22-23 Oct 2008, Rome2008 ICH User Group Meeting 1 SIS e-Invoicing Legal Aspects Jean-Christophe...

22-23 Oct 2008, Rome2008 ICH User Group Meeting 1

SISe-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 toe-Invoicing


The typical paper process is fragmented and discontinuous

e-invoicing process

Supplier

Airline AP System

TransmitInvoice

Electronically

TransmitInvoice

Electronically

Print PaperInvoice

Mail Invoice

Supplier• Receives Paper

Invoice• Checks Invoice

on Paper

Airline Manager

Invoice DataEntry

AP Clerk

Airline AP SystemTypical

paper process

The Internet

XML01110001101010010011101 0111000110101001001110101011


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)


e-Invoicing with Integrated Settlement


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


e-Invoicing with IS

BilledAirline

Integrated Settlement (IS)

BillingAirline

Enab

ling

Proc

esse

s

Billing & Invoicing ProcessesCentralRepository

“DigitalSignature”Company

Enab

ling

Proc

esse

sSettlement Processes

ICH ACH

Processes at time of SalesNFP

engineARC COMPASS™

ProrateEngine

IS-WEB

IS-XML

IS-IDEC

Other

IS-WEB

IS-XML

IS-IDEC

Billing File / Data(similar to today)

Billing File / Data(similar to today)

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


Legal Aspects ofe-Invoicing


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


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:

1. Identification of invoicing party (“Authenticity of origin”)

2. 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)


Life in the global environment

ProblemsVariable technical skills and IT infrastructureNo universal standard applicable everywhereLegislation 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


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


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


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


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 Billing

Carrier

U.S. E.U.

U.S.

E.U.

Digital Signature

Required?

Billed Carrier


Legal obligations ofe-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


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


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


Thank you.

Email:

[email protected]

SIS Web:

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

mailto:[email protected]

22-23 Oct 2008, Rome2008 ICH User Group Meeting 1 SIS e-Invoicing Legal Aspects Jean-Christophe...

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