Month: January 2021

What is the EDIFACT standard?

Posted on by Laura CONREAUX

EDIFACT: EDI’s toolbox

EDIFACT is an English acronym for Electronic Data Interchange for Administration, Commerce and Transport.

The EDIFACT standard aims to secure and accelerate trade. It enables companies to communicate and exchange all their business documents in EDI format with suppliers and subcontractors within their supply chain. They may also be logisticians, distributors and have a B2B network. The required information is transferred directly from the company’s IT system (ERP, PGI) to the computer systems of their industrial and commercial partners (Commercial Management, Production Management, ESM, TMS, WMS).

In order for this communication to work efficiently, 24 hours a day, 7 days a week, it is necessary for each company’s information systems to communicate with one another according to strict and common rules. That is the goal of the EDIFACT standard. A standard put in place by the United Nations that defines the rules for the interoperability of EDI messages by specifying content and syntax.

What does the EDIFACT standard represent?

Depending on the industry and regional zones, different EDI standards have been developed, published and adopted, based on the EDIFACT standard. These redeveloped standards take into account the sectoral characteristics of each industry and region: EDI Automobile in France and Europe with GALIA, and ODETTE, EDI EANCOM for EDI Grande Distribution with GS1, are just two examples.

The EDIFACT standard: an EDI standard

An EDI standard sets the rules for framing the exchange of information: specify what information, in what format, and where it should be placed in an EDI message. As a result, EDI transmission between companies becomes fully automated.

In the late 1980s and early 1990s, CEFACT-UN (The United Nations Centre for Trade Facilitation and Electronic Business), whose main mission is the facilitation of international trade, developed and published the Electronic Data Interchange for Administration, Commerce and Transport (EDIFACT).

The EDIFACT standard is a set of syntax rules that define a hierarchical and repetitive structure required for an EDI message, which is an envelope identifying the sender and recipient in which the messages are placed. In addition, the EDIFACT standard offers a library of more than 200 standard messages for the exchange of electronic business documents between companies. The best known are the ORDERS, DESADV, INVOIC, HANMOV, and PROCAT.

This publication was quickly a success: developed internationally, published and updated regularly, adopted by an exceptionally large number of economic players in industry and trade, and standards bodies.

A sectoral organizations’ toolbox

In fact, the EDIFACT standard has become an EDI toolbox for sectoral standards bodies, such as GALIA, ODETTE, and GS1, and for all private and public organizations that wish to set up the electronic exchange of their documents. This toolbox complies with the syntax rules of the EDIFACT standard and appropriate standard EDIFACT messages by enriching them according to their specific needs. GALIA and ODETTE have migrated their EDI Automobile to EDIFACT.

The result has been a shift from proprietary standards set by regional zones and by sector activity, to a standard common to all sectors that is favored by industry standards bodies and adopted by a large majority of companies.

EDI providers, independent of the IT services of large companies, have contributed to the rapid deployment of EDI in small- and medium-sized enterprises, allowing them to work with large contractors. Thus, PGI companies’ cloud-based ERP systems were able to easily and directly link documents with the Commercial Management, Transport Management, and Warehouse Management of their supply chain, and other commercial networks. Similarly, large companies have accelerated the integration of new partners into their networks.

A basic standard for all industries

The strength of the EDIFACT standard is its adaptability to the specific needs of all industries. It is the most widely used standard in France and Europe:

  • For EDI Automobile, the work of GALIA and ODETTE has contributed greatly to the success of EDIFACT. Thus, covering all exchanges between manufacturers, equipment manufacturers, and logisticians.
  • The EDIFACT standard is also the basis of the EANCOM standards that define EDI’s large distribution. These are exchanges in the world of mass distribution: businesses, manufacturers, transporters.
  • Most sector EDI standards have migrated to the EDIFACT standard: agriculture, public sector, and so on, enriching it.

EDIFACT has contributed to the spread of paperless commercial documents and the interoperability of information systems.

What future is there for this data-exchange standard?

Today, XML language is becoming the new benchmark for structuring and exchanging information. Indeed, it is better suited to interact with emerging technologies of the supply chain: consider, the Internet of Things (IOT) and Artificial Intelligence (AI).

XML is also more used than the EDIFACT standard in some parts of the world (the Pacific, Asia) and competes with EDIFACT in the exchange of trade documents.

Is a migration from the EDIFACT standard to XML possible?

At the moment the EDIFACT standard remains relevant:

  • The EDIFACT standard is regularly updated to incorporate new functional needs, and thus regularly integrates new information and new sectoral specificities.
  • The automotive and retail sector have made significant investments in EDI, to the EDIFACT standard, to the satisfaction of all stakeholders in their respective sectors. These have been productive investments that provide user satisfaction and which they wish to sustain over time.

EDIFACT and XML standards co-exist: EDIFACT remains the standard for paperless commercial documents in Business-to-Business exchanges. However, for the latest projects incorporating new technologies with new partners, the XML format is often chosen.

For more than 30 years, Tenor has been supporting you in setting up the EDIFACT Standard for your computerized data exchanges. Check out this article on EDI to delve deeper into the subject, or browse the one on EDI file types. Also, feel free to contact our EDI experts to identify your needs.

Factur-X, the future of the electronic invoice?

Posted on by Laura CONREAUX

Factur-X was introduced in France in July 2017. On this date, the FNFE (National Forum of Electronic Billing) presented Factur-X as the future standard of electronic invoices.

But the future implementation of this so-called mixed invoice format is also linked to a legislative and technological context. In effect, the tax authorities are pursuing an incentive policy to the transition to paperless billing. The shift to electronic invoices is accelerating globally: 2.5 billion inter-company invoices are issued each year, 15% in 2019 were paperless, compared to 5% in 2015. Find out all the ins and outs in this article!

The shift to electronic invoices is accelerating

In their fight against VAT fraud, the government is pursuing an incentive policy to move to paperless billing.

Simplification of the paperless processes

Until 2014, paperless invoicing was a billing process based on the EDI (Computerized Data Exchange) Tax or EDI DMF. As of 1 January 2014, companies’ choice of electronic invoice processes expanded to include PDFs:

  • Electronically signed PDF invoices,
  • Simple PDFs, provided that permanent controls establish a reliable audit trail, and the dispensing of paper invoices is subject to the same conditions.

New obligations for all businesses

  • Since 1 January 2020 an extension has been granted to all companies regarding their obligation to commence paperless invoices in the context of public procurement (B2G or Business to Government),
  • Article 153 of the Finance Act 2019-1479 of 28 December 2019, progressively makes the use of the paperless invoices compulsory in B2B (Business to Business) exchanges from 2023, and for widespread use for all businesses by 2025.

However, in practice, with the exception of the EDI, there is no standard for paperless billing accessible to all businesses. Only secure invoice channels.

What secure invoice channels exist today?

Let’s discover the channels that provide a digital file, image or PDF, the same authenticity and legal value as the original paper invoice (with unalterable integrity). But also the channels available to legally archive these invoices for the legal period of 10 years, and transmit invoices from the transmitter to the receiver.

Tax EDI as a paperless bill channel

The EDI allows the direct sending of paperless invoices from the information system of the issuer to that of the receiver. This mode is that of large companies, and requires significant software investment and prior agreements between issuers and receivers on the formats and structures to be used. In economic sectors such as Automotive and Retail, contractors rely on standards bodies (GALIA, GS1),to promote electronic invoices to companies.

Supplier portals as a means to file invoices

The vendor portal on which the issuer comes to deposit its invoices in the form of digital files (simple or signed PDFs, and image formats). EDF and the major construction groups all have intranets open to their subcontractors, on which they exchange documents, tenders, quotes, invoices, etc. Chorus Pro, developed by AIFE (State Financial Informatics Agency), is a portal of public services for filing B2G invoices. This mode of operation requires supplier authentication controls and specific data processing before the invoices are integrated into the official accounting systems.

E-bill attachments

When the sender transmits digital invoices to a receiver’s mailbox as an attachment. Upon receipt, billing data will need to be manually entered in a central database like a spreadsheet, or a LAD/RAD (Automatic Document Recognition Reading) solution will be used to automate the process. This method is simple to implement, and removes the need for paper. But it requires the maintenance of a reliable audit trail similar to that utilized for the paper invoice, during tax checks.

Is Factur-X accessible to all companies?

Is Factur-X, presented in 2017, the solution for a generalized process of paperless billing for all companies, as its promoters predict?

How does it work? And, finally, what future does it have?

Factur-X is a Franco-German standard electronic invoice published in France on 9 July 2017 by the FNFE. This type of invoice is also called a mixed or hybrid invoice able to be read by man and by machine. Factur-X is a PDF/A3 file that incorporates an XML file containing billing data in structured form.

Factur-X is therefore readable as a PDF invoice and is also read directly by information systems without going through complex LAD/RAD operations.

So that the Factur-X can be received and processed by all companies, that wish to be able to integrate it directly into their information system, its standard format allows several data profiles to be structured according to regulatory and business requirements:

  • MINIMUM profile: minimum data required by the Chorus Pro portal,
  • BASIC and BASIC WL profiles: minimum data with or without bill lines,
  • Profiles EN 16931 and EXTENDED: compliant with new European billing standards.

Thus, issuing companies can charge electronically and benefit paperless invoices without worrying about whether or not their partners can process a paperless invoice.

The simple implementation of Factur-X

For the invoice-issuing company, the implementation of the Factur-X format is simple. It requires no billing software changes, and no significant investment.

All the issuer has to do is continue to edit their invoices in PDF format with all the usual legal and business requirements required.

To convert the PDF invoice to a Factur-X, it will need to go through an intermediary or paperless platform to support the conversion of the PDF to PDF/A3 format. The sender, for example, can opt for a PDF/A3 format signed electronically with a RGS (General Security Reference) certificate. The PDF/A3 invoice is then sent to the receiver. The information is recorded and in this way, the issuing company frees itself from the obligation of recording a reliable audit trail.

At the initiative of the issuer

Previously, the switch to electronic invoices was imposed by a company’s contractors. Each contractor imposed its own electronic invoice channel on its suppliers by various means:

  • EDI Fiscal, where the issuer then had to invest in an EDI solution,
  • An intranet portal on which the supplier filed its invoices in PDF format requested by the client,
  • A simple or signed PDF sent to a dedicated mailbox.

That system created as many invoice channels as commercial partners. By adopting the Factur-X, the issuer takes the initiative to simplify its paperless billing.

Factur-X will accelerate the transition to paperless invoicing.

Factur-X fills the system compatibility gap with a paperless standard that is financially and technically accessible to all small, medium, and large businesses. Nevertheless, EDI tax remains the standard for large companies who trade with subcontractors.

After Factur-X, what is the future of the electronic invoice?

As of 1 January 2025, all B2B and B2G billings will be paperless.

Will this obligation to go paperless be extended to e-commerce? BtoC (Business to Customer)? These questions still await an answer.

Yet already with the general adoption of the electronic invoice, all invoice data can be communicated to the tax authorities so that it can exploit them for VAT control purposes. This allows the tax office to automatically cross-reference all issued and received invoices, and propose pre-filled VAT returns.

Does the generalization of the electronic invoice with Factur-X pave the way for a new billing model? The Clearance model is certainly one of the options on the table. To find out more, please consult this excellent article on the Clearance model.

Tenor has been supporting its customers in the management of their data for more than 30 years. Paperless/EDI invoices are no longer tricky for our teams. In contrast, our paperless tax solutions are already operational for a smooth transition to Factur-X. Contact-us for more information.

Supplier EDI. Onboarding, or how to ship all your suppliers via EDI.

Posted on by Laura CONREAUX

Initiating a Supplier EDI Onboarding approach is a strategic benefit for your company’s trade. Exchanging data in a computerized way via paperless documents, such as digital invoices, holds considerable advantages for your business. Business management is made easier via innovative software solutions. This is the case, for example, for paperless invoicing.

Commencing a Supplier EDI Onboarding approach is not just a technical choice of EDI solution. There are multiple ways to turn this approach into a real “success story”.

The challenges of successful deployment

Set up EDI feeds with providers

Setting up EDI provider feeds is all well and good. But deploying electronic exchanges with all of your suppliers, whether large and small, and automating 100% of your document exchanges in the purchase-to-pay process is a significant way to save time and reduce business costs.

To benefit from the gains of an EDI purchase, you have to plan to expand this approach to all suppliers at the same time: this process is known as “Supplier EDI Onboarding”.

Increase EDI profits by systematizing EDI vendor deployment

The more messages and partners you obtain, the greater the benefits to your business as Computerized Data Exchange maximizes profits as the number of transactions and messages between interlocutors increases.

Its benefits are all the more important because many transactions and disseminated messages are relevant to your business.

Tip: Think about all the paper documents currently exchanged with your suppliers: from sending purchase orders, to receiving delivery orders, and electronic invoices, or even tax forms.

Streamline your distribution

The distribution phase must be simple, efficient, and fast to save employee time and quickly accomplish the profitability expected from the switchover.

The speed of supplier integration is an important factor to consider in the success of your project.

Once your EDI platform is ready, the steps that follow must be systematically conducted with each provider: a communication plan, registration and connection, compliance tests, certification for each scenario, the double-flow phase (paper and electronic track), and, finally, the production phase.

It is important to choose tools that enable effective tracking and the simple setting up of each vendor to the new system.

Tip: Supporting your purchasing department is essential for the success of this business project.

The keys to unlock your suppliers’ EDI Onboarding success

Here are some ideas to turn your EDI provider deployment into a real onboarding.

EDI Guidelines

First, create the requirements for your EDI switch (your EDI “specifications”). Broadcast to your suppliers what actions they need to take ahead of deployment, it will avoid misunderstandings, and simplify the testing phases.

For instance, your switchover may consist of an interchange contract, a document containing the types of message to be used, the frequency of messages, possible communication protocols, identifiers, and back-up procedures.

Your EDI guidelines should describe the standard message format chosen, the expected EDI format, and the required data for your new information system.

Tip: Explain the different functional scenarios and the corresponding EDI syntax in your specifications.

Your suppliers’ EDI onboarding communication plans

Communication is a major step to successful onboarding. Careful preparation is required to explain to your suppliers the benefits they will derive from the implementation of electronic data exchange, and what you expect from them.

The communication plan must be adapted to the different waves of its rollout. For instance, after evaluating overall supplier potential, group suppliers by turnover and transaction volume and focus first on key suppliers.

Tip: Communicate several times with your suppliers as EDI deployment progresses.

Self-test platforms

Depending on the number of vendors involved, it may be appropriate to implement self-testing platforms, such as Amazon or Volkwagen. These certification platforms allow suppliers to test the reception and syntax of the EDI message themselves.

An error report is automatically generated if the syntax is incorrect, allowing the message sender to make necessary corrections without soliciting the customer-side distribution team. Thanks to this verification system, integration is ensured before the green light is given for manufacture.

Tip: Prepare a few test messages (one per functional scenario) to allow your suppliers to optimize their certification phase.

Offer an alternative Web EDI

Your goal is to automate the processing of all transactions from your EDI suppliers. However, some will not be equipped with EDI; especially, small businesses. By offering them the opportunity to view or enter their business documents via a software solution, on a web portal, you benefit from the automation of these paperless exchanges with your computer system via the Internet, regardless of the provider.

Tip: With a Web EDI, immediately integrate all documents into your ERP. The contribution is immediate for your users and the EDI deployment can continue independently.

A dedicated onboarding team

To ensure the success of EDI rollout, it is imperative that a dedicated team monitors suppliers and ensures that system requirements are met. This role can be assumed within your company by an existing employee, or group of employees, or delegated to your EDI provider.

Tip: Save time and effort by entrusting EDI suppliers to an external partner to facilitate the process and ensure timely compliance.

Companies are betting that B2B flows will increase efficiency, increase competitiveness, and reduce costs in the supply chain. To succeed and benefit from all the gains of EDI, the rollout method is important: agility, efficiency, and speed are its pillars.

Tenor has been supporting its customers for more than 30 years in the dissemination of system changes to their EDI suppliers, as well as its EQP (Exchange Quality Platform) service, which ensures the validation and approval of your suppliers. Contact our experts to launch your supplier EDI onboarding project.