Check invoice BRS

otherProject Details

Relevant SDG targets:

• 8.10 - Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance, and financial services for all customers
• 12.5 - By 2030, substantially reduce waste generation through prevention, reduction, recycling, and reuse
• 12.6 - Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle
• 17.16 - Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology, and financial resources, to support the achievement of the Sustainable Development Goals in all countries, in particular developing countries

Project Purpose

The purpose of this project is to develop an information exchange standard for the Check Invoice open finance use case, to mitigate the risk arising from the fraudulent use of invoices for the disbursement of credit to the detriment of Intermediaries, in addition to increasing stability and efficiency of the financial sector.

Banks, factors and other financing agents will be provided with a digital service that through the DLT stamp ensures the real state of an invoice and its balance in the overall credit line life (previous financing or assignment of credit).

The main target is B2B space but also B2G.

The service foundation is a federated inter-governmental system that holds information on advances and assignments of invoices from a multi-bank and multi-channel perspective. The source is created through link to the public government DBs (eg: Tax Authorities) and through upload by the onboarded intermediaries (e.g. 2 years history records) for financing status data.

These two main sources (Government, Banks that are subject to Central Bank surveillance, KYC, GDPR and all other applicable legislations) ensure the system is trustable.

 Actually, Invoice validity is guaranteed at two levels:

• on a formal level, because the invoices upload on the government systems is checked against international binding formats (as CII, UBL)
• on the integrity level, because they are signed by the issuer and the signature hash is checked upon before registration in the government DB

The invoice status (% of amount available to financing) is guaranteed by the banks and the other financial intermediaries that must update the status at each transaction. For sure, the more the system is populated (national mandate of B2B e-invoice; many banks adhering to the community), the more it is effective. But the sources (banks and government) are trustable themselves.

After input of the whole signed invoice in the system, the consequent financial transactions (inquiry on the invoice, notification of advance financing or credit assignment for status change) are possible by minimum key data. The invoice could be retrieved and verified only through the Issuer Id and the Invoice number / date of issue.

The model will be technology neutral; two possible scenario are:

• Federation of DBs (interlink between the Tax Authorities participating in the System: the invoice is looked-up starting from a general index that associates the Issuer Tax Identification with the relevant Tax Authority , whose DB has then to be queried by the invoice number)
• Permissioned DLT (every Tax Authority owns its node on the DLT where a copy of all the invoice information is registered).

Tax Authorities can develop the system on its own premises or relying on trusted third parties.

All operations will be carried out in real time using the Rest API interfaces. DLT check will add integrity timestamp through validation of transaction hash.

The main service requests based on initial massive population of the System will be:

• Get Invoice Status
• Get Invoice Financing Status
• Post (Update) Invoice Financing
• And related http response codes belonging to the Service infrastructure.

Information flows must be exchanged and protected securely with Enhanced Encryption mechanisms (https).

The operating model allows for constant dialogue between PSP and Factors involved in the initiative and any third parties to obtain information aimed at improving the efficiency of credit disbursement processes.

Project Scope

International trade is changing as a result of technological innovation and of the digital approach that consumers and organizations use data flows globally for ecommerce, payments, communication, and information access.

The ease with which confidential information may now be stored, accessed, shared, and published, thanks to modern technology, increases cyber risks.

Cybercrime refers to a wide range of illegal actions and fraudulent activities, and it represents a severe threat to international trade.

Costs associated with cybercrime include data loss and damage, money stolen, lost productivity, intellectual property theft, financial and personal data theft, fraud, disruption of regular business operations following an attack, forensic investigation, data restoration and deletion, and more.

According to recent data (taken from Statista.com), the global indicator 'Estimated Cost of Cybercrime' in the cybersecurity market was forecast to continuously increase between 2024 and 2029 by in total 6.4 trillion U.S. dollars (+69.41 percent).

After the eleventh consecutive increasing year, the indicator is estimated to reach 15.63 trillion U.S. dollars, therefore resulting in a new peak in 2029.

These data explain why organizations and Enterprises worldwide are investing more in the adoption of cybersecurity measures.

The Finance & Payment domain looks into the payment and supply chain finance phase (Pay phase), using the UN/CEFACT Buy-Ship-Pay Model. The payments landscape and overall, the financial sector are experiencing a revolution due to the impact of new paradigms based on "open" models, which are adopted nowadays in over 40 countries worldwide.

In the past years the Finance & Payment domain has analyzed these paradigms, in particular the “open finance” paradigm, by publishing in 2022 the “Whitepaper on open finance to support trade facilitation”, which is available online on the UNECE website. Following the publication of the White Paper, the Domain decided to deepen use cases that are part of the payment process in order to prevent payment fraud occurring within the supply chain process and the Buy Ship Pay model.

The Check Invoice BRS project focusses on a service related to electronic invoicing and more particularly, on advance invoicing.

Electronic invoicing and the broader integration and dematerialization of the order-payment cycle represents a significant competitive advantage for both the national system, and individual companies, including the Public Administration. By reducing non-value-added activities and enhancing support for commercial partners, e-invoicing delivers substantial benefits with minimal technological and organizational investment. This highlights the growing necessity for businesses to achieve greater integration between the supply chain, which encompasses production, procurement, and logistics activities - and the financial chain - which facilitates the financing of working capital. In this respect, electronic invoicing serves as a key integration enabler, offering a comprehensive tool to streamline processes such as: collections, financing, invoice advance, insurance services. By aligning various business operations, it ensures greater efficiency, transparency and synchronization across the entire value chain.  

The Check invoice service consists in the creation of a Federated System that collects information on advance invoices from a multi-bank and multi-channel perspective in order to retrieve information aimed at improving the efficiency of credit disbursement processes (for example, an invoice advance request by a corporate) and avoiding the financing of duplicate invoices.

Furthermore, the publication of a BRS on this topic would be paramount to guarantee the interoperability of service providers on a large scale, domestic or even across borders, all the more, considering policy development that are simplifying cross-border invoicing procedures, fostering efficiency, and reducing costs. In the European Union, for instance, the Commission is committed to continuously reinforce electronic invoicing. The adoption of the eInvoicing Directive 2014/55/EU in 2014 marked an important step towards promoting the uptake of electronic invoicing, not only in Europe but also globally. Since then, several policy and market developments have taken place in the context of electronic invoicing to ensure that the directive remains relevant in a rapidly evolving digital era. The Commission has been closely working with electronic invoicing stakeholders to craft strategies that meet their needs. As a result, the European standard has been widely embraced at both the European and international levels. The directive lays the foundation for a more interconnected, interoperable and efficient European e-Invoicing landscape, taking a further step towards a fully integrated and digitalized single market. 

Project Deliverables

Deliverable 1: Business Requirement Specification

Exit Criteria

Exit Criteria for Deliv. 1: Public Review logs demonstrating all comments have been satisfactorily resolved; Final document ready for publication.

Impact Analysis

The main expected benefits will stand about standardization of check invoice process flow and interoperability of different solutions cross-country. Moreover, it will push adoption of international einvoicing standards such as CII from UN/CEFACT, according to the recent EU legislation policy.

From the intermediary's viewpoint it will accelerate automatization of financing procedures and make it more efficient and secure to provide invoice financing services. Corporate users will benefit from quicker time to access liquidity and better interest rate conditions. Also, reduction of paper process will be paramount thanks to the digitization of the preliminary checks, that can be combined with the Invoice /PO financing request enabling a fully digital end to end financing granting process.

Results will be evaluated after the launch of real tangible initiatives.

Project Team Membership and Required Functional Expertise

Membership is open to UN/CEFACT experts with broad knowledge in the area of: Finance and Payments In addition, Heads of Delegations may invite technical experts from their constituency to participate in the work. Experts are expected to contribute to the work based solely on their expertise and to comply with the UN/CEFACT Code of Conduct and Ethics and the policy on Intellectual Property Rights.

Geographical Focus

The geographical focus of the project is global.

Beneficiaries

Payment Service Providers

• Increased efficiency of the banking and financial system
• Improvement of credit disbursement processes related to invoice financing 
• Reduction in fraud and credit risk with consequent benefits in favor of Intermediaries in the financial industry

Corporates and SMEs

• Possibility of simplified access to credit, thanks to the streamlining of internal processes implemented by Credit Intermediaries

Ecosystem

• The system will be fed by participating Intermediaries (surveilled by competent Central Banks), indicating the relevant invoice for each advance, the status of the advance and the available amount. The original source will be the government archiving held by Tax Authorities (more often, where an eInvoice mandatory use is already in place). 

Initial Contributions

The following contributions are submitted as part of this proposal. It is understood that these contributions are only for consideration by the Project Team and that other participants may submit additional contributions in order to ensure that as much information as possible is obtained from those with expertise and a material interest in the project. It is also understood that the Project Team may choose to adopt one or more of these contributions “as is”.

• None

Resource Requirements

Participants in the project shall provide resources for their own participation. The existence and functioning of the project shall not require any additional resources from the UNECE secretariat.

Project Leadership

Fabio Sorrentino (E-mail: f.sorrentino@cbi-org.eu)

Project Proposal Files