronic documents (or other means) as sufficient to ensure integrity and authenticity of an e-invoice, some countries have gone for a ‘belt and braces’ approach, i.e. they require EDI and digital signature or EDI and a paper summary sheet.

Companies and their financial departments are usually well aware of the domestic requirements but, with increasing international co-operation and European cross-border transactions, there is a growing need to obtain and maintain a comprehensive view of the special requirements in other European countries.

Germany has recently changed its laws to allow eInvoicing via EDI without the additional requirement of a digital signature or, alternatively, the paper summary sheet.

Since the sending of paper summary sheets was the predominant way of complying with legal requirements, you can imagine the savings this will bring in printing and storage costs alone. Furthermore, it now opens the door to the use of the Odette Global INVOIC message in a much broader context in Germany and brings Germany into line with other countries such as France, Sweden and UK who have accepted it for several years.

The great thing is that the Odette Global INVOIC is ready for use now and meets all the latest fiscal requirements.

Odette has had European and globally harmonized recommendations on electronic invoicing available for several years. Since the legislation has changed, and also technical methods and services have been evolving, an update to the existing recommendations was needed and therefore an Odette project was initiated to do just that.

A team of experts from BMW, Ford, PSA, SEAT, Skoda, Volvo, Bosch, Hella, Johnson Controls, Axway and the Odette National Organisations have worked closely with the European CEN E-Invoicing Group to ensure all needs are considered on a cross-industry basis.

The guidelines document that the project group are just completing focuses on eInvoicing via EDI, namely EDIFACT, which is the main method for information exchange and automated processing in the automotive supply chain. The challenge is not only to replace paper documents by electronic ones, but to ensure and enable automatic processing.

The project team has been analysing the various options for eInvoicing and have been describing the best practice solutions that meet the latest legal requirements and which fit into the existing infrastructure.

The resulting document will be an essential guide for anyone involved in financial transactions within the automotive industry. It will be available from the Publications area of the Odette website during December.

For more information please contact Joerg Walther