Issue

Syensqo has a legal obligation to create and exchange sales e-invoices with many global regulatory authorities. Additionally responses are often required back to confirm they have been correctly submitted. Without this information goods cannot be sold in these jurisdictions and fines can be imposed.

Recommendation

Use a 3rd party provider to manage the integration from S/4 into the government authority systems and portals. This will provide a solution that can be implemented globally in the shortest time whilst ensuring a robust, compliant, auditable and scalable solution for Syensqo in the long-term.

Background & Context

E-invoice exchanges with the regulatory authorities are currently required or will be required in the next 2 years, when selling goods and services to the countries below. An e-invoice is sent to the authority and often a message is sent back to confirm the approval. Approximate invoice quantities shown below:

The number of countries that require this reporting is expected to rise each year - for example, all EU countries by 2030.

Even though there are similarities between the formats required they can differ substantially by each country. For example, Brazil has a different submission required depending upon the type of good or service sold.

Therefore Syensqo needs an efficient, robust and reliable method to send and receive the legally required sales and procurement invoice information.

Assumptions

Specific licence costs still need to be established with SAP and any 3rd party supplier - need to ensure future invoice volumes included in this estimation.

SAP S4/HANA will be the ERP (Enterprise Resource Planning) application that will enable the management and execution of the sales through to billing processes.

SAP / 3rd party supplier keeps up the maintenance of the DRC to be compliant with the differing requirements of each country.

Constraints

The e-reporting tools chosen to support Finance - there is also similar functionality required for government tax submission / reporting - therefore this KDD should be considered as part of an overall e-documentation approach.

Link to Finance KDD here.

Impacts

Implementation: The initial configuration and testing of the 3rd party solution may take a significant amount of technical resource and expertise. The intention would be to standardise the approach for all countries but there may be differences in how each is interfaced to the 3rd party software. (e.g. EU requirements through PEPPOL compared to LATAM).

Training and Change Management: Training will be required for the new ways of working with the integration with the new 3rd party software and S/4. The integration tools with S/4 have a different look and feel to existing ECC6 set up.

Security: Various front-end and back-end role settings need to be considered during the role building exercise.

Licensing: Additional licensing and therefore costs will be incurred for 3rd party software integration and usage.

Business Rules

None identified.

Options considered

1. Option A: Automate with SAP S/4 Document and Reporting Compliance.

The automated DRC functionality can operate in 3 x different ways to cover differing country specific requirements:

1. Document and Reporting Compliance via cloud - exchanges an e-invoice in with selected governments in the format required via Peppol - e.g. Belgium, Poland, France. 
2. Document and Reporting Compliance via integration suite - exchanges an e-invoice with selected governments in the format required. For example, Saudi Arabia, Chile & Peru. Additionally, file format and transmission provided via integration suite for the Chinese Golden Tax transactions.
3. Document and Reporting Compliance for Brazil - exchanges an e-invoice with the Brazilian government in the format required using S/4 Nota Fiscal functionality.

The basic flows are defined below:

DRC via cloud:

DRC via integration suite:

Even though this is the standard SAP S/4 solution there is significant complexity involved here:

• This is not a single process in S/4. There are 2 x principle ways this functions - (1) via cloud and (2) integration suite. The cloud option covers the newer country regulations that work with the Peppol framework - such as France, Belgium, Germany, Spain & Poland and in the future other EU countries. The integration suite is aligned with the older existing technology currently available in SAP ECC.
• Significant configuration and testing is required to integrate to the government portals. This particularly the case for the integration suite where a different complex set up may be required for each country - such as Peru or Mexico.
• On-going maintenance is required in both models - whereby new legislature or tax rules will require additional set up and testing - experience has shown that this can be very time consuming and often cumbersome in SAP.

Option B: Automate with 3rd party solution

This option would be to integrate a 3rd party provider software into S/4 in order to automate the exchange of sales invoice documents - examples of this would be EDICOM or SOVOS solutions. In this case, the 3rd party provider would integrate their software into Syensqo S/4 systems to then be able to submit and receive back the relevant document and information directly to the relevant country authorities.

An example of how this could work shown below:

ADD CHART

Even though this solution would be provided by a 3rd party - only a proven solution should be chosen and this procider would take responsibility for

• Initial technical connections into S/4.
• Any subsequent updates (legislation changes, new countries etc).
• Submission to the authorities.

This would considerably reduce the Synesqo technical overhead for implementation and maintenance.

Option C: Manual download / upload process from S/4 into government portal

This option would require manually downloading the sales invoice from S/4 in the correct format and then manually uploading this document into the relevant government authority portal.

Real-time Monitoring and Reporting:

• Offers real-time monitoring of invoice status and performance metrics.
• Provides comprehensive reporting tools to analyze invoicing data and gain insights into financial operations.

	S/4 DRC	3rd Party	Manual
Global compliance	Covers all relevant countries.	Covers all relevant countries.	Most countries require electronic submission from ERP.
S/4 integration	Native integration into S/4.	Integrated into S/4 using technologies such as EDI.	None required.
Automated document exchange	Can automate validation, approval and transmission of docs in S/4.	Can automate validation, approval and transmission of docs in S/4.	None.
Standardized document format	Supports multiple e-invoicing formats to comply with global standards.	Supports multiple e-invoicing formats to comply with global standards.	Some document formats available for manual download.
Secure transmission	Secure transmission & tracking of invoices using encryption and secure communication protocols.	Secure transmission & tracking of invoices using encryption and secure communication protocols ???
Implementation complexity	Significant effort to set up, test and integrate with S/4.	Simpler (though still not simple!) to integrate into S/4 landscape as 3rd party software has built-in connections to government portals.	Less system set up required.
BAU impact	Efficient automated processes requiring less day-to-day manual intervention. New set up / updates required to be installed if regulations change or additional countries require e-invoicing.	Efficient automated processes requiring less day-to-day manual intervention. 3rd party provides relevant regulation updates / set up for new countries if required.
Licensing	On-going (and currently undetermined) licensing costs - often based on number of documents processed.	On-going (and currently undetermined) licensing costs - often based on number of documents processed.	Likely to be lower licensing costs. Significantly higher people costs for manual processing effort required.
Real-time monitoring and reporting	Real-time monitoring of invoice status and performance metrics	???	Manual checks required for reporting.

See also

Change log

Workflow history