Case:EInvoicing in Denmark (description)

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Case Study

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Introduction

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Context

Paper based invoicing is an expensive process, so it is a prime candidate for digitalisation. Paper requires manual processing by employees in the public sector and private companies. It incurs a number of costs including paper, printing and postage, and a considerable risk of errors.

The eInvoicing project covers invoices for all kinds of goods based on service contracts also including suppliers of water, energy,transportation, and others. (Latter examples have exceptional status of the European Procurement Directive 2004/18/EC; i.e. enjoy different regulations as conventional goods. For the conversion to the electronic invoicing to be complete, it must be compulsory. Otherwise, both public and private entities will be left with two overlapping systems – one manual and one digital. This requires:

That all public institutions are able to receive electronic invoices.
The establishment of an electronic distribution and "postal service".
A link that can convert paper invoices to electronic ones from companies who do not have the volume to justify the investment in electronic invoicing systems.
A distinction between central infrastructure (distribution and postal service) and de-central use (internal accounting systems, etc.). In order to reap the efficiency benefits as quickly as possible, the eInvoicing project establishes the overall infrastructure, while the individual public entity must implement an efficient electronic workflow system to handle the approval of electronic invoices in alignment with its internal administration and systems.
That the solution is based on proven market technology and private vendors, to reduce cost and uncertainty.
That the savings earned by increased efficiency are not retained by the individual public entity, but passed back to the public treasury.

From a rather functional view, this in addition requires:

The creation of a unique identification system for public entities compulsorily to be used in invoicing proceedings where public entities are involved. This identification system shall allow the unique and unambiguous identification of physical locations and legal entities by an already established system in the business sector; the EAN location number.

[image] According to the Global Location Number (GLN) the EAN location number has a 13-digit numeric data structure and is composed of:

GS1 Company Prefix (hence: Public Authority Prefix) – assigned by the GS1 Member Organisation (7 digits)
Location Reference –allocated by the company (public authority) to a specific location (5 digits)
Check Digit – calculated according to the standard algorithm (1 digit) The provision of a secure network where eInvoices are transmitted between customers and suppliers. (A Value Added Services Network infrastructure was used in Denmark, but an Internet based infrastructure may also be used).

Thus, the specific requirement concerning interoperability (IOP) was to achieve IOP between all public entities and the private companies who do business with them in terms of invoicing procedures independent of the kind of service or product sold. I.e. if we think of a workflow existent between them - IOP between different stages of a supply chain had to be achieved with thousands of organizations on each side. The eInvoicing currently encompasses "only" the invoicing process, other process flows such as "match invoice with order" or pay invoice are currently in the development.

A specific challenge to meet this interoperability requirement is that electronic invoices generally are to be sent by the Value-Added Network Services – which is a sort of electronic postal service. This network collects and distributes all electronic invoices to the right customers at their electronic postal address (the EAN location number). I.e. transportation via VANS centralises the transport of invoices and requires a unique identification system of the public entities in order to electronically address and route the invoice to the respective public authority