What is going on with the digitalisation of the financial supply chain

“BACK TO THE FUTURE” DEFINITELY
MOVED INTO THE PAST
22 juni-2013
2015-2016 WHAT IS GOING ON IN
THE DIGITALISATION JOURNEY
OF THE FINANCIAL SUPPLY CHAIN WITH HIS
POWERFUL E-INVOICING ENGINE?
SOME THOUGHTS, REFLECTIONS AND TRENDS
InCoPro D4M
Design for Margin
1.
Tel :+32/473.38.16.13
Jos.feyaerts@skynet.be

Copyright 2015 by Jos Feyaerts All Rights reserved. The readers may share the whole document for
free and reproduce selected parts of the document content for non-commercial use if referring to
the source. All other use <strong>is</strong> subject of prior written perm<strong>is</strong>sion of the author.
Keep on focusing, reg<strong>is</strong>tering and crystalizing your journey
Enjoy reading it and all exchange of thoughts, remarks are welcome.
Jos Feyaerts
Your digitalization guide
InCoPro bvba, ‘Design for Margin’ (D4M)

Contents
1. In 2016 “Back to the Future” will definitely be something of the past .............................. 4
2. ERP are more and more becoming backbone systems of standardized process data far
from the front. ............................................................................................................................ 5
3. Cloud-based accounting platforms will play a major role in the digitalization of the
“small-b” segment. ..................................................................................................................... 7
4. E-commerce <strong>is</strong> much more adopted in BtoB than we think. .............................................. 9
5. Order to Cash (OtoC) and Purchase to Pay (PtoP) are out, one shared end-to-end
Sourcing to cash (StoC ) <strong>is</strong> a new platform paradigm. ............................................................. 11
6. Analytics:D2III data to information insights and impact .................................................. 12
7. Say goodbye to conventional banking .............................................................................. 13
7.1 Cashless society: ........................................................................................................ 13
7.2 The Blockchain technology: ....................................................................................... 14
7.3 Paradigm Switch of Working Capital and the growth of supply chain finance ......... 14
8. Governments <strong>going</strong> digital ................................................................................................ 15
9. VAT-compliance an increasing challenge ......................................................................... 18
10. An e-invoice <strong>is</strong> a strong communication channel with the customer .............................. 21
11. Maturity, specialization and concentration ...................................................................... 23
12. Portals aren’t the endpoint: “We need invoices to talk back” ......................................... 25
13. E-invoicing was driving far too long by technology due to the “e” in e-invoicing............ 27
14. Everything <strong>is</strong> relative, nothing <strong>is</strong> absolute ........................................................................ 29
15. 2016 the year to talk back ................................................................................................ 29
3

1. In 2016 “Back to the Future” will definitely be something of the
past
2015 was the year where “Back to the Future”
definitely moved into the past. A lot of women
and men of my age, most with grey hair (or even
lost or coloured) , saw th<strong>is</strong> film when they were
an adolescent. October 21st 2015 was in the
movie a date that was that far away that it
seemed as unreachable. Now it <strong>is</strong> in the past.
The fax machine 1 , for which the film devoted a
lot of credentials, did expand fast but it in 2015
it <strong>is</strong> after all gone in the day-to-day life. In the
digitalization of the financial supply chain, the
fax did play an important h<strong>is</strong>torical transition roll. How many orders, order confirmations were
<strong>going</strong> faster due to the fax?
1
Fax machines and phone booths: Th<strong>is</strong> <strong>is</strong> one of the biggest predictions the movie got wrong. In the movie
everywhere the protagon<strong>is</strong>t went, there would be fax machines. Although they are still used, they are not as
prominent as the movie depicted them to be. Phone booths are also seldom. Those two are definitely
technology of the past. https://youtu.be/eVebChGtLlY
4

The fax had a huge impact on the order
admin<strong>is</strong>tration, but it seems already a long time
ago. People are not good in judging time. The way
we experience time <strong>is</strong> strongly d<strong>is</strong>torted by our
actual subjective perception and actual habits. But
that <strong>is</strong> the same with the smartphones and tablets
of which we have nowadays the feeling that they
have been in our lives all the time, knowing that the
iPAD <strong>is</strong> only from mid-2010 on the market. On the
other hand, it seems that tablets are already on
their decline curve compared to smartphones. At least two things we can learn, time <strong>is</strong> relative, and
times flies. So make the best out of it in 2016, as you are the pilot and you determine the destiny.
From our side, we will reflect below on some movement, waves we saw in 2015 and of which we
have the feeling that they will matter in 2016 and beyond, concerning the digital<strong>is</strong>ation of the
financial supply chain. When I use “we”, th<strong>is</strong> <strong>is</strong> because th<strong>is</strong> document <strong>is</strong> not only my own insights,
but they are the results from a full year of exchanging thoughts of all of you. The blames that they
are wrong on the impact, or not so important and the selection criteria to be mentioned need to be
completely addressed to my account and I apologize for it.
2. ERP are more and more becoming backbone systems of
standardized process data far from the front.
In the nighties, ERP was growing fast and the batch systems were send to the eternal hunting
grounds. Mainframes weren’t hip anymore.
The slogans of the new paradigm were at that
time; avoid data redundancy, one single truth,
real-time systems. The integrated ERPsystems
would bring it all to us... We are 20
years later and I see more data redundancy
than probably ever before, especially the last
3-5 years, due to the explosion of
“platformization” and our APP-culture. Master
data was never our favorite thing, <strong>is</strong>n’t it?
Master data <strong>is</strong> important but already 20 years,
I am attracted to companies struggling
ERPs become backbone
systems, gathering
standard<strong>is</strong>ed process
data to fulfill the enterpr<strong>is</strong>e
needs on transactional
process information, and
legal compliance.
(euphem<strong>is</strong>m) with it. Or was it indeed a representative sample of companies? For a lot of them,
master data was more a kind of nightmare, definitely not a free lunch. Master data seems to be
subject of some very easy natural laws: “shit in, shit out”, “nothing in, nothing out”.
5

But the establ<strong>is</strong>hed ERPs suffer due to digitalization, “platformization”, connectivity and
collaboration. ERPs seem to have a kind of a legacy, their fundaments (of which the master data
models <strong>is</strong> one) are blocking them to catch up
with the collaborative connected world where
we are working all together across
organizations in different processes in a
continuing change of the constellation.
More and more, we want to connect with
APPs (best of breed) in an easy way. ERPs are
more and more out of the transaction. Frontend
applications are now part of the fast
moving goods business and subject of
seasonality, just like in the fashion industry
(short live cycle). Plug and play by API. APIs are
ruling the world. Master data <strong>is</strong> generated in
all APPs across all platforms. It looks like classic
ERPs, and also organizations, are not to
prepared to deal with th<strong>is</strong> new movement,
some of them even do not notice it.
If you look under the engine hood of ERPs, you probably noticed already for some time that they
were more and more a collection (spaghetti) of different applications. The ERP vendors developed or
bought a lot of applications over the years and th<strong>is</strong> was already a challenge to manage the
communication between the application specialized interfaces. But they are facing the boundaries of
th<strong>is</strong> from of facelifts. In the fast moving digital times , the ERP-platform technology <strong>is</strong>n’t appropriate
to catch up. We need more and more specialized integration tools. And ERPs will become more and
more backbone systems, feed by process information capturing tools (ETLs) Extracting standardized
information out of different front applications and platforms where the interactive collaborative
processes take place. Transforming it in a data format and data fields that are compatible with the
ERP architecture? Than the process information will be Loaded and stored in a structured way,
respecting the end-to-end process steps. These process information will be used for their internal
goals, data-analytics and legal compliance (business controls) and to give it partially back to the
front APPs and platforms for a next step, our successive cycle. SAP the biggest ERP vendor <strong>is</strong> also
<strong>going</strong> th<strong>is</strong> way, with Hana, Ariba etc. But they still seem too egocentric oriented and still try to have
control on everything instead of <strong>going</strong> more for an open model where they are just an orchestra
conductor facilitating interconnectivity and interoperability.
Why do we see still so many corporates and ERP implementers starting ERP-projects or next
releases as 15 years ago, not putting connectivity and cross organizational collaboration on top and
even ignoring the platform reality?
6

For more info; slides Exchange Summit BCN October 5th 2015. The Impact of Platformization on P2P
and ERP-landscape: one of the presentations on http://www.vereon.ch/events/exc
3. Cloud-based accounting platforms will play a major role in
the digitalization of the “small-b” segment.
External bookkeepers were shared services centers long before corporates claimed the title for
their entities , often off-shored, centralizing large parts of the transactional processes of the financial
supply chain. The most external accounts still work on a batch principle with as a consequence a
mostly unbalanced cyclical workload without real collaboration and interaction with their client SME.
Onboarding the long tail of small companies <strong>is</strong> difficult and mostly without direct cost gains for the
SME. If you look more in detail to it, you will see that the processes are totally different from the
one’s of the corporates. Embarrassing <strong>is</strong>, that most law makers, lobby<strong>is</strong>ts and political dec<strong>is</strong>ion
makers are still reflecting on the processes as they are establ<strong>is</strong>hed by bigger organizations. Although
in mid-Europe the economy the SMEs(2) are by far the largest population.
2
More than 9 out of 10 (92.7 %) enterpr<strong>is</strong>es in the EU-28’s non-financial business economy were micro
enterpr<strong>is</strong>es (employing fewer than 10 persons) Eurostat Nov 2015.
7

By bringing small companies working on the same accounting platforms (not pure outbound
invoicing web-apps) in close real-time collaboration as their external accountants, we connect the
long tail segment automatically through the platforms in the digital business economy.
External accounts would not just offer Shared Service Centers but also a shared digital
collaboration platform to their customer base and interconnected them with the rest of the e-
business world. Incoming invoices would be brought to their SSC-platform (at the external
accountant) immediately
and not just the day before
the VAT-reporting deadline .
These platforms have to
deal with all ex<strong>is</strong>ting
technologies to digitalize
documents (incl. scanning),
not only invoices but also
payroll, bank statements,
contracts, warranties, taxes
etc. It will increase the
v<strong>is</strong>ibility during the
accounting period and will
automate a lot of matching
work for the accountants
(ex.: payments done from
the platform and automated linked) and making the different manual follow-up-l<strong>is</strong>ts absolute at the
SME (ex. open standing customers and suppliers would be integrated), smoothing the workload
across the accounting period. The SMEs wouldn’t no longer have to deal with the different business
portals as their mutual platforms would offer them the opportunities (through interoperability) to
deliver the electronic business documents to the big buyers and suppliers, the governments but also
between their peers without doing anything special.
New accounting platforms are appearing as E-economic, Yuki using totally other basic concepts more
document oriented, but also the senior players transformed in 2015 and did more than just a catch
up as Exact online, who did a huge metamorphos<strong>is</strong> as well as Sage. But also Kluwer with EVA and
Winbooks are moving to real collaborative platforms, no way around.
If we can bring the SMEs working on the platform of their external accountants and if we can connect
these platforms with the corporates, we can gain access to the long tail easily and quickly and build
the fundaments for real digital business interactions without tremendous investments.
The everyday new appearing rather simple outbound invoice portals, often focused on the
segment of “small-Bs” should fear th<strong>is</strong> evolution. The “Platformization” of accountants to the cloud
will expand fast, very fast. The outbound invoice portals should adopt their offerings and d<strong>is</strong>tribution
model. Otherw<strong>is</strong>e they r<strong>is</strong>k to be in the h<strong>is</strong>tory books of digitalization, less relevant than the fax
machines, mentioned as valuable transition tools with a very short lifecycle and no ROI.
8

4. E-commerce <strong>is</strong> much more adopted in BtoB than we think.
It <strong>is</strong> impossible to imagine E-commerce out of our lives. One of the amazing confirmations we got
during the terror threat phases in Brussels, with the steep increase of 50% of the purchase through
the E-commerce channels at classic retailers as Carrefour and Delhaize. But E-commerce <strong>is</strong> not only
about BtoC , as you can see from the study below. E-commerce <strong>is</strong> also very famous for a lot of
companies, especially in indirect spends.
Amazing <strong>is</strong> that th<strong>is</strong> evolution has some aspects of ”The Boiled Frog Syndrome”, slowly “Ecommerced”
not noticing the process changes.
If you d<strong>is</strong>cuss th<strong>is</strong> evolution with agents
from corporates they often stated in a first
reaction that their companies don’t use E-
commerce in indirect spends, until you start
asking how they order stationary, booking
business trips, books, office furniture,
standard maintenance spare-parts (screws),
ICT-appliances, security cloths , even coffee
and leasing cars are handled through
platforms.
We also see that spending on platforms, often gives a boost to the number of incoming invoices.
The hit of indirect invoice lines <strong>is</strong> nowadays often stationary and small maintenance parts, due to the
internet small amounts
ordered by all company
agents. It <strong>is</strong> my conviction
that th<strong>is</strong> <strong>is</strong> an evolution that
<strong>is</strong> mostly unwanted and it
increases the AP-costs. It <strong>is</strong>
also often subject of extra
log<strong>is</strong>tic charges for small
deliveries which can be
avoided by better
customizing the platforms
and processes.
9

The challenging opportunity for platforms <strong>is</strong> how to open the access to the long tail of e-shops for
our indirect spent without killing the flow of the business processes.
E-shops are often offering some price advantages compared to the classic indirect spend platforms
(ex the classic stationary companies). The problem <strong>is</strong> that we are in the long tail and the basic
principle of the long tail access <strong>is</strong> that the transaction cost should be nearly to zero.
10

Th<strong>is</strong> <strong>is</strong> a tremendous
opportunity for service
providers (iPAAS) offering
real end-to-end
collaborative process tool
and connectors with e-
marketplaces and e-
shops. (See also next
point).
Big players as Basware,
Tradeshift (acquires
Merchantry 08/2015) and
especially Coupa are
exploring th<strong>is</strong> markets.
But also niche ERP players
as AXI surpr<strong>is</strong>ed me in
2015 with their great
feature “E-Commerce –
Punch out catalogi” to
make the long tail
available into larger
organ<strong>is</strong>ations (in their case
a lot of public and
healthcare). Where I do
not judge whether th<strong>is</strong>
specific approve <strong>is</strong> the
only way to reveal th<strong>is</strong> long tail of E-commerce.
5. Order to Cash (OtoC) and Purchase to Pay (PtoP) are out,
one shared end-to-end Sourcing to cash (StoC ) <strong>is</strong> a new
platform paradigm.
With the actual configuration of our business processes based on the SoX and other models,
swearing by PO, GR, IR created in the own ERP, the transaction cost r<strong>is</strong>ks to exceed several times the
value of the bought on-line product or service. We can’t efficient and effective deal with continuous
changing relations in our classic master data management and business process models. Here the
BtoB providers can make some differences to explore the gains of indirect spend in the long tail of e-
shops. E-market places as Amazon, Bol.com, Aliexpress can also play a huge role in offering
appropriate API connectors. But what we need here <strong>is</strong> flexible end-to-end cross organizational
workflows in the cloud, settling the complete process, including payment (matching) and then
bringing the process data into our ERP as described above.
11

But th<strong>is</strong> means that we have to be
open to more collaboration across
platforms and BtoB-service
providers and that we need more
interoperability and not just
exchange of documents but the
real-time transm<strong>is</strong>sion of events’
status. Let’s make the cake bigger.
(see also point 11: Portals aren’t
the endpoint: “We need invoices
to talk back, Portals are dead”)
6. Analytics:D2III data to information insights and impact
At InCoPro we executed most of our projects based on the D 2 iii methodology. We are gathering
Data and facts, structuring it to Information, crystalizing Insights from it and realizing Impact
defining concrete actions. Gathering data without impact <strong>is</strong> hallucination, costs money and <strong>is</strong> so
mostly a waste of cash.
Digitalization seems to generate an unavoidable byproduct
that calls data and it seems to be more than we
can consume. The same <strong>is</strong> happening on BtoB-platforms
and at BtoB service providers, let’s cultivate it.
“Your digital shadow”(3)
3
Digital d<strong>is</strong>rupt or die, Mark J. Barrenechea
12

And oooh yes service providers are working on it. Data Mining based products/services will
overwhelm us in the coming period as:
Payment habits will be monitored in BtoB but also BtoC
Credit rates will come available for BtoB based on data that <strong>is</strong> much easier to capture as the
classic rating agencies (as D&B, Graydon etc.) can with more relevance and less effort.
Spend analytics but also price compar<strong>is</strong>on within sectors can be done, on product groups,
even product items.
VAT tax compliance audits
Creditworthiness based on social media acting, etc.
R<strong>is</strong>k management (financial, legal, procurement chain)
Fraud detection
Cash flow prediction
Automatic replen<strong>is</strong>hment proposals of indirect spend
Automatic generated shopping l<strong>is</strong>ts proposals, also for BtoB
…
There are surely a lot of privacy <strong>is</strong>sues to reflect but also a lot of social-economic gains. These must
be set-off against each other. For example fraud detection and insight in creditworthiness can avoid
bankruptcy, where there <strong>is</strong> mostly a substantial cost to bear by the remaining society, that <strong>is</strong> left with
unpaid invoices, taxes, unemployment and psychological traumas of involved people.
7. Say goodbye to conventional banking
7.1 Cashless society:
We have seen an increased move into a cashless
society and I believe th<strong>is</strong> will continue in 2016, with a
further decline in conventional retail banking but not
necessarily without the banks (they are transforming
and can deliver the compliance and have the funds).
Sweden (4) <strong>is</strong> definitely in a leading position in <strong>going</strong>
to a cashless society, but in most EU countries you
notice th<strong>is</strong> evolution.
Also mobile payment will increase and th<strong>is</strong> will be
used in B-to-small-B and at E-commerce indirect
spend at corporates.
On the other side also corporate multi-bank payment platforms are transforming fast, as the Belgian
Isabel went mobile. Th<strong>is</strong> makes payment approval cycles much more flexible as a lot of payment
approvers (often CxO-level) are travelling.
4
KTH Royal Institute of Technology in Stockholm
13

7.2 The Blockchain technology
Whether or not you are a believer in Bitcoins, the technologic behind the crypto currencies which <strong>is</strong>
described as blockchain can and will be used in a lot of other financial processes. In the domain of
trade finance and documentary credit the block chain has been already explored.
We are convinced that there will follow more of cross industry financial supply chain processes as in
the recent presented car rent process of VISA, DocuSign and Hertz.
V<strong>is</strong>a and DocuSign (5) have
unveiled a new proof-ofconcept
that uses bitcoin
blockchain technology to
revolution<strong>is</strong>e the car leasing
process, allowing people to
rent a car without having to
plough through reams of
paperwork. The project aims
to digit<strong>is</strong>e the whole process,
from configuring the lease,
insurance and other expenses
like parking and tolls, to digitally signing and paying for the car itself. Everything <strong>is</strong> done on the
screen of the connected ar. https://www.youtube.com/embed/2rLNbd6MQXg
7.3 Paradigm Switch of Working Capital and the growth of supply chain finance
Supply chain finance aims to improve the financial efficiency of the supply chain and substantially
reduce the working
capital of both buyers
and suppliers. It allows
buyers to extend
payment terms while
providing suppliers access
to better financing rates.
It creates a true win-win
situation for the buyer as
well as for the supplier.
We clearly see a paradigm switch in BtoB where the suppliers are asking “to be paid NOW”. SME just
don’t have the means or access to working capital to finance their mostly bigger customers. As
especially for starters it <strong>is</strong> a hurdle on their growth.
Our working capital thinking has also something from a kind of schizophrenia. In private life we learn
our children to save first and then spend, we won’t transform the keys of our cars if it wasn't paid
before. But in professional life we act completely the opposite way.
5
https://youtu.be/2rLNbd6MQXg
14

At the other side there <strong>is</strong> in BtoC another
paradigm crystalizing: “I want to pay after
delivery”. A movement that might have negative
impact on cash. In The Nordics there are already
some platforms offering tools for it, as for
example Klarna ( 6 ). Th<strong>is</strong> paradigm will get more
impact once E-commerce of fresh food <strong>is</strong>
breaking through. The price of 5 bananas <strong>is</strong> only
known after they are picked. When I pay after
delivery for bananas, please also for the other
goods.
Supply chain finance <strong>is</strong> not reverse factoring, it’s much more. Reverse factoring <strong>is</strong> just a form of
supply chain finance, just like trade finance, consignation, cash-pooling, dynamic d<strong>is</strong>counting
factoring etc. Please, dear marketers don’t m<strong>is</strong>use the word by making the reader myopic, what
stops him from process/system thinking.
“Inline (process) financing” <strong>is</strong> getting hot and <strong>is</strong> coming from the USA over the UK to central Europe.
The effective use nevertheless <strong>is</strong> still low but will grow. Some of the major problems I see for the low
expansion in central Europe are: member state compliance difference concerning VAT treatment of
cash d<strong>is</strong>counts, regulation of financial institutes, but also the process complexity (invoice (supplier)
and approval process (buyer) capability dependency between the partners), a real<strong>is</strong>tic rate-level,
more automated payment as USA (no checks, SEPA) etc.
8. Governments <strong>going</strong> digital
Governments obligate to deliver e-invoices to their buyer platforms? More and more countries are
implementing obligations to deliver e-invoices to
governmental organ<strong>is</strong>ations. Austria, Italy, Spain
and Switzerland from 2016 on. In Belgium, the
Flem<strong>is</strong>h region <strong>is</strong> explicit that they also will make it
obligatory by 2017.
Personally I’m not the great believer that an
obligation of the government <strong>is</strong> the best signal to
get traction on the digital<strong>is</strong>ation. The first
argument <strong>is</strong> that the impact of the governmental
organ<strong>is</strong>ation <strong>is</strong> not that big. Most retailers and
huge corporates are doing more invoices than
governments. As an example, the Belgian federal
government has 1.2 million incoming invoices, the
Flem<strong>is</strong>h region nearly 0.7 million. To have a real
high impact on making the economy more digital,
6
Klarna: payments company lets customers try before they pay http://www.ft.com/cms/s/2/d881cb3c-f95e-
11e4-ae65-00144feab7de.html#axzz3uatxnFzq; http://www.bloomberg.com/news/videos/b/c25a18a8-c4eb-
4572-a97d-ab24e56fe85b
15

there <strong>is</strong> still m<strong>is</strong>sing focus on the added value for the counter partners, the collaborative aspects and
the automation of the related processes and documents.
If it comes to out<strong>going</strong> invoicing (they make a lot of invoices outside the tax notices ) than we see
that they are not so consequent, or not that far in the
digital journey. Will they send their invoices to the
different dedicated platforms of their customers (the
enterpr<strong>is</strong>es and private persons)? Wouldn’t it be a
logical consequence, walk the talk? Indeed, it will be
a challenge to deal with the complexity of these
millions of different connections, but <strong>is</strong>n’t it exactly
the same proportional complexity that all non-public
organ<strong>is</strong>ations and especially SME are confronted
with? Solving th<strong>is</strong> would boost the digitalization, if it
<strong>is</strong> an open solution useful for the long tail interrelation
and relations of BtoSmall-b and BtoC. In my
opinion, th<strong>is</strong> <strong>is</strong> the challenge the governments need
to pick up. Also government suppliers could use it to deliver the invoices to them and it would
improve the adoption rate in their PtoP-process and the whole society.
Has anybody obliged you to use a mobile phone?
I encourage everyone to learn from the mobile phone
explosion. Has anybody obliged you to use a mobile phone?
I don’t think so. But due to the network coverage, the
interoperability across providers and nations, the use has
been spread. Being part of the network was important.
Everybody has h<strong>is</strong> provider, I don’t have to go to a specific
portal (in the old days the booth), you don’t have to know
which provider your conversation partner <strong>is</strong> using,… You just
need h<strong>is</strong> digital address (phone number), a network and
collaboration between the providers who deals with the
connection problems.
Stimulating investments in digital<strong>is</strong>ation of the financial supply chain:
Belgium granted to SMEs extra tax deduction for investments in E-invoicing, an example that could
be followed by other countries.
A Belgian Royal Decree of December 2, 2015 (Belgian Official Gazette December 8, 2015) extra tax
compensation for digital investments. It aims to support an increase in investments by SMEs in the
domains of digitization of commercial operations and cyber security. The Royal Decree defines the
different categories of investments eligible for the investment tax credit for digital investments.
With regard to digital assets that serve for the integration and exploitation of digital payment and
billing systems:
1 ° investments in systems (hardware or software) that facilitate electronic payment;
2 ° investments in systems (hardware or software) for electronic invoicing, signature or archiving.
16

The investment allowance <strong>is</strong> a tax advantage whereby 13.5% of the invested amount <strong>is</strong> deducted
from the taxable profit once.
A standard for the public sector r<strong>is</strong>ks to become just one (more ) of the standards.
A lot of people believe a general standard for E-invoicing
will make the adoption expand from itself, but I’m not
convinced that even 1.000 different standards would be
the biggest hurdle to overcome, as long as the mandatory
fields are present (which mostly <strong>is</strong> the case) and the
semantic and syntax documentation <strong>is</strong> available.
For me, the lack of connectivity and inter-collaboration <strong>is</strong> a
prior hurdle to overcome. Providers will do the mapping
and conversion where necessary. That <strong>is</strong> for a lot of them
one of their original core business.
If you stand on a bridge (as on the picture)
the type of car (the format) <strong>is</strong> not the
problem, the lack of connection taking you
from continuing your digital journey, seems
to me more important at that moment.
The standard semantic <strong>is</strong> from the
beginning mortgaged by the nonharmonized
national legal obligations in the
different EU-member states, to be used
outside the BtoG.
The lower attention to end-to-end VATobligations
(record to report) and the
process difference between corporates and SMEs often with external accountants. Although a
lot of public organ<strong>is</strong>ations are more VAT-reg<strong>is</strong>tered.
The new standard developed for BtoG seems not to deal with d<strong>is</strong>count calculation which <strong>is</strong>
subject of non-harmonized leg<strong>is</strong>lation, but <strong>is</strong> on the other hand intensively used in BtoB and
BtoC.
The standard seems not to reflect self-billing, a technique that <strong>is</strong> more and more used to
simplify the billing process in the long tail, also at governmental organization. Self-billing <strong>is</strong> also a
great example of non-harmonized obligations in the different countries.
In paralleln there <strong>is</strong> also a standardization workshop <strong>going</strong> on about CENBII/3 used by Peppol.
17

The increased interest in hybrid formats (a syntax) in Central Europe.
Hybrids are indeed getting more and more attraction in Germany, France but also in Belgium. In
Belgium there <strong>is</strong> the specific format e-fff (form for the future of accountants). E-fff <strong>is</strong> based on UBL
and was at the start an XML with embedded XML and changes now to PDF with embedded XML. I’m
very pleased with th<strong>is</strong> change, although I’m not involved in the e-fff workgroups. The transition
phase we are in (still for a few years), seems to
me a way to support interoperability,
interconnectivity and legal compliance. The
latter are huge challenges and create at least a
feeling of an increased complexity (multi-way).
To start, hybrids do not exclude the use of pure
XML neither PDF and even paper.
For me it all depends on the segment and the
segment should be materialized enough for a
specific approach.
The same argument counts for the next hybrid
d<strong>is</strong>cussion about the XML with embedded PDF or
the PDF with embedded XML In environments
where the focus <strong>is</strong> on highly automated
processes, where the invoice <strong>is</strong> automatically
approved based on previous events and
documents, the PDF should indeed perhaps be
not in the front.
More interesting details can be found on iTEXT
info search on ZugFeRD. 7
9. VAT-compliance an increasing challenge
2015 <strong>is</strong> indeed a year where legal compliance got more attention. Uber was d<strong>is</strong>rupting the taxi
industry, quote by many people, but <strong>is</strong>
Uber in 2015 not d<strong>is</strong>rupted by h<strong>is</strong> noncompliance?
I notice that they take back their
development in most Central European
countries. But it woke up the taxadmin<strong>is</strong>trations
who are now realizing
that there <strong>is</strong> not a real difference
between digital platforms and the
physical world. They realize that the
sourcing industry <strong>is</strong> not new. <strong>What</strong> <strong>is</strong>
the real difference between a tour
operator and AirBnB and between an
interim agency and Uber? Platforms
7
ZUGFeRD overview: http://www.slideshare.net/iTextPDF/zugferd-an-overview
More about the technic of hybrids in “ZUGFeRD The new standard for invoicing” an E-book of iTEXT :
http://pages.itextpdf.com/ZUGFeRD.html
18

will be in the focus of the taxman in 2016. All sharing and sourcing platforms need to be aware the
times changed. Also marketplaces and BtoB platforms will have to do their reflections on their
liability.
There <strong>is</strong> a huge understanding gap about VAT-compliance between “Form-compliance” and
“Content-compliance”. Most platforms offer services for Form-compliance (mandatory files filled
out and digital signature where necessary, etc.).
Content-compliance <strong>is</strong> about
checking whether the invoices
respect the rules of VAT (correct %,
correct exemptions, correct
reference to exemption rules etc.).
As tax authorities are <strong>going</strong> more
and more to line item control (SAF-
T 8 ; VAT-books, even in real time
2017 in Spain; Germany with GoBD
and DaRT). Data mining <strong>is</strong>n’t just
hot in BtoB also the tax
admin<strong>is</strong>trations are more than
exploring it, they are even
experienced in the meantime.
VAT-Content compliance <strong>is</strong> getting
more and more attention,
especially from large buying organizations who don’t want not content-compliant invoices entering
their prem<strong>is</strong>es. They want to avoid dealing with the correction cycle (wrong invoice , credit note,
correct invoice) and want a gatekeeper to avoid compliance <strong>is</strong>sues with tax-admin<strong>is</strong>trations losing
their deduction increase with interest and penalties.
VAT-compliance <strong>is</strong> a
nightmare for E-commerce,
but end to end automation
(from VAT-reg<strong>is</strong>tration in a
country to declaration) can
help. Buying organ<strong>is</strong>ations
will have to put more
control on VAT-content
compliance of incoming
invoices especially when
exploring the long tail of
changing supplier
relationships (in indirect
spend through e-market
places).
8
SAF-T (Standard Audit File for Tax) <strong>is</strong> an international standard for electronic exchange of reliable accounting
data from organizations to a national tax authority or external auditors. The standard <strong>is</strong> defined by
the Organ<strong>is</strong>ation for Economic Co-operation and Development (OECD). The file format <strong>is</strong> based on XML.
19

Inline automated VAT-compliance monitoring within the PtoP process can bring protection in a
world where tax-auditors are looking on a line item level. Spain announced that from 2017 the SII/IIS
(Immediate Information Sharing) 9 will be in place,
obligating companies <strong>is</strong>suing or receiving an
invoice, they must send the information to the tax
office within a maximum of 4 working days.
Why an iVAT Engine and content compliance?
• Data mining <strong>is</strong> hot
• VAT returns to be filed in Spain electronically
in real time 2017
• Periodical SAF-T files in PT 2014
• SAF-T capability in France and Luxembourg
• DaRT capability in Germany GoBD 2015
• E-commerce <strong>is</strong> in focus of the taxman and <strong>is</strong>
complex and important in BtoB
9
The so-called IIS (SII) <strong>is</strong> a VAT (Value Added Tax) management platform, based on the real-time reporting of
company business transactions. Every time a company <strong>is</strong>sues or receives an invoice, they must send the
information to the Tax Office within a maximum of 4 working days. These invoice details will be provided in the
form of VAT record books, which contain the essential information on the invoices and can be managed
through the electronic systems and solutions linked to the Tax Agency platform.
20

10. An e-invoice <strong>is</strong> a strong communication channel with the
customer
An invoice <strong>is</strong> also a communication tool. The essence of an invoice for a supplier <strong>is</strong> to inform h<strong>is</strong>
customer that he executed h<strong>is</strong> part of the contractual agreement and that it <strong>is</strong> now to the
customer to fulfill h<strong>is</strong> part, the payment. A nice supplier specific lay-out can then be very
supportive.
Most customers in BtoC and BtoSmall-b who are also the dec<strong>is</strong>ion makers are mostly looking to
the invoice with more than an average attention rate. A lot of companies already used th<strong>is</strong>
document to communicate about the next
step in the customer journey. But also to give
general information such as address changes,
new products, holidays, special actions. That <strong>is</strong>
also why we should not forget the
importance of the lay-out of an invoice. I
learned over the years that at each billing
implementation a more than expected (even
unreasonable) time went to the lay-out of the
invoice where the marketing department and
often the CxO level was involved. The invoice
also plays a very important role in the dunning
process, when copies of the invoice often
must be resend. Readable form and proper
lay-out are also very important at that moment.
But an invoice can also be used for gamification to get cash earlier or to collect Taxes
(Corporates can learn from the Portuguese TAX-gamification) and naturally to payment facilities
(Hyperlink, QR-codes etc). It can also bear a link to the next customer journey as: links to product
warrantee, user guides and user groups. We see an increased number of players which are
working around invoice communication in the OtoC cycle and the dunning and incasso process.
An incasso process, even a digitalized one, <strong>is</strong> taking place out of the normal processes, a proper
invoice lay-out <strong>is</strong> than very important, because in th<strong>is</strong> stage it <strong>is</strong> definitely all about the
communication.
The invoice appearance should stay under the control of the sender in a lot of segments,
because it has a more than average impact on a lot of related processes. That <strong>is</strong> why Hybride
invoice models can play an important role in a lot of segments. Don’t forget that in the small-
SMEs world there <strong>is</strong> mostly no PO system or related documents and the reader <strong>is</strong> also the
dec<strong>is</strong>ion maker. Even in corporate land we can see that people are more comfortable with
approving original digital copies than with standardized representations of the digital content.
Supplier specific invoice lay-out helps to increase the speed of solving the exemptions. Also in
fraud detection a company specific layout helps.
21

“Only through mobile, merchants can be present in the pocket, the home and the heart of the
customer, at all times !” 10
It <strong>is</strong> all about the process and not just the automation for the automation. One can say that
th<strong>is</strong> <strong>is</strong> all not the goal of an invoice but it <strong>is</strong> a practical factual use of invoices which we cannot
stop that easily. And why we should? I can recommend; do more with your invoice, use the
attention the digital communication <strong>is</strong> even more with pictures than ever before.
10
Doccle at BeCommerce Summit 2015:” How big <strong>is</strong> your e-Commerce business ?”
22

11. Maturity, specialization and concentration
At the beginning of 2015 we made a post about the Consolidation and Concentration movement
that we felt in the market of e-financial supply chain providers. We asked you to fasten your safety
belts and yes there were a lot of announcements which are regularly added in the post and
comments.
www.linkedin.com/pulse/consolidation-digitalbusiness-world-e-invoicing-e-fsc-jos-feyaerts
It were mostly bigger players who were
involved in the M&A. <strong>What</strong> with all those
smaller often national or even regional players
in the market? Can they survive? Will they be
eaten by the establ<strong>is</strong>hed players? True
questions but more difficult to observe. A lot of
these smaller players come and go and even
merge without being noticed because no
official announcements are made.
One thing <strong>is</strong> for sure, a lot of them will have
difficult times to survive, due to the need of
mammal scale to be fundable and long lasting.
The digital financial supply chain <strong>is</strong> in expansion in crowd and users but also in technology. Th<strong>is</strong>
latter makes feature lifecycles short and huge needs in investments of resources, compliance and
market development. SAAS <strong>is</strong> fantastic but not for the provider as he <strong>is</strong> bootstrapped by the cash
investments in market deployment (sales efforts) with future cash flows (no upfront license fees)
and a lot of investments in R&D.
But besides the M&A we also see more and more collaboration between the providers and
specialization focus. Th<strong>is</strong> shows that the market <strong>is</strong> coming to maturity. Collaboration and
specialization are a typical sign for it. Look at the car industry? <strong>What</strong> <strong>is</strong> the difference between an
VW, BMW, Audi, Ford, Peugeot, FIAT etc? They are all developed by and in collaboration with the
same OEM suppliers, they exchange and share spare parts, engines, platforms and models. Isn’t it a
consortium of Audi, BMW and Daimler who bought in the summer months the HERE map service
from Nokia for $3 Billion?
The same trend to more specialization, collaboration and willingness to interoperability can be
noticed in the service provider sector.
And we are very pleased with it. More collaboration and interoperability will make the cake bigger.
We should stop fighting about slogans as “Open” and start real collaboration. It <strong>is</strong> in the end the
customer who will decide which platforms and technologies he wants to work together, and not the
providers. The crowd <strong>is</strong> always right (often). Fighting for the angle of the piece of the cake <strong>is</strong>
probably not that efficient as we can increase the radius of the digitalization cake to so many more
aspects of the e-business by specialization, collaboration and interoperability.
Decreasing the angle by ex. 10% in sharing the cake with more specialized partners, to increase the
radius of the cake with 5% will give a fantastic boost to the market as the cake surface <strong>is</strong> R*R*π. So
let’s focus on the radius from 2016 on.
Services providers will explore more and more services. Some of the areas where we see traction:
SCF: dynamic d<strong>is</strong>counting, reverse factoring, trade finance (ex e-LC), etc.
Integration with invoice markets
Invoice clearing (ico payment factories, cross industry)
23

Multi bank payments
More and more payment remittance
E-commerce connections
Data Mining :
spend analytics
spend advice,
replacement of indirect spend
credit rating and payment experiences (BtoB and even BtoC)
fraud detection
spam indicators for fake invoices (ex. recognizing changed Bank Account or
suspicious ones)
etc.
R<strong>is</strong>k management in the supply chain
Cloud scanning and cloud capturing (CAAS, capturing as a service)
VRM (vender relation management, master data exchange and control on use.
E-collection and E-incasso
Credit insurance
VAT Content Compliance; VAT Form Compliance and legal archive
Support to government clearing models (Spain 2017)
Services to support business controls and audit trails and SAF-t compliance in a platformized
world
Blockchain technology to connect processes (example car rent end-to-end)
Invoice marketing and invoice communication
Extending the customer journey to product warranty, contracting, user guides, etc.
Exchange of track and trace of log<strong>is</strong>tics for my indirect spend
More and more event and status exchange across platforms in state of pure document
exchange and portal exploitation (real collaboration in my unique environment)
Etc.
By means of example, we l<strong>is</strong>t some of the special<strong>is</strong>ts we see on the Belgian market who could
collaborate and serve each other and other platforms in th<strong>is</strong> area. Sorry to forget important tools
and yes there <strong>is</strong> some support for my Belgian compatriots behind it. The same specialization could
be seen for other players outside Belgium.
Arco with h<strong>is</strong> CAAS (capturing as a service)
AXi: “E-Commerce – Punch out catalogi”
Nallian : for VRM and master data exchange and controle.
Sector specific platforms as e-Health asbl/vzw created on 2004, March 30th <strong>is</strong> an association
grouping 31 suppliers from Pharma.be and Unamec.
Edbex an Invoice Markets:
VAT Applications: Comp. AAS (VAT content compliance as a service)
Graydon: company ratings
Data.be: official company records and financial info
Datastories: Data-analytics:
Datascouts: DATA analyses with GIS and MAP d<strong>is</strong>play
iController: Digital Collection
Doccle: with h<strong>is</strong> document collaboration model for BtoC and BtoSmallb
Isabel: Payment platform
POM: Pay your invoices in one click.
CODA: dematerialize and process of the other documents Bank, Pay-roll etc
24

Atradius with h<strong>is</strong> Cashfirst online credit insurance
ExArte: ERP focused solutions for Mircorsoft Dymanic integration tools
Babelway for h<strong>is</strong> format mapping services as OEM
Lean Pricing: pricing consulting subscription economy and SAAS-providers
KBC with h<strong>is</strong> click shop e-marketplace
Xpenditure with h<strong>is</strong> out of pocket admin<strong>is</strong>tration tools
Sign2Pay: authenticated with your signature for contracts, to sign in for a service , payments
Etc.
12. Portals aren’t the endpoint: “We need invoices to talk back”
Portals are walls with limited v<strong>is</strong>ibility and not the optimal collaboration in the supply chain.
The portal h<strong>is</strong>tory was boosted in the accounts payable with the huge invoice senders
obligating the customer to come and get h<strong>is</strong> invoice on the portal of the seller. The ARdepartments
were
optimizing the
d<strong>is</strong>tribution cost but often
increasing the efforts for
the receivers. The buyers
learnt quickly and had
more power, and started
to oblige the supplier to
bring the invoice to their
buyer portal, optimizing
their AP process where
most corporates (often
the same) seem to be
convinced to win much
more. But still th<strong>is</strong> <strong>is</strong>n’t an
optimal situation for the
end-to-end process across
the partners (buyer and seller). Buyer portals are often, in my opinion, an obligated puzzle piece
in the transition phase, but the possible gains for the eco-system seems to reach the boarders.
They are starting to suffer from and becoming the victim of their own popularity. Every large
corporate has h<strong>is</strong> own portal.
For many medium players (suppliers), dealing with all those different buyer portals where they
have to communicate on, are faced with real bottlenecks, inefficiency and ineffectiveness in their
AR-process. Many of the mid-segment suppliers are confronted with up to more than 20
different portals to deal with all of their customers. Th<strong>is</strong> phenomenon <strong>is</strong> also killing the
deployment of the next services in the supply chain as SCF-tools. How will I manage my invoices
finance trough twenty different portals?
We need more information exchange across portals, platforms and providers and that <strong>is</strong> indeed
more than exchange of documents. It also means exchange of process event information and
status from the actions taking place in shared cloud-platform (for example E-commerce),
between interoperable platforms and the processes at the supplier eco-system and those at the
buyers ecosystem. Th<strong>is</strong> exchange of events will be explored more and more by the providers, as
25

th<strong>is</strong> <strong>is</strong> a way they can let the cake (e-market) grow and, in combination with the previous
mentioned specialization, improve their future and remuneration (monetize) model.
A nice recent quote in th<strong>is</strong> context from Douwe Lycklama “We need invoices to talk back”.
“Wouldn't it be great when outstanding invoices would communicate their status at the
debtors in real time back to the original sender (creditor)?”
More of my thoughts on th<strong>is</strong>, you can learn from my slides of the exchange summit 2015 in BCN
October 5 th ,2015 about "The impact of platformization on P2P and ERP landscape" especially
slides 15-26): www.vereon.ch/events/exc
Peppol’s network <strong>is</strong> getting more attraction.
E-invoicing alone will not bring a lot of advantages to SMEs if
we cannot automate the related documents and processes
(payment, bank contracts, payslips, warranties, taxes, etc).
Obligating delivery without network, <strong>is</strong> not a mutual
benefit. Governmental obligation to deliver invoices to portals <strong>is</strong> like
obligating people to go with a taxi (paying for a service to convert a
PDF invoice to a XML) or by feet (reg<strong>is</strong>ter it on the portal) to a phone
booth in an age where cell phones are possible, because we don’t
invest first in a network.
Last phone booth in Belgium was removed on 1 st June 2015 11
Belgium government will put effort on deployment of Peppol in the first quarter of 2016, following
the Nederland’s with Simplerinvoicing. I
hope that if they obligate anything it <strong>is</strong>
in the first stage the connectivity with
Peppol of providers of platforms, ERP
and larger accounting packages. Where
from my point of view they can do it on
their own or through a collaboration
with an ex<strong>is</strong>ting OEMs. I still hope that
the Belgian and Dutch Peppol
community becomes a single BENELUX
Peppol community with unified forces
joining forces and resources for further
developments.
11
Last phone booth in Belgium removed on 1st June 2015
http://www.gva.be/cnt/dmf20150601_01708233/laatste-telefooncel-van-het-land-weggehaald
26

13. E-invoicing was driving far too long by technology due to the
“e” in e-invoicing
E-invoicing and digitalization of the financial supply chain was driven far too long by technology
providers. No one should blame them. We should be happy they did it. But I’m convinced that we, on
the business side, are now to bring or part into the play and take more than ever a leading role. The
technology <strong>is</strong> a tool, a mean to reach the goal not the ultimate purpose of our digitalization
journey.
It <strong>is</strong> all about the
process, where
people act in it and
tools are facilitating
the actions to be
done. That <strong>is</strong> not
new. But the
awareness that the
network <strong>is</strong> also
part of the journey
<strong>is</strong> still m<strong>is</strong>sing in a
lot of ERP and
business process
automation
projects. The
network must be
open, interconnected and interoperable across platforms, software versions and devices.
We are in a transition not in a revolution. In a transition it <strong>is</strong> all about segmentation and change
management. The best technological technic will not always win, that’s how it was in the past and <strong>is</strong>
27

also now. We must reflect on the end-to-end
process systems and the scaling possibilities.
Far too much startups and technology partners
are not aware of the habits and ex<strong>is</strong>ting use of
documents. I see that a lot of people even are
not aware anymore of the most important
essence of an invoice, communicating that I
did my job and you have to pay me. The
communication aspect of invoices <strong>is</strong> important
in th<strong>is</strong> fundamental role and a lot of people are
ignoring th<strong>is</strong>. As I mentioned before, it was
used a lot for attracting people’s awareness on
simple events such as holidays, products, and
in some sectors as delivery confirmation by
signing it off. Making the invoice in XML need
Remember John Gall’s Law
“A complex system that works <strong>is</strong>
invariably found to have evolved
from a simple system that worked. A
complex system designed from
scratch never works and cannot be
made to work. You have to start
over beginning with a working
simple system.”
to replace even th<strong>is</strong> simple process. Denning these habits and perhaps at first look strange uses,
makes that people do not understand why it <strong>is</strong> so difficult to change to perfect in the backyard XML
exchange.
So please let 2016 be the year that the CFOs become CDOs and take back a leading role in the
digitalization of the (financial) supply chain. Digitalization of the economy has tremendous impact on
corporate finance, not only on Working Capital 12 . The change to service oriented economy where
car makers aren’t selling cars, but offering mobility will have a huge impact on all financial aspects.
‘Design for Margin’ (D4M) should get back the focus as the margin <strong>is</strong> the fuel for your future cash
flows.
12
For more reflection look at my presentation and blog text „Die Digital<strong>is</strong>ierung der Financial Supply Chain:
Auswirkungen auf die Unternehmensfinanzierung und das Umlaufvermögen“
http://www.basware.de/blog/die-digital<strong>is</strong>ierung-der-financial-supply-chain-gastbeitrag-jos-feyaerts
28

14. Everything <strong>is</strong> relative, nothing <strong>is</strong> absolute
It <strong>is</strong> indeed all about perception and perspective, don’t blame me for trying to find new trends
with you.
The 7 Worst Tech Predictions of All Time 13
1. "I think there <strong>is</strong> a world market for maybe five computers." Thomas Watson, president
of IBM, 1943
2. "Telev<strong>is</strong>ion won't be able to hold on to any market it captures after the first six
months. People will soon get tired of staring at a plywood box every night." Darryl
Zanuck, executive at 20th Century Fox, 1946
3. "Nuclear-powered vacuum cleaners will probably be a reality within ten years." Alex
Lewyt, president of Lewyt vacuum company, 1955
4. "There <strong>is</strong> no reason anyone would want a computer in their home." Ken Olsen, founder
of Digital Equipment Corporation, 1977
5. "Almost all of the many predictions now being made about 1996 hinge on the
Internet's continuing exponential growth. But I predict the Internet will soon go
spectacularly supernova and in 1996 catastrophically collapse." Robert Metcalfe,
founder of 3Com, 1995
6. "Apple <strong>is</strong> already dead." Nathan Myhrvold, former Microsoft CTO, 1997
7. "Two years from now, spam will be solved." Bill Gates, founder of Microsoft, 2004
15. 2016 the year to talk back
We w<strong>is</strong>h you an inspiring year-end of 2015 and a successful 2016 where you can realize the impact
you want to achieve, but above all a lot of fun and a good health.
Keep on focusing, reg<strong>is</strong>tering and crystalizing your journey
See you in 2016!
Jos Feyaerts
Your digitalization guide
InCoPro bvba, ‘Design for Margin’ (D4M)
13
Source: http://www.pcworld.com/article/155984/worst_tech_predictions.html?page=2
29