The Business Payments Coalition’s market pilot represents the culmination of years of development to redefine how American businesses manage their invoicing. Let’s delve into the details of this project to reveal a transformative initiative ready to reshape the world of B2B transactions in the United States.
This article marks the second installment of our two-part series providing an in-depth exploration of the current landscape of e-invoicing adoption in the U.S. If you haven’t done so already, make sure to familiarize yourself with the first article, where we examined the role of tax in driving e-invoicing adoption, explored potential VAT implementation in the U.S., and discussed issues such as fragmentation and other challenges.
A Deep Dive into the BPC's Market Pilot Phases
The market pilot, launched by the Business Payments Coalition in 2022, aimed to design, build, and test a virtual network facilitating the exchange of invoices among American businesses. The primary goals were to establish common standards, formats, and an open, secure network with a standardized delivery framework through certified service providers. Executed in three distinct waves, the pilot focused on developing, testing, and proving the concept of these new standards, including the creation of access points to the network and the actual delivery of e-invoices.
Progressing through these phases, the pilot sought to build on the success of each wave, incorporating lessons learned to identify best practices and eliminate barriers hindering U.S. businesses from adopting e-invoicing. Initially planned to conclude by the end of 2022, the pilot aimed to establish an operational B2B invoice Exchange Framework for the U.S. market in 2023.
Over 90 diverse entities participated in the pilot, including:
- Service Providers
- Large Corporates
- Financial Institutions
- Business-to-Business Networks
- Various Invoice Service Providers
The project then garnered insights from consultants, billing service providers, and stakeholders on the accounts payable (AP) and accounts receivable (AR) sides. Given the emphasis on faster payments, significant involvement from bank processes and major corporations, such as Microsoft, was observed. Different users from these businesses provided varied experiences and personas, ensuring a comprehensive representation.
The pilot's final wave, originally slated for Q4 2022, extended into the first quarter of 2023 for additional testing and development. In April 2023, it was formally concluded, marking the transition to a go-live network for the U.S.
The Role of the Digital Business Networks Alliance
The Digital Business Networks Alliance is a non-profit organization established to oversee the broader ecosystem of invoice service providers within the new delivery network. Its responsibilities include onboarding new members and access point providers, supporting the infrastructure facilitating this network, and fostering widespread adoption to create a network effect that attracts an increasing number of businesses. While still in its early stages, the primary mission of the DBNAlliance is to operate an electronic delivery exchange network, soon accessible to all companies in the U.S.
The network is designed to facilitate the digital delivery of any invoice, enabling customers of all service providers to communicate seamlessly. This eliminates the constraint businesses previously faced, dictated by larger customers or multinationals, as they can now freely choose their service provider. Achieving this freedom relies on interoperability and the implementation of a four-corner model, mirroring successful approaches like Peppol and EESPA in Europe.
What does the Exchange Framework look like in practice?
- The DBNAlliance creates a B2B digital highway, employing a four-corner model, connecting businesses across the U.S. to exchange invoices in a common format.
- The invoice data structure adheres to UBL 2.1 (Universal Business Language), providing a global data dictionary and aligning with Peppol and the European invoicing standard.
- The AS4 protocol serves as the delivery channel, with mechanisms for data structure and exchange closely resembling, but not identical to, the Peppol Network.
These international standards ensure a high level of interoperability (over 90%) with any differences or divergences potentially addressed by service providers, enabling the conversion and augmentation of invoices for interpretation and receipt across diverse networks worldwide.
9 Benefits of the Exchange Framework
- Interoperability: Streamlining diverse invoice formats, codes, and information, promoting seamless business communication.
- Single Connection Point: The framework provides a unified connection point, allowing buyers to connect through a service provider and reach all participants in the network, reducing complexities.
- Standardized Invoice Format: Enforcing a single standard invoice format for the U.S. market ensures consistency across all participants, minimizing confusion and errors.
- Efficiency and Reduced Integration Efforts: Minimizing integration efforts by connecting through a service provider linked to the network eliminates the need for individual point solutions and EDI connections, enhancing operational efficiency.
- Elimination of Private Networks: The network's effect eliminates the necessity for private networks or specialized procurement and accounts payable (AP) networks, simplifying processes for recipients.
- Incentivized Participation: The participation of large corporations incentivizes others to join, creating a domino effect and fostering a collaborative ecosystem.
- Cost Savings: Substantial cost reductions result from eliminating expenses associated with traditional point-to-point connections and reducing reliance on paper, PDFs, and manual processing.
- Streamlined Operations: Shifting away from manual processes removes the need for posting, printing, and mailing manual tax coding, streamlining operations within large AP departments.
- Reallocation of Resources: By reducing manual tasks, the framework enables the reallocation of resources within AP departments toward more strategic and value-added activities.
Interoperability Challenges Beyond the U.S. Borders
While a standardized framework, shared standards, and a unified network form a crucial part of the puzzle for U.S. businesses, achieving interoperability extends beyond these components. Multinational enterprises operating beyond the United States face an additional challenge in navigating diverse tax-driven mandates. These mandates, tailored to specific entities, introduce many formats, standards, syntaxes, software certification requirements, and signature specifications variations. The complexity is particularly pronounced for multinationals operating globally outside North America as they contend with these challenges internationally.
Historically, businesses addressed these challenges tactically, relying on local finance or country managers to seek localized solutions or outsource to regional providers. However, the rapid evolution of invoicing dynamics and global mandates has rendered such local approaches increasingly intricate. Depending solely on local tactical solutions is no longer feasible. The imperative is now to approach this strategically, seeking a singular, scalable method for compliance. This shift is apparent not only among businesses but is also reflected in customer demands and finance and accounting platforms.
A Collaborative Solution: Comarch e-Invoicing
It is evident that ensuring the longevity and functionality of systems is of prime importance. Given the complex nature and challenge of navigating this terrain independently, the adoption of a collaborative solution, such as Comarch e-Invoicing, becomes necessary.
Comarch e-Invoicing stands out as a scalable, robust platform facilitating secure document exchange with business partners worldwide. Crafted with the ongoing digital transformation in mind, our tool is fully compliant with the latest regulations, and it adheres to modern data transfer standards. Drawing from more than 20 years of market presence, we’ve honed our sensitivity to clients' unique needs, tailoring each solution accordingly. Explore further details about Comarch e-Invoicing or contact us directly – we’re delighted to guide you through the digitization process.
The Current State of E-Invoicing in the U.S. – FAQ
Can a U.S. company join the Peppol network?
Yes, U.S. businesses can join the Peppol network to exchange e-invoices globally. Engaging with a Peppol-certified service provider enables them to obtain a unique Peppol ID for seamless cross-border transactions.
Has tax been considered for the new U.S. initiative?
Absolutely. While tax authorities aren't directly involved, the invoice structure includes tax considerations. Tax category codes and exemption codes, maintained by X12 with a common taxonomy, enhance automation and tax coding in the invoicing process.
Under the U.S. B2B Digital Highway, what if your customer uses a different service provider?
There are no additional charges for using different service providers. The four-corner model allows businesses to choose one service provider of their preference without incurring extra fees, promoting an open network with certified providers.
What is the timeline for the go-live phase of the new network?
The go-live phase is expected in Q3 or Q4. Service providers are finalizing membership with the Digital Business Networks Alliance, and network effects will become evident as large corporations join, with businesses of all sizes anticipated to follow.