http://www.finextra.com/blogs/fullblog.aspx?blogid=9015
http://www.finextra.com/blogs/fullblog.aspx?blogid=8900

http://www.finextra.com/blogs/fullblog.aspx?blogid=8900
http://www.finextra.com/blogs/fullblog.aspx?blogid=8900
http://www.finextra.com/blogs/fullblog.aspx?blogid=8859
http://www.finextra.com/blogs/fullblog.aspx?blogid=7453

Recent blog posts on Finextra

http://www.finextra.com/blogs/fullblog.aspx?blogid=9015

http://www.finextra.com/blogs/fullblog.aspx?blogid=8900

http://www.finextra.com/blogs/fullblog.aspx?blogid=8900

http://www.finextra.com/blogs/fullblog.aspx?blogid=8900

http://www.finextra.com/blogs/fullblog.aspx?blogid=8859

http://www.finextra.com/blogs/fullblog.aspx?blogid=7453

Kaja Bajowska: 2x ZEF- days

Kaja Bajowska: 2x ZEF- days

Winning posts

Recent posts:
Apr 2013 Why us reuse to difficult? 403 views
Mar 2013 Cutting admin cost in half - video 1110
23 Feb 2013 Virgin territory 1987
22 Feb 2013 Is SME-sector competitiveness important? 2254
18 Feb 2013 The biggest ever revolution in banking a... 5072

some way to go to beat 2009 posted:
27 Apr 2009 Questions European tax payers should ask 11122 wievs
26 Apr 2009 Think small 8168
28 Apr 2009 e-id service making great progress 7113
23 Dec 2009 I cannot see around the corner..6396
29 Dec 2009 If you do not know where you are going -...5963

Why is reuse so difficult?

Most countries have established e-society strategies aiming at ao providing public sector services via the Internet. Progress has generally been fast with general information sharing  - but when it comes to private information (health, tax, social benefits, school records etc) - not to talk about signing documents - progress is generally stopped due to a perceived lack of tools.

In several countries it has luckily been realised realised, that reusing e-bank sign-in credentials - for both strong id and signing (I just established a limited company with 5 shareholders - no paper) -  not only in other private sector but especially public sector services is a key accelerator for e-society migration. To reuse means that ready trust and big volume habits can be built on > fast adoption - in addition to saving hundreds of millions (should this not be in strongest focus these days?).

Listing benefits:

- ready high volume habit (10-15 times more usage of strong tool - than all other potential cases taken together)  > economy of repetition (exponentially growing value in fragmenting world) and economy of scale

- the tool has to be strong enough for banking (supervision in place) = strong enough for any use

- tool can be used both for id and signing documents (can also provide age)- the tool has already been invested in  > economy of reuse

- banks are trusted (in this aspect at least..)  > economy of trust

-  banks as service providers have to adhere to anti-money laundering legislation anyway when opening accounts and handing over e-id tool

- banks provide the service also to unbanked

- payback time for banks - they should do this as good-for-society-at-large (income will not be big - but can cover the costs with some margin)

So why is reuse so difficult to spread faster? Why do tax payers not demand it? Why is it accepted that the public sector invests huge amounts in always-failing separate credentials? Anybody in the know?

Cutting admin cost in half - video

http://youtu.be/Kb3q2viAbbk

Great vision. Decent preacher.

 If you do not know where you are going, any road will do. 

Or even worse - nobody is going anywhere

Virgin territory

A lot of time and effort has been spent on automating manufacturing and logistics in large companies. Less has been spent on their administrative processes. Automation of SME administration and government reporting still appears as virgin territory.

As the SME sector stand for some 65% of corporate turnover and is the one that will employ more when large enterprises both cut and offshore it should be obvious that now is the time to standardize, digitalize, automate and harmonize x-EU.

Needless to say that no country can afford the present low productivity in the public sector either and that also the EU red tape initiative should be given full attention. Any new reporting requirement should be critically assessed and if found to be important enough it should be digital and EU-harmonised from the outset. Reusing existing tools should be the norm (bank credentials for strong e-id and contract signing, e-invoicing to curb the grey economy etc).

Only by getting the banking system involved - starting from building the 4-corner e-invoicing and payment automation as a platform - can the at least 350bn productity improvement be achieved fast and cost efficiently. Payback time for banks.

Is SME-sector competitiveness important?

22 Feb, 2013 04:42

Is SME-sector competitiveness important? If governments consider SME-sector competitiveness important they should do something about red tape and automation of administrative processes. The key to the latter is fast migration to structured e-invoicing - paving the way to automated accounting, real time payments, automated VAT-reporting, automated cash flow estimates, cost- efficient anti-grey economy measures etc.

As this should be a no-brainer, the next question is how to get there fast. Our experience:

1. Make sure that banks offer e-invoicing as part of e-banking and file transfer services. Only banks have the power to address the corporate mass market cost-efficiently all the way to secure payment automation and account statement based accounting.

2. Set deadlines for accepting paper and e-mailed PDF invoices

3. Implement cash based accounting as recommended in the VAT directive.

The biggest ever revolution in banking

As I am now checking out from full time employment I take this opportunity to sum up what we (not I..) at Nordea, Tieto, the EC Expert Group on e-Invoicing, the Real Time Economy program etc achieved in the some 40 years of bringing more technology into banking and beyond in the new connecting-customers dimension. The world is by no means ready, so I will continue contributing to the RTE program (for Finland and EU single market).More about that and ZEF Solutions - a growth company I am chairing - later.

What did we achieve?

1. E-banking - the biggest ever revolution in banking. We did not quite realise what dimensions of customer value was going to delivered when we launched e-banking in 79 for corporates and SME+home PC-banking in 82. Now there are som 5,3m e-banking contracts in a country with 5,5m citizens (some seem to pay for the value to two banks..). We did not realise either what kind of platform e-banking was going to be for the "connecting customers" and extended payments services.

2. Cutting costs of banking in Finland in half. When only 1% of customers need branches for transactions this massive saving of costs - customers used to pay every cent of - was made possible by bringing the services to homes, offices and in between with with mobiles.

3. Eliminating cheques and radically cutting use of cash. Transparent charging in 83 eliminated cheque usage and card payments took over and was pushed also as they were used as ID tool for bill payment terminals - which again paved way for PC-banking.

4. Making it possible for bank customers to use the e-bank credentials in public sector and other services where strong Id-tools (one-time password) are needed. Economy of reuse, economy of repetition and economy of trust - big time. Also non-bank customers can have the credentials.

5. Eliminating need for paper contracts - first the loan agreements as these could be signed with the e-bank passwords, then any contracts between 3rd parties and finally also contracts signed on behalf of employers (understanding that it always is Mr Same Guy doing things - irrespective of roles). Connecting customers - again..

6. Real time e-commerce payments - by reusing bill payment infrastructure.

7. E-invoicing by banks in just-like-payments 4-corner model. Any-format-out and any-format-in white label service launched by Tieto. In practise all enterprises signed up in Finland and 70% already using. Heading for 100% structured (not emailed PDFs) e-invoicing soon.

8. Mobile notifications and press "a" (no PIN) payment approval of e-invoices. This is the proper road into mobile banking at large. Moving from self-service to service...

9. E-salary statements as clickable addition to account credit.

10. EU-harmonisation - no more mandatory digital signing of e-invoicing making adoption easier for SMEs and VAT-directive recommending cash based accounting.

11. Designing the next value layers enabled by structured e-invoicing - automated accounting, cash flow estimates, automated VAT-reporting etc. - central parts of RTE program's ambition to cut SME administrative costs in half (and save massively also in the public sector...). The biggest ever revolution in administrative processes...

12. Finding efficient and cost efficient anti-grey-economy tools by combining real time salary reporting and e-invoicing based VAT-reporting. It is our money...

13. Standardisation: Finvoice, TEAPPS and ISO20022: for credit payments (SEPA), payment references, e-invoicing, account statements, account inquiries, VAT-reporting etc

14. Started with Union Bank of Finland that grew into Nordea Bank - one of the most stable, profitable and highest market value banks in Europe.

15. Tieto was established in 68 by UBF and delivered much of the industry reshaping solutions for ao Nordea. Now a leading 17.000 strong multisector IT service company.

But there is much more to do - so I will try to get back with an action point list later.

Established limited company – virtually in real time

As I plan to step down from full time employment at Tieto but will continue as advisor in various projects I needed to establish a company of my own. Yesterday I thus logged in with my e-bank credentials to the Finnish Trade registry and completed the needed handily presented information, signed it with my e-bank credentials and sent a signing request to the other shareholders.

They signed with their e-banking credentials (also unbanked persons can have them) and I had my company registered and corporate register number issued by return. Easy as that – no paper – no delays!

So my next thought was: Why on earth is not all contract signing etc done in the same way? Much is – but not all. Pure intertia..

Anti-interoperability

We keep hearing from enraged enterprises that some e-invoicing service providers still continue with their old 3-corner strategy. Signing up big invoice reveivers and trying to force suppliers to sign up with this particular service provider.

Especially angry comments come from those who already have a functioning relationship for their large volumes in the domestic market – and then for artificial lack-of-interoperability reasons – the 3-corner operator tries to force them to become customers.

This slows down e-invoicing adoption, is anti-competitive and is not a sustainable model for any operator. The sooner it becomes so-last-season the better for the customers and society at large.

Give citizens a choice - and this is what they choose

Strong e-id is often needed when logging in also to non-banking services. Reusing bank e-id also there - especially in the public sector - is something of the most sensemaking aspects of also otherwise much needed public-private co-operation. 2011 was a great year for bank e-id (TUPAS) - the alternative (a state issued smartcard) is not used at all. It is to be hoped that no further countries will try the citizens smartcard route (our dead on arrival experience should deter). Background here: http://www.finextra.com/community/fullblog.aspx?blogid=2820

Bank e-id tools can also be had by the non-banked. Close to 30m transactions in Finland would translate to 2,1 bn in Europe. Massive cost-saving - and would deliver much faster public sector e-services.

Using bank ID for login to third parties started in 1993 in Finland. Now at least Sweden, Estonia, Norway, Denmark are using it - and at least Canada is joining soon. It would be interesting to see if somebody can come up with real counterarguments in the still-out-countries.

e-Commerce payments (like the Dutch Ideal) was introduced in Finland in 1996. Good growth also there. Again it is a question of economy of repetition (same procedure as when paying bills), economy of reuse, economy of scale, economy of scope and economy of trust.

My name is Guy. Same Guy. Reissued

My name is Guy. Mr Same Guy. I show up in as a so called private customer off hours, then during working hours as a corporate customer, as a citizen in public sector services and often also as a member of associations, clubs etc.

My point is that there are no corporate customers, no private customers, no citizens etc - only human customers or users in different roles. Why is it so often difficult for my service providers to keep the user experience constant when I use their services in different roles? Services should today not only be clinically simple - but also clinically similar.

There are no corporate customers: http://www.finextra.com/community/Fullblog.aspx?blogid=2867

Miserable public isolation:

http://www.finextra.com/community/Fullblog.aspx?blogid=4415

The main reason - at least in banking (which I know more of) is the organizational structure - the units looking after the respective segments do not seem to get this basic fact that it really is the same user.

But it is not enough to get the same tools and user experience rolled out irrespective of the role. It should also be a goal to let the user use the same tools in different services. Here the prime example is the use of often needed bank-id codes in the seldom needed public sector.

The value of economy of repetition x-roles&x-services is rising exponentially with the overflow of information and technology. The best way forward is to start with tools in services needed often by many and then reuse them in services needed seldom by many. Even services needed seldom by few has a chance with this philosophy. Too often we start from the wrong end and Mr Same Guy is not getting the user experience he earns.

EU moving forward with e-invoicing

Snippets from multistake holder meeting

“· The European Council called for actions to encourage theuptake of e-invoicing in the EU and the European Parliament issued a resolution which calls for making e-invoicing mandatory in public procurement by 2016.

Einvoicing is seen as a potential source of significant savings for European public authorities.

· Several Member States made e-invoicing already mandatory in public procurement. There is also a solid basis for possible action at European level: the Communication "Reaping the benefits of electronic invoicing for Europe" (COM(2010)712), the Directive on the common system of value added tax (Council Directive 2010/45/EU), the Communication "A strategy for e-procurement"
(COM (2012)179) and the existing projects PEPPOL and E-prior.”

Mr Same Guy yesterday, today and tomorrow

1. Mr Same Guy yesterday.

In the old days – when we launched PC-banking for SMEs and private customers (1982) at Union Bank of Finland we lived with the false impression that we had private and corporate customers – when we defacto only had human customers – in different roles.

As a result the user experience was not similar enough across roles. This did not disturb customers too much as they were not overwhelmed with IT-initiatives.

2. Mr Same Guy today.

It is no news that Internet, Mobile Networks, Big Data (supported by exponentially cheaper processing), gamefication, YouTubes, pads, smartphones, omnipresent sensors etc etc is shovering potential users with information and propositions.

This means – Less Time for any ONE Thing. Which again means that user communities are split into an ever increasing number – consuming the only scarce resource – TIME – in such a way that rapid breakthroughs are very difficult to accomplish. Those who succeed can become Facebooks or Angry Birds..

So – we have tried to stress the need to (i) be clinically simple, (ii) clinically similar – across services AND roles and (iii) use platforms that are already familiar (Importance of Economy of Repetition growing exponentially). A good example of this has been to use bank ID also for public sector services.

3. Mr Same Guy in the future.

Nothing tells us that the change is slowing down. So in the future services will have to know much more about what the customer really needs – in his different roles – where he needs it – and how he can take it into use by just pressing “a” in his mobile device. Moving from self service to service.

e-Invoicing is not a goal in itself

E-invoicing as such does not save the 250bn/year cost. It is an enabler - and that is why the focus should move to the next layers.

Experts tend to dig so deep into details that they forget to communicate the big picture. What is the WHY for e-Invoicing? From the EC Expert Group angle the targets are clear:

1. Improve enterprise competitiveness. Structured e-invoicing (not e-mailed PDFs):

- enables automation of business processes at large (important part of cutting administration cost in half in the SME-sector - 65% of total corporate turnover - also the new-jobs creating sector)

- brings real time financial management

- cuts the need of and costs for financing

- cuts the cost of risk and risk mitigation (estimated to amount to 4% of corporate turnover)

2. Speed up migration to real Single market.  Harmonized rules for invoicing, accounting and VAT-reporting are the most important practical steps that can be taken for the moment. A seldom seen opportunity that is enabled by digitalization and supporting a natural migration to SEPA-payments.

3. Cutting the Grey Economy. One of the central reasons for the euro-crisis is the grey economy - taxes not being collected. With e-invoicing (and banning cash payments of invoices) the needed transparency can be achieved (especially with automated VAT-reporting) - without adding administrative costs for enterprises.

So - everything should be done to make the transition fast - like:

1. making it very clear that the business controls used for paper invoicing are perfectly sufficient also when using e-invoicing (the very target of the VAT-directive). Stop integrity&authenticity scare mongering.

2. setting deadlines for accepting paper and e-mailed PDFs - pressing send is easier than pressing print once the mass-market e-invoicing concepts introduced by services providers (especially banks) are in place

3. Set price for having to send unstructured invoices and for having to receive.

4. Stop scanning - set target date for starting to return paper and e-mails to senders.

Is there anything more important around in the business infrastructure field?

Final words on integrity and authenticity

A panel discussion at EXPP made it clear that further clarification is needed to make it clear what the EU Commission means with equal treatment of paper and e-invoicing. The VAT directive states that business controls are sufficient. Now people ask what does that mean? What kind of business controls?

The best way to fend off scare mongering - is to keep messages very simple. "If you send or receive paper invoices today and plan to start using e-invoices you can continue using the same business controls as before."

This also goes for e-mail invoices - even if all efforts should be made to move away from PDFs as they are not really enabling the automation of process the whole exercise is all about.

2020 – too late to afford

Most governments are trying hard to save tax payer’s money – and even more importantly trying to push the SME-sector into digital processes and financial administration. But still too many in EU seem too signal that 2020 is a deadline for unstructured invoicing.

More here:

http://eeiplatform.com/8528/an-overview-56-government-e-invoicing-initiatives-anything-missing-here/?utm_source=E-invoicing+Platform&utm_campaign=42f689713a-E-invoicing+Platform+-+Newsletter+week+27&utm_medium=email

Why are some governments still dragging their feet?

8 reasons for paper and PDF-deadlines NOW:

http://eeiplatform.com/8429/8-top-quoted-reasons-mandating-goverment-e-invoicing/?utm_source=E-invoicing+Platform&utm_campaign=5b97b520f0-E-invoicing+Platform+-+Newsletter+wk+26&utm_medium=email

An additional major one is that we need to free up soon very much smaller workforce (35m smaller in EU by 2020) for much more productive work if we intend to finance the welfare state and also start to reduce the far too big debt politicians have raised – buying votes with IOUs in our and our childrens names..

EC shaping up

^{from EEI-platfomr news:}

^{“We also received confirmation from several of our informal sources in Brussels. Some of them said that there are thoughts to make e-invoicing mandatory. Some others have the opinion that the e-invoicing uptake in the EU will get a boost (because of the liberalisation) as from 2013, making additional e-invoicing regulations redundant. 
A third piece of evidence can be found in the speech by EU Commissioner Michel Barnier. He lifted a corner of the veil on what he calls “act two” of the priority measures of the Single Market Act. Speaking at the European Parliament, last 21 June, Michel Barnier said that electronic invoicing would be oneof the priority measures for deepening the EU Internal Market.”}

64% of Finnish enterprises use e-invoicing

This will grow very fast as:

1.  Almost all enterprises have signed up for e-invoicing services (201 000 with banks by end 2011 – 85% of all active). All have not yet started to use the services but will have to as:

2.  The state sector and many enterprises have stopped scanning and return paper and PDFs.                                                           Deadlines for paper and PDFs  are a must  as the interest on senders side is too small (1% of turnover is not much in an SME) in face of many other pressing business issues.

China on the move with e-invoicing. How about your country?

http://eeiplatform.com/8190/china-issues-guidelines-to-promote-e-commerce-and-e-invoicing/?utm_source=E-invoicing+Platform&utm_campaign=753ea3d568-E-invoicing+Platform+-+Newsletter+week+23&utm_medium=email

The biggest change ever..

We have been running a Real Time Economy program in Finland since 2006 and it has become very clear that the elements created (from plan, concept to ready) will create the biggest change ever in business processes and financial administration.

The change is achieved by migration to real time exchange of structured and eventually globally ISO-standardized business information between enterprises and with the public sector. The automation achieved save massively work and costs, mitigates risks in many dimensions and lay the ground for real time management of liquidity and financing.

Migration to e-invoicing is laying a large part of the foundation (not a goal in itself) - due to its ability to create and transport structured data.  Saving stamps and envelopes by e-mailing PDFs is not saving much cost and is not laying the base for automation without resorting to difficult scanning procedures.

Banks in Finland were able to cut their combined costs in half with help of e-banking (and massively new dimensions of customer value and convenience). The automation layers created on top of e-invoicing will be much more important for society at large.

100% automation

http://www.finextra.com/community/fullblog.aspx?blogid=6536

100% SEPA

http://www.finextra.com/community/fullblog.aspx?blogid=6535

Demise of cash 2011

http://www.finextra.com/community/fullblog.aspx?blogid=6520

Give citizens a choice – this is what they will choose

http://www.finextra.com/community/fullblog.aspx?blogid=6519

Return to sender

http://www.finextra.com/community/Fullblog.aspx?blogid=6517

e-Invoicing - bank sector in Finland 2011

Noteworthy:

- banks have tremendous selling power - over 200 000 enterprises signed up - about 87% of active enterprises

- excellent and improving volume growth (even if Norway and Sweden are ahead in the consumer sector - as invoice senders are not discouraged to charge visibly for having to send paper there)

- on EU-level this would mean some 1,8 billion e-invoices - still a lot of room for growth

- b2b will grow even faster now as the state sector is applying "return to sender" for paper or emailed invoices (the idea is NOT to save stamps - but to enable process automation by using structured data and common standards

The biggest impact has been that banks – when moving in – electrified the market. Much more efforts and innovations from traditional service providers.

Time for the obvious good-for-society-at-large

I have often been asked lately how the e-invoice penetration in a country can be raised fast. This urge to speed up migration is increasingly driven by the need to cut costs and improve productivity – but also more by the need to get tax revenues lost in the grey economy.

It has been realized that mandatory digital signatures was a mistake and now when the VAT-directive has outlawed mandatory-ship it should be easy for any SME to use one of many generic portal services to send e-invoices – just like payments (subject to operators supporting interoperability – most do).

The answer is very simple. Invoice receivers – especially the rest of state and municipal sectors - should set deadlines for paper and e-mailed PDFs. If the service supply is adequate -  still during 2012 (granting billerspecific extensions when invoicing systems need tuning) – if the service supply is only building up and operator-roaming is scant then during the first half next year.

Mandatoryship is usually resented – but they are dearly needed now as the benefits are so massive for society at large – be it more competitive enterprises, better jobs, just tax collection, rule of law, CO2 reduction or lower tax pressure. The lack of symmetry needs this action as the SMEs sending invoices do not see much value in saving work worth 1pct of a small turnover and have no time to realize the huge benefits around the corner.

Norway joining the elite

Norway: “The transition to electronic invoicing is a major milestone on the path to complete digitisation of invoice management by the Norwegian public sector. By 1 July this year, almost half a million Norwegian companies will have to start sending their invoices to the State in electronic rather than paper form”

What is needed is a sufficient number of service providers for the SMEs (banks especially important) - and then the deadlines (not only - but especially in the public sector - to save tax payers' money). Deadlines because the SME sector have small immidiate benefits (1% of a small turnover may not be enough) and do not have time to realize that sizeable benefits that are enabled by structured invoicing (real time view of financials, lower risks, easier and cheaper financing, better cashflow,automated VAT reporting etc) - while the immidiate benefits for larger enterprises and the public sector are huge.

Some 15 countries have set public sector deadlines and more are on their way

Pillars of banking

The first and main pillar of banking is trust.  It can be built and maintained by sticking to moderate risk taking – both in  lending and recommending invest “products” – reputation building.  Trust improves customer retention – even when new entrants try to enter markets with often overly aggressive pricing.  Customer retention improves the stability in the deposit base –  de-facto long term natural and stable funding is increased – a second pillar. Then it is also possible for the bank to rely to a higher degree on interbank and money market funding. A banking sector with a high degree of trust is then able to better perform its key task in the economy – turn short term deposits and liquidity into long term financing – enabling investments.

But this is not enough in today’s world where customers are bombarded with convenience-adding technology from all corners of a global open market. To keep its share of the market a bank has - more than ever before – to think of how it can make life more convenient for customers in their private and corporate roles (it is the same person). Convenience has become a third pillar for customer retention – of growing importance. It is built of simplicity of language, clinically simple user interfaces, similar user experience for all services and all roles,  active recommendations (e-banking direction turned..), mobile omnipresence, prefilled forms, mobile notifications, no paper needed (instant agreements) etc.

A fourth pillar for customer retention – especially in the enterprise sector – can be built by paying attention to commercial value chains. Payments are the most important link here and it is clear that banks should look deeper into future of the networked economy and technology. Customer’s need to serve their customers and authorities with more structured and increasingly standardized data on a global scale. In the past the focus has much been in the procurement area – upstream from the payment – but now it has become apparent that the downstream area holds much more productivity improvement potential. This is the case because the largest sector – SMEs can benefit here – and they stand for over 60% of the enterprise sectors turnover, have only started to benefit from automation (have the biggest potential for improvement), will further automation in larger trading counterparts and especially in the public sector. Banks are well placed to serve in the fuller value chain – with solutions for payment automation, mobile notifications, account statement integrated accounting, VAT-reporting and payments, automated invoice financing, fronting archiving, risk mitigation services (globally with TSU/BPO). This is especially important as banks are used to work with strict and global standards.

The full value chain pillar – is built on elements from the payments and risk mitigation services – traditional strengths in commercial banking. On occasion there is a need to be worried about how much the wider importance of the payment area understood in bank management today.  Mobile hypes tend to get more sudden attention than deeper and longer term value creation. If this is not changed banks may lose out to entrants from new sectors (all the way to transaction account balances and financing) and society at large will have to wait longer and  pay much more for a much needed automation and real time economy.

Innovation leaps and bounds in banking

E-banking is one of the biggest innovations in banking - worth reflecting on from time to time.

So what was our WHY when we launched corporate e-banking in 1979? Mostly a question of speeding up payments and cutting costs by letting large enterprises have similar terminals in their offices as bank employees used in the back offices. In 1982 when e-banking for SMEs and private customers was introduced there was a different WHY.

Now it was about creating convenience - don't leave home for it - HomeUBF (kotiSYP). Initially it was for payments, gradually it expanded to all other services - all the way in thr mid90s to being able to sign loan documents electronically with the log-in codes. No need to travel to sign or for sending paper back and forth. Another innovation leap was realized when we discovered that this simple but strong and above all so familiar eID and e-signing tool can be used also between customers - citizen to public sector saving 100mplus in a small country like Finland.

Other leaps showed up when we realized that e-invoices can be transported as payments and e-salaries also - again the same WHY - convenience - economy of repetition.

And so it goes - now there is an immense platform of structured data with the ISO20022 global standard family support that can be used for the next WHY - mega improve corporate competitiveness in three dimensions:

1. Cutting admin cost in half,

2. Cutting cot of risk and

3. Improving finance and liquidity management - all with the same toolset.

EU pushing forward with e-invoicing

Important communication. “Europolitics also reports that ministers discussed the widespread adoption of e-invoicing, with all in attendance backing the European Commission publication 'e-Invoicing: Reaping the benefits of electronic invoicing for Europe', which outlines a blueprint for introducing cross-border e-invoicing”

http://bx.businessweek.com/e-invoicing/view?url=http%3A%2F%2Fwww.sharedserviceslink.com%2Ffile%2F94290%2Feu-ministers-set-out-online-billing-and-procurement-plans.html

Hadoop needed to extract the value

The United States of Europe

When now the market and media hystery around the Euro is fading away it is getting clear that half-pregnant is not a happy state. More integration is needed to reach the splendid potential of a true single market - the largest in the world - is needed.

It is now very clear that no national politicians are allowed to borrow money (in the citizens' childrens' name) at a rate that not only destroys their own economy - but also endangers the stability of other European countries (be they in the Eurozone or not). Most of this hectic borrowing has furthermore led to overconsumption (surely bad news for the environment) - not investments for the future or dismantling of expensive structures of the past.

The next grand step is thus now being taken - fiscal disciplin - the needed strong fundament for the United States of Europe.

While this is happening, other more practical EU harmonization issues need to progress as well. In the Finnish Real Time Economy program (aiming at cutting administrative cost in half and taking them real time) VAT collection has been chosen as a priority. VAT collection can not be a political issue and should thus be easy to implement.

The model created is very simple and is based on accelerated migration to e-invoicing (which has the 250bn business case as a whole). When in next couple of years almost all invoices are in electronic structured form (Finland already e50% in b2b) each invoice issued will automatically send the VAT information needed (EU-harmonized) to Tax (cloud-based register) in realtime. This will eliminate all VAT-reporting (60m workdays in enterprises - and a lot in Tax). E-invoice payments deliver the VAT to Tax automatically and the net amount to the seller - again saving costs both in enterprises and the public sector. Most devils in the details have already been addressed.

Productivity improvements on a grand scale - and an important step forward for the Single Market. Not to talk about getting tax (a big bite out of the 118bn VAT Gap - our money..) collected. At the same time we can get a firm grip on the high cost of the grey economy and criminal behavior.

Who can possibly be against this? Nobody, I am sure. But how can we get some more steam in the engine? DG Taxud is surely doing its part - but more is needed. Please join the supporters.

The importance of WHY

Many of you have surely seen this presentation by Simon Sinek http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html.  He very eloquently – with to help of  three circles outlines how important is not to start with the What (what is being offered – the outer circle) or with How this has been achived – but make it clear for ourselves and then for our audience Why we are doing what we are doing. I definitively recommend watching  and rewatching the video.

This Why often addresses good-for-society-at-large issues. Idealism of this sort will invariably bring both the needed passion to new levels, attract resources who have stronger drivers than money alone and makes the whole thing attractive for those that should buy in. It is not only a pure procurement matter – but something with a deeper meaning.

So when we applied this to the 5th stage of the Real Time Economy project we are running here in Finland we came up with the following:

Why are we running the program?

1.  Better competitivity for enterprises (better service, lower costs, easier control)

2. More efficient and better-serving public sectors (lower tax pressure brings new jobs)

3. Better jobs (less routine – more value add – better paid)

4. Harmonizing EU to create a true Single Market – VAT-reporting and collection in focus

5. Better tax collection – efficient, just and less fraud-prone

6. Lower CO2 emissions – net saving of 300g compared to paper based transaction

 

My experience is that this kind of approach – in e-banking, mobile communications (connecting people..), in e-business solutions (reusing e-banking and payment tools in e-business for e-id, e-invoicing etc,) has brought in a much better business case than expected.

Simon Sinek says it all eloquently.

2nd most viewed post in 2011 - e-banking is not ready

The second most viewed post last year states that e-banking is not ready: http://www.finextra.com/community/Fullblog.aspx?blogid=5353

The points raised can be crystallized as follows:

1. New generations of smartphones and tablets mean that also bank customers start to expect proactive intelligence and context based messages. In stead of only logging in starting to try to find something - get an expected or even better unexpectedly accurate service proposal to approve in real time - without further ado (when consumer protectionists do not hinder it)

2 These devices (and especially earlier versions still in use) are more seen as messaging tools than  PC-screen emulators..). The practise of approving e-invoices for payment with a single press "a" serves as guide and creates the habit with critical mass for the future.

3. E-banking should not serve only payments - but with the help of e-invoices automate enterprise administration on a large scale.

4. The e-banking customers should have the right to use the codes also when loggin in to other services - especially in the public sector where strong e-id is often needed.

Much work to do - some investments also needed - but not massive ones.

Most viewed post 2010 - no rose garden promised

When more countries enter the race to the future of business transaction automation our experience that it takes time may be useful - blog from late 2010:

"Nobody promised you a rose garden

I went to a book publishing party yesterday. Wonderful book about interior design and life by extraordinary personality. Lots of cultural types around and good food. And as I am kind of known as Mr. e-Invoicing the accountant present came up to me with his story – which went like this:

He: “ The migration to e-invoicing has not been easy. Lots of things went wrong in the beginning.”

Me: “Have you heard about any new networked service that would function perfectly from the beginning? And if too few users join in - there will not be any second version and even the most good-for-society-at-large thing will never happen”

He: “Of course it is so  – and now it all functions very well”

Me: “So let us tell the story starting from the present happy day –problem stories of yore have a tendency to stay  around far too long – and change resisters too often believe that progress does not happen.”

So we agreed. But the lessons we have learned mostly in the Nordic countries are that it takes time to get those who do not need ERP systems to understand that only fingers are needed to send the e-invoice for example from his secure e-bank-linked portal, that those who have ERP-systems see how important it is to check that these support the local standards properly and link up to interlinked service providers who can then convert to other standards as long as that is needed. Only then will the gates to the rose garden start to open – and what a rose garden..

But it will take time, the beginning takes some efforts and the opportunity to learn from our mistakes should not be missed."

http://www.finextra.com/community/Fullblog.aspx?blogid=4488

e-invoicing information sources

Still relevant interview - http://eeiplatform.com/3551/interview-with-the-chair-of-the-former-ec-expert-group-on-e-invoicing/

UNCEFACT>ISO 20022 was not ready then - but now it is! See other blogposts here.

And then a collection of e-invoicing information sources by EEIplatform:

http://eeiplatform.com/6886/7-websites-e-invoicing-ap-automation-content/

Business Week is also useful: http://bx.businessweek.com/electronic-invoicing/

and of course Bruno Koch: http://www.billentis.com/index_e.htm

Most read post–all times

Questions European Tax Payers should ask:

http://www.finextra.com/community/members/PreviewBlog.aspx?b_id=2815

This is a post from 2009. Even if the finance crisis has since hijacked almost all attention it is more than obvious that we need to push forward with this - not only to improve productivity in all enterprises and the public sector - but even more to liberate workforce for value creation.

The United States of Europe

When now the market and media hystery around the Euro is fading away it is getting clear that half-pregnant is not a happy state. More integration is needed to reach the splendid potential of a true single market - the largest in the world - is needed.

It is now very clear that no national politicians are allowed to borrow money (in the citizens' childrens' name) at a rate that not only destroys their own economy - but also endangers the stability of other European countries (be they in the Eurozone or not). Most of this hectic borrowing has furthermore led to overconsumption (surely bad news for the environment) - not investments for the future or dismantling of expensive structures of the past.

The next grand step is thus now being taken - fiscal disciplin - the needed strong fundament for the United States of Europe.

While this is happening, other more practical EU harmonization issues need to progress as well. In the Finnish Real Time Economy program (aiming at cutting administrative cost in half and taking them real time) VAT collection has been chosen as a priority. VAT collection can not be a political issue and should thus be easy to implement.

The model created is very simple and is based on accelerated migration to e-invoicing (which has the 250bn business case as a whole). When in next couple of years almost all invoices are in electronic structured form (Finland already e50% in b2b) each invoice issued will automatically send the VAT information needed (EU-harmonized) to Tax (cloud-based register) in realtime. This will eliminate all VAT-reporting (60m workdays in enterprises - and a lot in Tax). E-invoice payments deliver the VAT to Tax automatically and the net amount to the seller - again saving costs both in enterprises and the public sector. Most devils in the details have already been addressed.

Productivity improvements on a grand scale - and an important step forward for the Single Market. Not to talk about getting tax (a big bite out of the 118bn VAT Gap - our money..) collected. At the same time we can get a firm grip on tje high cost of the grey economy and criminal behavior.

Who can possibly be against this? Nobody I am sure. But how can we get some more steam in the engine? DG Taxud is surely doing its part - but more is needed. Please join the supporters.

Euro crisis–eerie silence

You have surely taken note of the eerie media silence that followed the daily barrages of real or imagined bad news. After the bold Italian package media seems to have lost interest – and as media does drive markets – also there the swings are now more moderate.

So was the whole thing a really a media fabrication? Why this abrupt attack – on countries where politicians had borrowed too much for ages? Why where they all of a sudden considered to be on the brink of bankruptcy? Why where no warning signals raised before? And how much did media hysteria have impact on investors, traders and regulators? Too much probably…

Why did rating companies not react? And why did investors continue to invest in state papers with waferthin margins – when they should have known that they continued to increase borrowing – when a decrease should have started.

Whatever the answers – now we have to look forward and do the proper painful adjustments. Work harder, spend less, export more and understand that the age of overborrowing in our childrens name is gone forever.

Innovation work rewarded

http://eeiplatform.com/6515/tieto-wins-financial-i-award-for-the-swift-e-invoicing-solutions/?utm_source=EEI+Platform&utm_campaign=00ba920b8f-E-invoicing+Platform+-+Newsletter+wk+51&utm_medium=email

Just like payments–in sight

With the establishment of eeSPA we now have the organization in place to drive towards e-invoicing functioning “Just-like-payments. You sign up with one and you reach your customer or supplier globally. Every enterprise is here free to choose their own service provider – nobody is forced to choose that of his customers. e-invoicing services are generic –driven by the global IOS20022 standard. This all of course means that there is a need for both rule-books, standards and implementation guidelines – meaning that service providers joining the network has to live up to minimum demands – otherwise the weakest link syndrom will destroy the value of the network

Some people say that standards are not important. Certainly should not be for the enterprises and many of today’s service providers can convert messages from most standards to most standards. But we need to look into the ERP-environments also – how much more cost-efficient these will become when the invoicing programs and other administrative applications are designed for ISO20022 from the outset.

So expecations towards eeSPA are high:

1. make e-invoicing happen

2. further interoperability

3. ISO20022 e-invoice message standard deployment and support for the other closely interacting ISO standards

Best of luck and success!

http://www.eespa.eu/EESPA%20Press%20Release-2011-12-15.pdf

Saving Tax payers’ money

We have on many occasions stressed the need for the public sector to more aggressively

-   save their own operating costs,

-  help enterprises to save cost,

-  drive enterprises across digitalization thresholds

-  cut CO2

-  make the single market real

-  collect VAT and other taxes due

-  further global standardization

Migration to e-invoicing furthers all these – and is furthered in return by all these.  So no efforts should be spared and bold action taken. Bold action means mandatory migration – needed as the 25bn public sector cost saving in EU public sectors (see Bruno Koch newsletters http://www.billentis.com/EBPP_EIPP_e.htm ) does not happen without it. These deadlines also drive private sector deadlines aiming at the 250bn cost saving for enterprises.

 

Saving own costs – tax payers’ money.

The public sector in Finland has estimated its cost saving to 300m€/year.  Bruno Koch has estimated the figure for the public sector in Austria to 590m. Estimates from UK point at 1-3bn and so forth. So we need the deadlines – but before that we need 0-investment and 0-ITskill just-like-payments functioning generic tools for the SME-sector.  It is of utmost importance to avoid buyerspecific portals and procedures for the SMEs.  Banks have to take action here – the investments are small and as most non-bank service providers have said – only banks can bring in the SME-sector fast on cost efficiently.  So it is also about taking responsibility for society at large.

A more competive Europe–drilling deeper

1. More competitive enterprises. How? Drilling down selectively:

1.1. Better products, selling, procurement and service processes – mostly (but not only)  a question of digitalization

1.1.1. Accepting e-invoices from suppliers save their and own costs and 300g CO2 every time – makes for a better customer

1.1.2. Sending e-invoices (ideally with global standard) saves some 20€ per invoice for the receiver (especially when posting codes are included) – makes for a more competitive supplier

1.2. Better productivity – cutting administrative costs in half by 2015

1.2.1. DG Enterprise 25% cutting-red-tape initiative (enhanced clinically clear language in regulation and rule books)

1.2.2. Migration to e-invoicing and payment automation

1.2.3. Automation of VAT-reporting and payments (real time enabled by e-invoicing)

1.2.4. Automated cash flow estimates (real time part enabled by e-invoicing)

1.2.5. Migration to cash-based accounting for enterprises in the sub2m€ category – enabling automated accounting by tying e-invoice to debits and credits in the electronic bank statement

1.2.6. Automated e-invoice financing (including reverse factoring)

1.2.7. Automated tax returns, financial, statistical, environmental and HR-reporting - using generic unified reporting codes and XBLR

1.2.8. Deploy global standards in cloud services to lower IT-costs and increase competition

1.3. Lower risks (cost of risk and risk mitigation estimated to 4% of turnover)

1.3.1. Migrate to e-invoicing >

1.3.2. Cut invoice receivables by increasing invoicing frequency (motivated by lower handling cost) – lowers credit, currency and finance-availability risks

1.3.3. Cut fraud and VAT-reporting risks by using trusted service provider networks

1.3.4. Use Bank Payment Obligations

1.4. Lower financing costs and better return on liquidity

1.4.1. E-invoicing speeds up payments and lowers financing needs

1.4.2. E-invoicing enabled Real Time accounting and cash flow estimates fine tune financing needs and enable better return on liquidity

1.4.3. Reverse factoring can lower credit margins

1.4.4. BPO enables risk taking by the party that knows the enterprise best

2. More competitive public sectors. How?

2.1. Lower administrative burden by 25% (DG enterprise red tape initiative)

2.2. Accept and send only structured electronic invoices – supporting interoperable global standards (ISO20022 family)

2.3. Adopt unified reporting codes for all tax, statistics, financing, sustainability and HR-reporting

2.4. Outsource and privatize routines – free up resources for guiding and supervising

3. More of a Single Market. How?

Examples from digitalization area:

3.1. Implement VAT-directive for simplified and equal treatment of e-invoices

3.2. Use global standards family (ISO20022) for e-procurement, e-invoicing, SEPA-payments, payment references, account statements, finance requests, reverse factoring, e-id and VAT-reporting

3.3. Automate and harmonize VAT-reporting and collection (split payment model)

3.4. Harmonize VAT-exemptions and tax rates generally 

3.5. Harmonize patenting

3.6. Use federated model for strong e-id (reuse e-bank codes) with ISO20022 e-id message standard

4. A mobile, educated, flexible, and motivated workforce. How?

Examples from digitalization area:

4.1. Liberate workforce by automating administration

4.2. Automate sales processes

5. Better rule of law. How?

Examples from digitalization area:

5.1. Migrate to e-invoicing

5.2. Automate VAT-reporting and payments

5.3. Regulate away cash for business transactions

6. Lower CO2 emissions. How?

Examples from digitalization area:

6.1.  E-invoicing and digitalized business processes

6.2.  Business-process integrated sustainability-reporting

6.3. High carbon tax

The above is viewed from the digitalizing business process angle – please feel free to fill in missing ones – also from other areas.

For a more competitive Europe–big picture

From time to time it is necessary to look at the big picture. What do we need for a more competitive Europe? Innovative and determined actions in many areas – like:

 

1. More competitive enterprises – innovative and productive. 85% of growth comes from product and service innovation – so this must have the highest attention.

2. More competitive public sectors – lower cost, lower tax pressure and less red tape.

3. A Single market – true harmonization makes the market bigger.

4. A mobile, educated, flexible, and motivated workforce – less routine work and more value creation (driven by rapidly retiring population).

5. Better rule of law – less fraud and tax evasion.

6. Lower CO2 emissions – less material, transport, travel and work that can be automated.

Detailing – what and how?

1. More competitive enterprises. How?

1.1. Innovative products and services

1.2. Innovative selling and service processes – mostly (but not only)  a question of digitalization

1.3. Better productivity – cutting administrative costs in half (including DG Enterprise 25% from red tape)

1.4. Lower risks

1.5. Lower financing costs and better return on liquidity

 

2. More competitive public sectors. How?

2.1. Lower administrative burden by 25% (DG enterprise red tape initiative)

2.2. Accept and send only structured electronic invoices – supporting interoperable global standards (ISO20022 family)

2.3. Adopt unified reporting codes for all tax, statistics, financing, sustainability and HR-reporting

2.4. Outsource and privatize routines – free up resources for guiding and supervising

 

3. More of a Single Market. How?

Examples from digitalization area:

3.1. Implement VAT-directive for simplified and equal treatment of e-invoices

3.2. Use global standards family (ISO20022) for e-procurement, e-invoicing, SEPA-payments, payment references, account statements, finance requests, reverse factoring, e-id and VAT-reporting

3.3. Automate and harmonize VAT-reporting and collection (split payment model)

3.4. Harmonize VAT-exemptions and tax rates generally 

3.5. Harmonize patenting

3.6. Use federated model for strong e-id (reuse e-bank codes) with ISO20022 e-id message standard

 

4. A mobile, educated, flexible, and motivated workforce. How?

Examples from digitalization area:

4.1. Liberate workforce by automating administration

4.2. Automate sales processes

 

5. Better rule of law. How?

Examples from digitalization area:

5.1. Migrate to e-invoicing

5.2. Automate VAT-reporting and payments

5.3. Regulate away cash for business transactions

 

6. Lower CO2 emissions. How?

Examples from digitalization area:

6.1.  E-invoicing and digitalized business processes

6.2.  Business-process integrated sustainability-reporting

6.3. High carbon tax

 

The above is viewed from the digitalizing business process angle – please feel free to fill in missing ones – also from other areas. I will drill deeper in some of these in the next post.

When will your country become e-id-progressive?

Canada joining the self-evident model - reuse what citizens already are used to, is secure and saves tons of tax payers money.

http://www.finextra.com/news/fullstory.aspx?newsitemid=23132

When will your country join? If not soon - why not?

Miserable public isolation: http://www.finextra.com/community/Fullblog.aspx?blogid=5932

Progressive Kazakhstan – how about your country

Kazakhstan is moving to e-invoicing with the help of the needed deadline for paper:

http://bx.businessweek.com/e-invoicing/view?url=http%3A%2F%2Fwww.sharedserviceslink.com%2Ffile%2F93958%2Fe-invoicing-in-kazakhstan-from-2012.html

The progressive club with public sector deadlines now include 11 countries (in some sort of chronological order of announcing - some include municipalities):

Denmark, Singapore, Italy, Spain, Sweden, Finland (b2b now over 40% - and rising fast), Brazil, Greece, Norway, USA, Hungary and Kazakstan.

Argentina, Portugal and Nepal have either total or partly implemented - as far as we know - and work is going on in Canada, Russia and Luxembourg - and many more.

To get this fundament - fur cutting administrative cost in half - in place faster - we of course need also the entire municipal sector and all sorts of big invoice receivers to announce the end of the era of dull and badly paid routine work - including error-prone scanning.

e-government checklist – expanded

http://www.finextra.com/community/FullBlog.aspx?blogid=5991

The high cost of cash

We have elected and pay for decision makers and regulators. Sometimes I get the impression that they try to govern as little as possible in important areas and overcompensate with irritating nitty-gritty.

An area where actions certainly is needing is in the fight against cash usage - at least for the following reasons:

1. Cash is expensive - according to EU-study cash-handling costs 50bn a year - and the consumer pays every cent of it. The problem is that she/he does not know it as the cost is hidden. Action point: Make cost visible by charging charging for withdrawals and usage.

2. Cash is an open invitation to crime. Be it drug dealing, illegal weapons, prostitution, gambling, black economy, grey economy, counterfeit, robberies, blackmail - you name it. If cash usage would be made difficult, an unusual and expensive practise - what would happen to crime?

Action point: Make the cost of all this (including crimeprevention, courts, jail systems - not to talk about costs to the victims) very clear to citizens.

3. Cash is the vehicle for not paying tax. The VAT-gap in EU in 2009 was 118,7bn. Much of this is due to avoidance schemes and politically motivated rather silly exceptions - but the fraud part is much dependent on cash (and paper/e-mail invoicing).

Action point: Make it clear that this is our - the tax payer's badly needed debt reduction money - being lost. Make e-invoicing and credit payments mandatory. Salaries and social benefits can be paid only to accounts (every identifiable person should have the right to a bank account and a direct debit card at decent cost).

4. Cash is CO2 heavy. How much CO2 does not the daily armoured car parades (out and in again) emit + printing and destroying vast amounts of paper.

Action point: Make the CO2 amount visible on global/EU/country levels and tax it.

When will investigating media notice this anacrony - using cash even in places where there are many alternatives - only because the many cost dimensions to society and the users are not known. Put the light on this - instead of being tools for populists protesting about handling charges becoming transparent (sic!). Media should also reveal how consumer organizations often are doing their best to protect old and create new unnecessary costs - instead of truly protecting consumer longer term interests.

Then the politicians might get the nerve to do something bolder about it.

When will your country become e-id-progressive?

Canada joining the self-evident model - reuse what citizens already are used to, is secure and saves tons of tax payers money.

http://www.finextra.com/news/fullstory.aspx?newsitemid=23132

When will your country join? If not soon - why not?

Miserable public isolation: http://www.finextra.com/community/Fullblog.aspx?blogid=5932

Progressive Kazakhstan - how about your country?

Kazakhstan is moving to e-invoicing with the help of the needed deadline for paper:

http://bx.businessweek.com/e-invoicing/view?url=http%3A%2F%2Fwww.sharedserviceslink.com%2Ffile%2F93958%2Fe-invoicing-in-kazakhstan-from-2012.html

The progressive club with public sector deadlines now include 11 countries (in some sort of chronological order of announcing - some include municipalities):

Denmark, Singapore, Italy, Spain, Sweden, Finland (b2b now over 40% - and rising fast), Brazil, Greece, Norway, USA, Hungary and Kazakstan.

Argentina, Portugal and Nepal have either total or partly implemented - as far as we know - and work is going on in Canada, Russia and Luxembourg - and many more.

To get this fundament - fur cutting administrative cost in half - in place faster - we of course need also the entire municipal sector and all sorts of big invoice receivers to announce the end of the era of dull and badly paid routine work - including error-prone scanning.

Näkökulmia taloushallintoon: Poliittisten tahojen aika toimia hallinnollisen taakan vähentämiseksi.

Verkkolasku rajaa riskiä ja säästää päästöjä - Kumppaniblogit - Talouselämä

Puolet pois yritysten hallintokuluista - Kumppaniblogit - Talouselämä

Miserable public isolation – who is holding back?

Who is holding back - governments or banks?

Needed for accelerating citizens' use of government e-services:

1. That the public sector realizes that it is not the only service citizens use - and in fact one of the most infrequently used and then

2. allows and encourages citizens to use the so frequently used familiar and secure e-banking log-in-id also in the public sector (banks can provide it also to those who do not use e-banking or have accounts)

- thus achieve a order-of-magnitude faster take-up

- get high citizen satisfaction

- save very substantial amounts of tax payers money

- avoid humiliation with failed smart card schemes

Why not? How long will tax payers allow this miserable isolation to continue?

More on this in earlier posts:

e-id service making great progress

http://www.finextra.com/community/Fullblog.aspx?id=2820:

Questions European tax payers should ask:

http://www.finextra.com/community/Fullblog.aspx?id=2815

e-ID volume progress in 2009:

http://www.finextra.com/community/Fullblog.aspx?id=4033

Reflections on blogs and blogs

I got the half a million pageviews message and looked into what I wrote in early 2010: "

"I have been writing blogs for about 3 years and it is helping me to get some messages and information out to partners, customers, students, researchers and others who share the networked economy passion.

About a year ago I was invited by finextra to start blogging on their site. As I have a background in banking and especially e- and 3rd generation e-banking I was glad to test out if my input would interest readers in this channel. Usually I publish the same stories in both my original Networked Economy blog and here - but add financial industry aspects in Finextra.

The results have been rather impressive. While 3 years at http://boharald.blogspot.com have produced 15 000 page views - 1 year in Finextra has produced 120 000 (8 months later 250 000)..

What does this say? First of all that the media matters - easy to find > brings in readers and more comments (not much though). Secondly that you can reach the audience without the help of journalists. This "filter" is of course sometimes very useful - but sometimes it is not adding anything but time. Sometimes more "neutral" journalists naturally add credibility to your cause - but then again may take away part of the passion - and are not necessarily much more trusted than the writer. A conclusion may then be that both are needed - and that the demands on both are on the rise.

See the big picture, show the big picture, get going, go deeper, keep going - and all the time communicate so that the market (including your competitors) get it."

Still sense-making I think.. maybe a full million is realistic?

What we would do differently today

If launching e-Invoicing today:

1. The SME-sector’s organizations were not involved strongly enough in the beginning.  They should have been co-owners of the productivity issue with e-invoicing and thus taking responsibility to tell enterprises that it is not only cost-saving in the core invoicing and payment process  – but an innovation platform that leads to:

- real-time view of financials with automated accounting and cash flow estimates

- automated VAT-reporting

- better cash flow based on faster payments and higher invoicing frequency

- lower credit risk based on faster payments and higher invoicing frequency

- automated invoice financing (and cheaper with supplier finance)

On this basis it would have been possible to more powerfully drive home the “Paper and e-mail invoices have no future”- mindset earlier.

Recommendation: communicate the no-future and “CUT50”-like targets and engage SME-organizations as co-owners

2. Cost-cutting aspect dwarfed other - even more important aspects -  like:

- sending and receiving e-invoices is better service for customers and suppliers alike

-  liberating back office staff for customer service (not just firing), selling and production – more interesting, productive and often better paid jobs

- CO2-reduction can be 300g per invoice (all included)

- cutting fraud risks and tax evasion (VATgap in EU 118,7 bn in 2009… our money..)

Recommendation: communicate the target beyond cutting costs – especially need to internally mobilize workforce

3. Only deadlines make it happen. General statements favoring e-invoices and carrots were not sufficient – the SMEs have so many issues to attend that migration is postponed without clear deadlines from buyers.

Recommendation: wide and early issuance of published early deadlines (all sectors – but especially public) stressing that individual exceptions can be granted for limited periods (for SMEs or their accounting service not using Internet or being in middle of upgrading invoicing applications)

4. Municipal sector was patchy (still is) – even if all have invested in receiving e-invoices they were too slow to issue deadlines for paper (not taking responsibility for tax payer’s money and pushing local enterprises into better competitiveness). Deadlines were sometimes delayed as they wanted to create ability to send first.

Recommendation: Stress need to save tax payer’s money also in municipalities and their responsibility to drive local enterprises into better productivity via e-invoicing. Deadlines for incoming paper should not be coupled to ability to send e-invoices as this takes more time.

5. The Finvoice standard was not implemented strictly enough > some interoperability challenges.

Recommendation: Use ISO20022 – both strict and equipped with clear and fast maintenance process

6. Separate bank network supporting only Finvoice. Work needed to get non-banks and banks to interoperate – worsened by lack of rulebook.

Recommendation: All service providers living up to strict customer identification, have recovery capability and support national standards should be allowed to join the network (and be shut out if rule book is not followed). The 3-corner model is anti-competitive (monopoly in relation to suppliers) and should not be allowed.

7. Too radical attempt to eliminate use of attachments in Finvoice standard. Corporate and public sector processes were not ready to integrate the attachments into the invoice.

Recommendation: Deploy standard that supports attachments – still working on eliminating the need.

8. Buyer-specific portals deployed despite rapid signing up of 200 000 enterprises by generic portal service providers (banks doing most of it). This development may be needed in some cases as an interim solution – but is quite obviously not good for suppliers who have to use different tools with different partners. This can also tie suppliers to buyers and lead to anti-competitive situations.

Recommendation: E-invoicing should work “just like payments” – sign up for generic service and send to all/receive from all without need for additional contracts or service charges from other end of chain.

9. Scanning invoices delayed migration to e-invoicing for no good reason. Pressing send is as easy as pressing print in most cases and scanning loses much of the data and has many quality problems.

Recommendation: No scanning – especially not in public sector. Where already in place a plan for stopping it is needed.

10. Late and patchy transparent pricing for paper invoices. Invoice senders were late (in Finland – faster in other Nordic countries) to start charging (visibly – customers pay all costs anyway) for sending paper invoices. Consumer organizations even tried to stop it – which leads to protection of unnecessary and hidden costs – instead of protecting consumers.

Recommendation: Drive open and logical pricing – in the best interest of customers.

11. The Single European Payment Area implemented harmonized payments first and moved to promoting e-invoicing later – despite our protests. As e-invoices automatically lead to IS20022 credit payments (SEPA) it would have been much easier and natural to implement PAN-EU e-invoicing first.

Recommendation: Pay attention to plug-in provided from e-invoice to payment in ISO20022

12. International aspects did not get enough attention early on. From a legal and tax point of view 95% of invoices are national -  but from an operational point of view especially in large and export/import oriented most and sometimes all invoices are sent cross-border from service centers. This has accentuated the need for the global ISO-e-invoicing standard and connectivity (which it also furthers) – especially as it automatically produces the ISO-payments.

13. Accounting profession should have been involved from the very beginning as so much of the process improvements can take place in their area of expertise. Once involved they produced several innovative ideas.

Recommendation: involve central players in multi-stake-holder forum

What we did right

What we (collectively) did right when launching e-invoicing and recommend:

1. Banks joined collectively with invoice portals and file transfer > payment automation was improved, financing aspects added and non-bank service providers were much invigorated. Only banks have the capability and business case to sign up the SME-sector quickly and cost-efficiently (ready tools from e-banking, payments and file transfers) – bringing in economy of scope, scale, trust, reuse and repetition.

Recommendation: involve key banks from the outset – and stress responsibility for society at large and fact that investment needs for banks are very small – especially if they deploy cloud services

2. The Finvoice standard was created (regularly updated by the banking community – now version 1.3) and supported by over 50 suppliers of invoicing software and all nonbank service providers

Recommendation: involve financial administration software and service providers and choose ISO20022 as base

3. The bank service was designed to serve both b2b and b2c and also printed paper invoices for non-e-receivers. B2c turned out to be an important eye-opener for SME-employees as most of them use e-banking and the “just-approve” convenience (pro filling in lengthy reference numbers and other details) became apparent.

Recommendation: move towards same solution for SMEs sending invoices to other enterprises and consumers

4. Networking between bank and non-bank networks evolved

Recommendation: Important to get joint network with rule-book established early on.

5. A number of municipalities and enterprises issued deadlines for paper and e-mail invoices early on and the State Treasury gradually increased firmness of deadlines for accepting unstructured invoices to soon join UPM Kymmene (amongst top3 paper manufacturer globally) returning paper and e-mail invoices (no scanning).

6. Direct debit was integrated -  eliminating the need for invoice senders to register receivers for paper, e-invoice and direct debit and instead send the entire invoice file to chosen service provider who prints for non-e receivers and sends the rest to the e-invoice address of the receiver who decides which invoices and how big ones can be paid automatically at due date. This model both saves very much costs at the invoice sender end as there is no need to interfere and keep repositories and makes it more convenient for the payer as all is done in one place – the familiar e-bank.

Recommendation: integrate direct debit

7. Mobile notifications – including click “a” for payment approval (no PIN needed) for due date and “n” for immediate (often real time) time payment

8. The partly publicly funded Real Time Economy program was started in 2006 (with resources and input from enterprises, banks, the public sector, the accounting profession and invoice operators)

9. Active involvement on EU level (with the Commission and the European Central Bank) and global level – leading to new VAT directive and global standards -  ISO20022 standardization for (i) payment reference, (ii) credit payment (used in SEPA), (iii) account statements, (iv) Bank Payment Obligation and (v) the invoice message standard

10. Clear cost-cutting potential  message from State Treasury:  cost for handling paper or e-mail invoice > 30€, cost for e-invoice 10€ and cost for automated e-invoice 1€. Total savings estimate for state sector 150m€/annum, municipal sector 150m€/annum and for enterprises 2,8bn€ (Federation for Finnish Industry)

What we would do differently will be published later.

Putting the horse before the cart

I have long been arguing that the natural way to SEPA-payments is through e-invoicing – especially now when ISO20022 for e-invoicing is ready. Here you do not need to force anybody to do SEPA-payments – they materialize automatically.

And as posted before – a u-turn in direct debit – should also be done – e-invoicing becoming the master would save costs enormously.

So – on the road to a harmonized Single Market:

Still time for much needed u-turn

SEPA direct debit is a huge step in the wrong direction - making direct debit more complicated for users and more expensive for invoice senders (who naturally add these costs into higher prices - the consumer always pays - every cent).

The obvious much better alternative is to integrate direct debit into e-invoicing - which is any way on the rise and is becoming the XML-stuctured data delivering innovation platform for wide range of standardized administrative processes. Also e-payments (in the Nordics and Ideal in the Netherlands) should adopt the posting codes and VAT-reporting capability planned for e-invoicing.

It works as follows:

1. the invoice sender sends the entire invoice file to service providers (no need to register and keep track of who wants paper, direct debit or e-invoice). How much cannot been saved with this? Billions... that would benefit consumers, SMEs and sellers alike.

2. the service providers sends e-invoices to e-banks for consumers who use e-banks (rapidly growing majority in all countries), and to automated payment service for those that have been using traditional direct debit and payment services (not ready to use e-banking). How much cannot be saved in banks by this consolidation? Hundreds of millions..

3. the invoice receiver (consumer, SME etc) decides in the e-bank which invoices (type monthly rent etc) can be paid automatically and which she/he wants to see first.

Several banks have already provided this service - including offering a limit like (if my sons mobile bill is less than 30€ it can be paid automatically - if more I want to see it..). If e-bank is not used the automatic payment preference is agreed with branch or contact centre.

In all cases a message (SMS or IM) to the mobile offers the press "a" for payment on due date (for those not on automated payment) and press "n" for real time payment (think of what kind of discounts this can offer...)

The hassle for the consumer is so widely eliminated in this model - and the cost for all so much smaller - that there must be really good reasons for not doing a u-turn. Or history will beriddle "We do it - because we have decided so - long ago - before we realized that there are better alternatives."

So stop the train - before more money is spent on in-no-way sense-making complicated e-mandate puzzles - and do a proper re-evaluation. E-invoicing is coming anyway - in a couple of years.

I am listening - anybody ready to defend the antiquated model?

First in the world

Global high performance ISO20022 e-invoice message format exchanged over SWIFT

http://www.tieto.com/archive/news/2011/tieto-to-provide-e-invoicing-service-over-swift

Now it is time for all interested in improving interoperability and starting cost lowering trend for the benefit of enterprises, society at large and also themselves to join the pioneers. Please let me know so that credit can be given.

The e-invoicing session at SIBOS was very encouraging - 99% of banks present showed a green card when asked if e-invoicing is a part of payments. A good dozen showed green cards when asked if the are actively selling e-invoice. Only banks can bring the needed sales force and economy of scope needed by all.

Tax payer's money - and much more

We all know how burning the need to save costs is in the public sector - to have to borrow less and avoid competitiveness destroying tax hikes etc. When this is coupled with a need to move a soon scarce workforce to more productive, better paid and more motivating tasks - which will take time - it is obvious: NO TIME TO LOSE - structural and wide structural changes are needed - innovation platforms (and standards)  for radical and disruptive innovations.

Payments have been an innovation platform - for e-banking, for card business, for factoring, for file transfers, e-invoicing, e-payments, e-pensions, e-invoicing etc

E-banking as been an innovation platform - for e-trading, e-loans, e-id services, e-payments, e-salary, e-invoicing etc

E-invoicing is the newest innovation platform - for automated and real time finance, cash management, administration, reporting, VAT-payments and risk mitigation services  - scores of them (detailed in earlier blogs).

Back to the public sector. The State Treasury in Finland has calculated that it could save 150m with e-invoicing and the municipal sector 150m - 300m€ tax payer's money - every year. Translate that to EU means 21bn/year and North America is probably much the same - tax payer's money. Then kick in millions of tons of CO2 avoided and 10s of billions of VAT and other taxes collected where they should be..

And then the businesses themselves. The Finnish Federation of industries arrived at a savings potential of 2,8bn/year for enterprises (b2b only). Translating that to Europe gives 200bn and kicking in b2c would add some some 20bn. This conservative calculation was made already 6 years ago - so today the figures would be higher - as seen from for example Deutsche Bank's 54bn for Germany only.

Why is this obvious, concrete, easy and fast productivity opportunity not grabbed with gusto - all over the place? Probably because lobbying organizations do not recognize these kind of benefits-for-all, because political decision makers have not been brave enough to issue deadlines, because the all-important entrepreneur fight for his daily bread and hate any changes in routines etc.

The answer is that we need a much firmer hand from the top - and the public sector has four reasons to do it: save tax payer's money, cut CO2, force enterprises to become more competitive and collect the tax due.

Earlier Questions European tax payers should ask - post: http://www.finextra.com/community/Fullblog.aspx?blogid=2815