Glossary of terms

E-invoicing - 'electronic invoicing' is method of communicating with government authorities in relation to sales and procurement invoices.

DRC - 'Document and reporting compliance' is a tool kit within SAP S/4 for exchanging and reporting on compliance documentation (e.g. for taxation, invoicing etc).

ERP - 'Enterprise Resource Planning system' (e.g. SAP S/4)

Issue

There are certain countries or jurisdictions that mandate the use of e-invoicing methods and platforms to complete a legal purchase or sale - Syensqo has a legal obligation to create and exchange sales and procurement e-invoices in the global jurisdictions where this is mandated.

The e-invoice platforms from each governing body are usually different and require different attributes and documents to be passed or received in order to complete a successful e-invoice lifecycle. For example, responses are often required back from the governing body to confirm if they have been correctly submitted.

Goods cannot be sold in these jurisdictions and fines can be imposed if the mandatory communications are not fulfilled.

Recommendation

Use a common and standard 3rd party provider across all GBUs and relevant countries to manage the integration from S/4 into the government authority systems and portals for both inbound and outbound invoices (and other relevant documents). 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 below are currently required or will be required in the next 2 years, when selling/buying 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. This should include all relevant document types such as invoice, credits & debits.

In Syensqo's existing systems the requirements for sales e-invoicing are fulfilled by using the various SAP adapters for each country - so each country (or group of countries) needs its own specific set up, testing and integration.

The requirements for Supplier Invoices are fulfilled by receiving the Invoices from the Government Portal into the Readsoft Invoice Process Director. Each Country or group of countries needs its own specific integration from the portal to the Process Director, its own mapping, set up and testing.

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 application that will enable the management and execution of the sales through to billing processes.

SAP / 3rd party supplier are responsible for keeping up the maintenance and compliance with the differing requirements of each country.

How suppliers send invoices to the government portal and what data they send is not under Syensqo's control so we assume that this will be implemented on the suppliers side correctly.

An investigation with any potential 3rd party providers would be required in order to confirm functionality offered - what's mentioned in this document is based on previous experience of implementing this process.

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.

We have to have a solution that works for Sales Invoices going into a government portal from S/4 HANA and one that works in reverse - going from the portal to S/4 Accounts Payable. Options that work best for inbound may not be the same as for outbound. 

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: Use the As-Is approach with the addition of using the new SAP S/4 Document and Reporting Compliance tool set.

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: Sales Invoices

DRC via cloud: Supplier Invoices

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

Sales Invoices

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 look shown below:

Supplier Invoices

In addition to transmission of documents, any invoices coming in from a government portal will need to be mapped to an SAP standard. So this option would be to integrate a 3rd party provider software into S/4 in order to automate receive the Supplier Invoices from the Government Portal and map them to the SAP Invoice format, (covering both non PO and PO based Invoices) as well as receive any other relevant documents and information from the relevant country authorities.  

An example of how this could work shown below:

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

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

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

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

Sales Invoices

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.

Supplier Invoices

Retrieving Invoice data sent into the government portal from suppliers in a human readable format and then manually keying into S/4 is not practical for Supplier Invoices. So this solution doesnt work for this process

Option D: Use Ariba Network (SAP Business Network to receive the invoice data from the Government Portal, map and transmit to SAP

Sales Invoices

As the Ariba Network is for suppliers to send invoices to customer its not a viable solution for Sales Invoices.

Supplier Invoices

This would be an out-of-the-box solution as it would rely on Ariba producing country specific connectors between a countries portal and the Ariba network that can then be used by any Ariba Network users in that country. It would also rely on Ariba providing the coverage necessary as well as the ongoing updates and expansions,

If possible this would allow Syensqo to leverage the investment made in onboarding its suppliers onto the network and  also act as a portal for suppliers who use the Network to view invoice statuses. So where an invoice has an issue they can see that issue in Ariba Network and are not reliant on Accounts Payable contacting them to alert them to the issue. 

There are not currently any live Ariba connectors for any government portal and we do not have a confirmed roadmap and timeline for this.

See also

Change log

Workflow history